Unilever Partners with Food Lion
For ‘Whole Aisle Merchandising’
By James Tenser
Unilever is collaborating with Food Lion on a 13-store test of what
the companies call a “whole aisle” merchandising solution designed to align section merchandising with the chain’s shopper-oriented store clusters.
The work calls for rearranging space allocations and assortments
for categories within an entire aisle, according to Jen Pasqua, Unilever’s Category Management Team Leader who did not disclose the department in the test. Results are expected by the first quarter of 2009.
“Unilever is helping us differentiate that department while maximizing space effectiveness,” said Kevin Durkee, manager of cluster management and assortment at Food Lion.
In a joint presentation at the annual conference of the Category Management Association in Atlanta, Pasqua said data analysis indicated that 80% of Food Lion shoppers were purchasing “department X” products outside of Food Lion. “This was due to assortment and perceived value. We identified the shopper segment with the largest opportunity segment based on dollars and behavior,” she said.
The plan was developed following months of effort by both companies to develop shopper insights, segment stores, and match merchandising to opportunities indicated by consumer insights. The focus of the test is on a store cluster designated as the “Affluent Bunch.”
Once Unilever and Food Lion agreed to proceed with the project, they determined to begin the test in 13 stores located near headquarters that could be closely monitored, according to Durkee of Food Lion. The entire aisle had to be re-merchandised, and re-set teams coordinated. The fixtures themselves were not changed, however part of the test includes new signage in half the test stores. There are no price changes anticipated as part of this test.
Target date for test results is the first quarter of 2009. If successful, the new aisle layouts will be rolled out to all stores in the cluster. Unilever and Food Lion expect to use the insights gained to target other clusters of stores.
Food Lion has been working steadily since 2005 to define shopper segments and store clusters based on insights, according to Melissa Zip, manager of collaboration and innovation for the chain. That was the year the company initiated its transformation from what she called a “one-size-fits-all” retail concept to a multi-banner concept that included the launch of upscale Bloom supermarkets and a program of “market renewals.”
After early shopper insights work revealed that Food Lion store shoppers could be decomposed into eight primary segments, Zip said the company confronted what she called a “brick wall of reality.” Food Lion operates 1,200 stores in 12 states. Each one has all eight segments represented in varying degrees.
“We needed to work on clustering our stores, based on who walks in the door,” said Zip. “Where it touches the customer, we will customize. As it moves through the organization, we standardize. That’s the only way to survive.”
Food Lion’s work resulted in the identification of seven store clusters, with such names as “Golden Country,” and “Affluent Bunch.” The retailer established what it calls “deep dive teams” to develop detailed insights about each that could be shared with its vendor partners. It was this kind of shopper information that Unilever had access to for the whole aisle merchandising project.
“We removed several categories from those aisles. At the same time we significantly extended another category by more than 50%,” said Pasqua.
The work was based on detailed shopper data provided by Food Lion, Unilever’s consumer data, and Total Store Analytics software from the TABS Group. The analytic tools permitted Unilever to run cross-purchasing data to analyze adjacencies, she said. Section adjacencies were rearranged, and Unilever worked with Food Lion to identify key metrics.
A model was developed that ranks the individual categories according to which ones should lead so as to bring shoppers further down the aisle. Unilever used TABS Profit Master tool to run what-if simulations that predicts the impact of the proposed changes in space.
Dr. Kurt Jetta, president of TABS, who introduced the presentation, said that roadblocks to whole aisle merchandising have traditionally been “both analytical and logistical in nature.” They include: lack of access to data on other categories of interest; data that are too high or too low in level”; lack of commitment from manufacturers and retailers; and inadequate analytic methodology.
“One thing that impressed me about Unilever’s approach to this
was their willingness to be objective,” he said. “In one example,
they sell just 10% of the dollars in the aisle, but they still made
the commitment.”
All the parties stressed the importance of collaboration in developing the whole aisle merchandising program. Zip said she regarded generous data sharing with vendors as a trait of the new Food Lion.
“We are not using this work to give away the farm, but we’re also not using it as a profit center. We don’t rest until we figure out how to get information into your hands so you can help us make better decisions,” she told vendors in the audience.
