Key Challenges on Agenda
Of Food Industry Summit
By John Karolefski
Meeting the challenges of today’s marketplace will be the theme of the fourth annual Food Industry Summit hosted by the food marketing department of St. Joseph’s University March 11 in Philadelphia.
Today’s shopper will be on the mind of marketers and retailers as they present their experiences and perspectives on a range of topics: the changing consumer, new store formats, the economic downturn, private label, food safety, urban supermarkets, and more.
One of the speakers, Jeffrey Brown, President and CEO of Brown’s Super Stores, was a guest of First Lady Michelle Obama at last week’s State of the Union Address in recognition of his work in building supermarkets in impoverished urban areas. At the conference, he will explain how he manages to serve shoppers in “supermarket deserts” where residents have no alternative to buying groceries in poorly-stocked bodegas and high-priced convenience stores.
“This conference is where you can get a solid reading on what the issues are and what you should be worrying about,” said Mark Lang, a professor of food marketing at the university. “You can get insights from successful companies on how to think about these issues and how to respond to them.”
He said many executives need help with the challenges in the marketplace. For new ideas and guidance, they will be looking to today’s business leaders such as Brown, owner of 10 ShopRite stores.
Other speakers will include:
- Scott Young, Senior Vice President of Retail Sales for Coca-Cola North America
- Andre Hawaux, President and COO of ConAgra Foods
- Mike Salsburg, President of Campbell’s Sales Company
- Fred Morganthall, President of Harris Teeter
- Pam Bailey, President, Grocery Manufacturers’ Association.
“We specifically have a program with at least two manufacturers, two retailers, and an association executive,” said Lang. “One reason we do that is for the knowledge and expertise from different parts of the industry value chain, upstream and downstream from each other. Sharing information is important to the different members of that chain. Manufacturers are always trying to find out what issues retailers are experiencing, what are they doing, and how are they responding. Retailers want to know what manufacturers are dealing with.
“Also, everyone likes to hear information about customers. In the end, Kraft’s customer
and Acme’s customer is the same person. Each of them wants to hear what the other one knows about that same person. There’s a great deal of overlap in terms of customer insights and knowledge.”
One of those shopper segments is Gen Y consumers. That demographic group, Lang said, presents a big pending change that the food industry is just starting to get its arms
around. They’re not going to be like a Baby Boom consumer. They’re going to be a different food consumer.
“Another thing is the future of private label,” he went on to say. “It has made significant inroads in our business. It’s not looking like it is going to go away when the economy improves. It is actually entrenched significantly into the consumer’s pantry and preference set.”
The emergence of private label, he said, is something that brand manufacturers and retailers cannot ignore. The former has to figure out how to compete with store brands, while the latter needs to determine if the chain is sufficiently committed to private label.
“We’re also seeing a lot of new [retail] formats being tested beyond just the lifestyle stores,” said Lang. “We’re seeing the smaller express formats which have a great potential as a reasonably priced, quick-visit store. They’re being tested, and a lot of people are interested.”
Market Watch
Shoppers Will Spend More to Go ‘Green’: Survey
By Lynne Cooke
Consumers are willing to pay more for a variety of products that are “green,” says a new survey from Burst Media.
Additionally, the survey revealed that nine of ten (90%) respondents have incorporated some level of “greenness” into their daily lives – few (8.8%) are 100% “green” and most are aspirationally “green” having incorporated a few “green” behaviors into their daily life. To help lead “green” lives respondents cited the internet as the best source of information on “green” products and practices.
The survey was administrated in lat December to over 1,500 adults 18 years and older.
Burst Media provides advertising representation, services and technology to independent
Web Publishers.
According to survey results, consumers are willing to pay a premium for products they know are made out of “green” or environmentally friendly, organic materials. Not surprisingly, aspirationally “green” and 100% “green” consumers are the most willing to pay a premium.
The aspirationally “green” consumers are most willing to pay a premium for food and household products they know to be “green,” including produce (66.6%), juices and other bottled drinks (61.1%), household cleaners (59.2%), laundry detergents (58.7%), and packaged food (58.2%). Meanwhile, among the 100% “green” respondents, over 80% are willing to pay a premium for all product categories, including food, garden/landscaping supplies (84.4%), home improvement supplies (84.0%), bedding (83.3%), and health and beauty products (82.0%).
More than one-third (39.4%) of respondents cite the Internet as the best source of information on “green” products and practices, followed by television (18.4%), friends and family (9.2%), newspapers (7.1%), magazines (6.5%), and books (4.6%). While men search for information on alternative energy and “green” technologies, women look for healthy recipes, recycling, simple living, and natural remedies.
