Jul 20, 2012 | Branding, Customers, Marketing, retail, Sales
Amidst the moans being heard from bricks and mortar retailers, you can still see in almost any store you choose to enter, opportunities to make the experience of shopping easier.
If it was more social, friendly, service oriented in stores, it follows that shoppers would find it easier to part with their money. Human beings are social animals, we herd, and congregate around things that interest and engage us, so it seems possible to dream up strategies that enable that behavior in a store, to make it an attractive occasion to go there, even if it is to your local supermarket, there are opportunities to reconstruct the experience.
Many consumers in high value categories, from furniture to electronics and whitegoods, are “showrooming”, doing some research on-line, then going into showrooms to have a look at the short list in the physical state, then go out and buy on line. Notice the disconnect there, sales people let them out of the showroom not just without a sale, but without permission to continue the nascent relationship.
On the other hand, I wandered into the Apple store last week, seeking information for a client, went back the next day for an information session targeted at the specific questions I had, and yesterday got a targeted email offering solutions to the problems I outlined in the session.
No wonder the Apple retail stores are breaking all retail records, and they are bricks and mortar, with a huge difference, they work at creating a relationship, recognising that it is the precursor to a sale.
Jun 13, 2012 | Change, Customers, Management, Marketing, retail
Data mining as it is evolving in retail is a fascinating exercise in identifying behavior characteristics that apply to very small percentages of the shopper population, and doing something with them. Progressively retailers are getting better at leveraging the data, and as the penetration of cards increases past a critical mass, so will the effectiveness of the marketing and promotional programs. Of course, consumers are well aware of this, and have well developed “relevance meters” built in.
Consider the category management of potatoes. Pretty dull stuff? no, fascinating stuff. I am making these numbers up to illustrate the point, but consider, of 100 customers using their cards at the checkout, perhaps 10% have potatoes in their trolleys, and 10% of that 10% have a particular variety, and of that 10% (now down to 0.1%), they also have sour cream and chives in their trolley. Pretty reasonable guess that the potatoes will be cooked in their jackets, with sour cream and chives garnish, particularly if the shopper is single, no kids, and also buys steak. An opportunity to offer the consumer a deal on a bottle of red wine on her way out of the shop, or in the associated retailer across the way? Multiply that by 5 or 6 million cards, and you have a pile of data to mine.
The gold standard of retailer card data mining is Dunhumby, now owned by UK retailer Tesco. They did such a great job in the development stages of the Tesco loyalty card, that the retailer bought them to keep their competitors away from them. In a move that recognises the future, Dunhumby is now crowdsourcing ideas via Kaggle, a fascinating startup that turns data mining into a competition for data nerds.
This is Category Management on steroids, and represents a monumental change in the skills needed by FMCG suppliers deal with dominant retailers. In the Australian context, very few FMCG suppliers have any idea of the power of the data tsunami coming at them, and how this will impact on their brand marketing strategies. It is also the realisation of the vision of category management the few of us who were playing with this stuff 30 years ago had when the data was warehouse withdrawals, we had a bit of U&A consumer research, and managed it all with calculators.
May 7, 2012 | Branding, Marketing, retail
30 years ago when housebrands were making their first inroads into Australian supermarkets, I took over management of Fountain tomato sauce. At the time it was a runaway market leader in NSW, but was being badly hurt by emerging cheap housebrands, priced a few cents less, 0.69 cents Vs 0.73 cents. Clearly to consumers there was not much difference in the products, they may as well take the few cents for themselves.
We lifted the price of Fountain significantly, the shelf price difference was then sufficient to suggest to consumers that Fountain was substantially better than any cheap housebrand, which was in fact, the case. Lo and behold, not only did our margins improve, so did our volumes.
The perception of the value delivered by Fountain overcame the rational response that sauce is sauce. Test yourself on this next time you walk into a liquor store, and consider a purchase of wine. Obviously, the greater the price, the better the wine?
In this great TED talk, Rory Sutherland, a big cheese in British advertising makes the point beautifully that decision making has three components.
- The technical considerations
- The cost/benefit considerations
- The psychological considerations.
The first two have a range of widely used and well understood models, whilst the third is often the province of the mavericks, creatives, and other assorted ratbags, and is therefore often dismissed as having a valid role in decision making. However, the best decisions are made at the intersection of these three perspectives.
May 2, 2012 | Category, Demand chains, Operations, retail
The word sustainable holds connotations of farming practices, and environmental sensitivity, all true, but only half the story.
A sustainable chain must also be commercially sustainable, and one without the other is by definition, unsustainable.
The characteristic that drive both are similar, transparency, and connections through the chain, both facilitated by the collaboration tools of the web. The outcome is increased productivity of the whole value chain.
The price deflation being experienced in the value chains supplying Australian retailers are testing the limits of Australian suppliers, and those that are surviving are dedicated to the implementation of chains that are commercially sustainable, and increasingly environmentally sustainable as consumers interest in product provenance increases.
Quietly, out of a home office, GFAP, a small chain consultancy that supplies a customised web based tool that manages value chains, to this point largely around horticulture, is flourishing. Very few pieces of produce arrive at Woolworths or Coles without being touched in some way by this system, but few have ever heard of it.
Apr 17, 2012 | Branding, Marketing, retail
Woolworths has “gone for the box”, advertising their “Select” range of housebrand products. The ads broke last weekend, (they have been removed from Youtube, curious) and to me appear to pretty effective, because they convey a single, simple proposition, that of top quality at a value price. Weather you believe it or not is another matter, and weather Woolies can deliver consistently on the promise is doubtful. Woolworths are retailers, not marketers, so by nature and culture their buyers are transaction focused, rather than customer relationship focused, making alignment with their marketing a probable headache for senior management.
The advertising adds to the social media and mobile marketing efforts, increasingly effective targeting of consumers based on the data collected via their store cards, and their cross category promotional strength flogging petrol. It also serves to further cement the duopoly of Coles and Woolworths at the core of Australian FMCG retailing.
Clearly the roadmap has been charted by the UK retailers, Sainsbury and particularly Tesco, who have supplied most of the senior management of their combatant Coles. The investment in brand building by the two gorillas is just another brick in the wall that keeps suppliers of proprietary branded products on their knees.