Market Watch
Shopper Marketing Delivers
ROI for CPG Manufacturers
By Lynne Cooke
Shopper marketing programs are among the top activities that deliver meaningful return on investment (ROI) for CPG manufacturers, according to a recent study conducted by Deloitte Consulting for the Grocery Manufacturers Association (GMA). Findings are based on the input of over 100 CPG companies, including interviews with more than 40 shopper marketing executives and an online survey of over 100 shopper marketing managers and executives.
The study, “Delivering the Promise of Shopper Marketing: Mastering Execution for Competitive Advantage,” also found that the percentage of manufacturers and retailers with significant shopper marketing organizations grew dramatically from 6% in 2007 to as high as 60% in 2008. Respondents expect shopper marketing investments, as a percentage of the overall marketing mix, to continue to rise for at least three years.
“Nearly every major manufacturer and retailer in the industry is dedicating resources to shopper marketing,” noted Brian Lynch, director of sales and sales promotion for GMA. “This report outlines lessons learned to date and puts forth a game plan to help companies become more sophisticated in their operations and thus more fully realize the enormous potential of shopper marketing.”
Successful shopper marketing programs have a three-stage
lifecycle, according to the report. While many companies have allocated resources and established pilot programs (stage one: incubating), they often fail to develop the capabilities needed to perform with scale (stage two: scaling). Rarely have they succeeded in culturally embedding this new way of thinking and working (stage three: embedding).
“Retailers and manufacturers who are embracing shopper marketing and executing against a core set of principles are growing 50% faster than the categories in which they participate,” said Rob Holston, shopper marketing practice leader for Deloitte. “This speaks to the promise that shopper marketing holds for those who do it well.”
There are many perceived resource and constraint obstacles to measurement. Sixty percent of retailers said that insufficient technology is their biggest roadblock, while 70% of manufacturers said the cost of data collection and analysis is their greatest obstacle.
Rapid In-Store Data Collection
The latest product from VideoMining Corporation aims to turn in-store video of shopper actions into quantitative data in a near instantly deployable, all-inclusive package for short-term data collection projects of 1 to 7 days. By using VideoMining Express, CPG manufacturers and retailers will have the opportunity to quickly learn how shoppers actually shop instead of how they say they shop.
“VideoMining Express offers companies a cost-effective way to measure shopper response in single or multiple locations over a short time period of one to seven days. This is our version of the NASCAR pit stop. We provide all of the same services as in our longer-term products, but in a condensed time period,” said Dr. Rajeev Sharma, president and CEO of the State College, Pa.-based firm.
Eye on Shopper Behavior
Nearly three of ten shoppers around the world wait until they’re in the store to decide which brand they will buy, according to a new global study by the Ogilvy Group. The study, “Shopper Decisions Made In-Store,” was based on more than 14,000 shopper interviews conducted in 700 retail outlets across 24 markets worldwide. It spanned five retail channels across six product categories
The report uncovered several other behavioral traits. For example,
one in ten shoppers simply change their minds in store and buy a different brand than what they had planned. Almost two of ten shoppers will buy from categories they had no intention of buying from before entering the store. In the US, almost one in five shoppers leave a product they planned to buy on the shelf and walk away empty-handed.
Better Eating Habits for Kids
The food perceptions and eating habits of children are becoming healthier, according to a survey from Mintel. Data shows that two in five youths reach for foods that give them more energy; more than one of three say they purposefully eat foods rich in vitamins and nutrients; one of four say they try to eat foods that are low in fat; and more than one of five (22%) are on the lookout for low-in-sugar foods.
Mintel’s research also shows that teenagers in particular are receptive to healthy eating messages. When asked about their attitudes toward food, two of three (66%) of teens said they believed “eating gives you energy/vitality,” while nearly two of three (61%) said “it’s important to eat a balanced diet.”
Seniors Go Green
Bucking the belief that environmentalism is a youth movement, consumers over 55 years old are the most prolific users of green products in the U.S., according to a survey by ICOM Information
& Communications.
Both male and female groups 55 years and over reported above average usage of environmentally-friendly home goods. Leading the way was the 55-59 year-old female demographic, who was more than twice as likely as the average consumer to use green products. Males 65-69 years old were second, more than 1.7 times as likely to use green products.
New Shopper Insights Suite
ReTel Technologies has released the ReView In-Store Insight Suite that allows brick-and-mortar retailers access to shopper behavior cost-effectively. The solution combines tracking systems, proprietary analytics software, a visual reporting suite and available value-added consulting services to draw deep insights from consumer behavior. This allows retailers to pursue actionable insights on merchandising, operations, marketing and store layouts.
The solution covers shopper conversion rates, category correlations, popular consumer paths through stores, staff-to-customer ratios and checkout queue lengths, absolute measurement of in-store media impressions, and incremental traffic from out-of-store media. ReView can also display compelling visual data such as heat maps of consumer behavior in retail environments, planogram compliance, as well as real-time snapshots of customer paths and activity in stores.
OCTOBER 2008
Coca-Cola Rolling Out Global
Shopper Segmentation Protocol
By John Karolefski
In an ambitious move notable for its wide scope and marketing implications, The Coca-Cola Company is rolling out a shopper segmentation protocol that can be applied around the world.
This sweeping global tool has been launched in multiple countries across Europe, Asia, Africa, and the Americas, with more in planning for 2009.
The reason for the global protocol, says Karen Gryson, Director of Marketing Strategy & Insights, is that local markets were each developing their own tools. These different methods not only represented redundant development efforts, but also would make cross-country comparisons difficult for the $29-billion company that markets 2,800 beverages and 450 brands in over 200 countries.
“Development of a standardized global protocol would therefore not only improve productivity, but would also enable a common language for shopper understanding across the company and facilitate cross-country opportunity identification,” she said. “The challenge, though, is how do you balance the global needs and the need for commonality and comparability with the need for local actionability?”
Gryson said the goal was a common global approach for shopper understanding that would enable Coca-Cola to identify not only
the local opportunities, but also regionally or globally scaleable opportunities.
“These opportunities might be at a channel level or for a particular retail customer,” she explained. “So we needed a standardized, yet flexible, Best Practice protocol that could be implemented in any market around the world without local reinvention.
“When we looked at all the work that had been done locally around the world,” she went on to say, “we found that fundamentally people shop for the same reasons regardless of where they live. Relative importance of the various missions may differ from market to market, and the channels may differ, but fundamentally the needs are similar. This gave us reason to believe that a global segmentation would
be feasible”
Gryson said that Coca-Cola’s ultimate Shopper Marketing objective is “to create the perfect shopping experience, one store at a time. So we want to use all the merchandising and marketing activities that will motivate a shopper and drive purchase.
“Are there things we could be executing better in stores today to deliver better results for us and for our retail partners? Where are the places where we may be under-performing today? Where are the opportunities for us to drive even more value out of our brand? If we do all of this well, we achieve the win-win-win: we drive more profitable sales in our categories, using segmented execution strategies that benefit us as well as our retail partners, and the shopper ultimately benefits because we have made the right brands available in the right packs in the right places at the right time” said Gryson in a presentation at the Shopper Insights Conference. The event was hosted in Chicago by the Institute for International Research (IIR).
To gain a comprehensive understanding of shoppers, Coca-Cola utilizes multiple sources of data, including a proprietary large scale quantitative tool that leverages the global segmentation. According to Gryson, it informs a holistic understanding of the shoppers’ lifestyle, channel usage, shopping missions, category and brand purchasing behavior, and consumption occasions.
“It’s critical to understand how the product is ultimately going to be used when you’re thinking about how you might apply strategies,” she said. “The ability to look at the intersection of multiple dimensions is where there’s real power in this tool because – since we’ve got a single source database – all of this information is linked. We can slice it and dice it any way we want to.
“We can look at any combination or aggregation of channels, missions, shoppers, categories, any way that we want to look at it,” she continued. “We can potentially profile any type of visit. We can look at a particular mission within a particular target segment, and understand how we are performing versus competition.”
According to Gryson, there’s a tremendous amount of analytic depth associated with the tool. It is a strategic tool that enables Coca-Cola to identify and prioritize opportunities.
“With this information, we can develop quantitative revenue maps for almost any combination of the elements,” she said. “We can diagnose our performance gaps. We can understand within which missions and which channels we are strong and we are weak, and then go in-depth and understand why and what we need to do to improve our performance. All of this can help inform our brand, price, pack, and channel strategies.”
Gryson said this work facilitates collaboration with key retail customers. Because Coca-Cola collects information down to the retailer level, it is able to bring shopper insights to trading partners and give them insights about their shoppers that they might not have otherwise. It also enables retailer comparisons to help them understand how they are performing compared to a competitor and where there are opportunities to differentiate. .
Shopper marketing is an area of renewed focus for Coca-Cola, according to Gryson. “We’re a consumer marketing company,”
she said. “Our focus has traditionally been on consumer and
brand marketing.
“We are building on our past knowledge but in the context of today’s demanding shopper. We’ve got the passion, the drive and the talent to develop the kind of marketing muscle with shoppers that we have with the consumer. And in collaboration with our bottling partners
and key retail partners, we will achieve this to our mutual benefit,”
she said.
Market Watch
New Shopping Patterns Emerge
To Cope with Sagging Economy
By John Karolefski
More than three of ten consumers are eating at home more and eating out less, while four of ten feel economically worse off than a year ago, according to a new study by Unilever. The report, called “Winning Shoppers in Turbulent Times,” uncovers how different demographic groups will change their shopping habits in the midst of a challenging economy.
“There are different levels of anxiety over the economy that varied – as you might expect – according to income level,” Mike Twitty, director of shopper insights at Unilever, told CPGmatters in an interview.
“The lower socio-economic groups are more concerned than the higher ones.”
Even though consumers are tightening their budgets, they don’t
wish to compromise on product quality. The study shows that most consumers will continue to seek out trusted brands across the
store, with most shoppers declining to switch to a private label to save money.
Consumers also want manufacturers and retailers to be creative in product packaging and sales approaches. Some shopper preferences uncovered in the study include: larger pack sizes, smaller package sizes at lower price points, and modestly reduced package sizes with the same price point. The introduction of slightly lower quality items with the same price point was the least desired among respondents.
“It used to be that stocking up in order to save money was the province of the mid-tier and upper income shoppers,” he said. “Now we are seeing a phenomenon where lower income shoppers might jointly buy a membership in a club store and shop there in groups. When they make purchases, they may split up those purchases outside of the store so they can capitalize on the value offered by those kinds of outlets.”
Unilever has talked a lot about “quick trips” and how important they are to the buying of consumer packaged goods, according to Twitty. “One of the things we are seeing is that the lower socio-economic groups have recognized for a long time that quick trips are a convenience. They are expensive and somewhat of a luxury; that is, buying something when you need it as opposed to putting it on a list and waiting until you go shopping.
“The lower socio-economic groups – out of necessity – have minimized that kind of behavior,” he continued. “But we are now seeing that all socio-economic groups in the current economy are beginning to do the same thing.”
To become more frugal, about half of the study participants would “reduce spending a lot” on entertainment and vacations. The top two savings tactics reported by shoppers include “only buy when it’s on sale” and “use coupons whenever I buy this product.”
The top dozen categories shoppers will not abandon include anti-perspirant and deodorant; batteries; canned vegetables; fresh meat and seafood; hair care; household cleanser; laundry detergents; margarine; pain relievers and cold medicines; personal wash; pet food; and tissues and toilet paper.
The top five categories where shoppers would reduce spending if the economy continues to struggle include air fresheners, cookies, beer/wine, frozen dinners, and soda/pop.
Wal-Mart Scores with Virtual Stores
When Wal-Mart wanted to find out how people shopped its stores, the world’s largest retailer turned to a process called Visual Intelligence in a Smart Store Real-time Analytical Environment(VISSRAE). In three months, twenty-three 215,000 sq. ft. virtual stores were “built” by Red Dot Square and stocked with intelligent packages.
As Wal-Mart had hoped, reported company executive Candace Adams, the virtual store experience measured in-store marketing initiatives in real time, engaged and collected data, and delivered world-class shopper insights. Wal-Mart is quick to point out that it “cares about the brands, but cares more about optimizing the category itself,” said Adams, speaking in Chicago at a Shopper Insights conference hosted by the Institute for International Research (IIR).
Interbrand Urges Unified Insights
Shopper research, shelving principles and package design can combine to form a powerful approach for activating purchases and increasing brand loyalty. The starting point for these unified insights is for manufacturers and retailers to listen to shoppers better, according to Bruce Dybvad, president of Interbrand, the well-known branding consultancy.
To maximize unified insights, he said environment, shelf and package must optimize four things: attract, focus, persuade and involve. “It’s a sea of sameness on food, drug and mass shelves. We’re trying to bring energy into this environment. There is energy from both manufacturers and retailers to work together connecting with shoppers,” he said in a presentation in Chicago at the Shopper Insights conference hosted by the Institute for International Research (IIR).