More than half (56.6%) of all respondents believe to some extent advertising claims that promote a product as “green” or environmentally friendly. However, one quarter (25.1%) do not believe the claims or find them confusing or misleading. Only one out of ten respondents (10.0%) say they never believe “green” claims made in an advertisement. Two-thirds (67.5%) of aspirationally “green” respondents believe “green” claims in advertising, compared to 58.2% of 100% “green” respondents, and 32.3% of respondents who are not “green” at all.
Interestingly, women in all key age segments are more likely than men to purchase a product that is advertised as being “green” or environmentally friendly. However, men still lead women for being completely “green” – 12.1% versus 5.3%, respectively.
“Green consumers are turning to the Internet,” said Chuck Moran, chief marketing officer for Burst Media. “This poses an incredible opportunity for advertisers who are marketing “green” products online. But it is important for marketers to recognize that consumers have different ‘green’ messaging needs as ‘green’ can mean one thing for women and something very different for men. With a clear and direct message, advertisers can take advantage of the internet to reach these ‘green’ consumers.”
Interestingly, there is a distinct difference in the motivation to go “green” between aspirational “greens” and those self identified as 100% green. While aspirational greens clearly point to working for a better environment (61.3%) as the reason for incorporating “green” behaviors into their daily lives, only 38.1% of 100% greens point to this cause. Among respondents who are “100% green.” reasons include “to live a better quality of life” (36.6%), good for the community (35.4%), desire to make a difference (32.9%), and to set an example for others to follow (31.5%). Among this segment, being “green” identifies a lifestyle rather than personal activity.
Hispanic Network to Help Brands
More than 20 major brands have signed with the Latinum Network, the first-ever business network devoted exclusively to helping corporations understand shoppers that comprise the estimated $850 billion U.S. Hispanic market. The brands include Clorox, Kraft Foods, Mazola, Nestle, Sara Lee Corporation, Splenda and others outside the CPG arena.
The Latinum Network, developed by EcoNet Ventures, enables CMOs and other designated executives to share best practices, improve inter-company collaboration, participate in cutting-edge research and pool resources to leverage their collective buying power. As such, Latinum aims to serve serves as a barometer of consumer and corporate trends. For more information, visit www.latinumnetwork.com.
JANUARY 2010
Retail Commission Aims to Enhance Shopper Marketing
By Dale Buss
CPG companies and retailers are more interested in – and more experimental with – shopper marketing than ever, but so far their successes have been relatively hit-or-miss. The goal of a new industry-wide initiative called the Retail Commission on Shopper Marketing is to come up with a retailer-driven model that will make shopper marketing effective for manufacturers and shoppers as well as retail chains.
Led by charter members Coca-Cola Co. and 10 major chains, and advised strategically by the Partnering Group and the In-Store Marketing Institute as well as by a number of other CPG giants, the commission was launched last spring. Members aim to establish some specific shopper marketing pilots by spring as well as unveil some of their initial conclusions, best practices and guidelines at the In-Store Marketing Summit, to be held at McDonald’s headquarters in Oak Brook, Ill., in April.
Some of the industry pioneers who initiated category management a generation ago now are behind the creation of the Retail Commission. But unlike the highly successful practice of category management, retailers in general haven’t initiated a thorough-going approach to shopper marketing.
“Shopper marketing primarily has been on the manufacturer side,” said Brian Harris, president of the Partnering Group, based in Cincinnati, and one of the fathers of category management as well as of the new shopper marketing initiative. “Manufacturers have been bringing in creative and good ideas to retailers for several years, but retailers are overwhelmed – they don’t know where shopper marketing goes or where it fits.
“To change that, we had to get retailers to put their stamp on [the commission], otherwise there would be lots of wasted money, and disconnects. Retailers needed to understand it and shape it and feel good about it.”
Wal-Mart, Walgreen’s, Supervalu, Wegmans, Schnucks, Marsh, Shop Rite, Food Lion and Giant Eagle are the group’s other charter members. CPG advisory members are Campbell Soup, Chiquita, Clorox, Hewlett-Packard, Hershey’s, Johnson & Johnson, Sara Lee, Kellogg and Kimberly Clark.
Coca-Cola stepped up as the sole CPG sponsor of the new shopper marketing group. The beverage giant has been accelerating its attention to shopper marketing and understands that retailers can do a better job of selling Coke if they could leverage shopper insights into more effective in-store marketing.
“Whatever we put in outlets with those retailers today has to be as productive as possible
to generate the velocity and credibility with their shoppers and have a return to their bottom line,” said Diane Wallace, Coca-Cola’s director of shopper marketing, last fall at an industry conference.
Coca-Cola has been active already in ramping up shopper-marketing initiatives with the likes of Meijer, the Grand Rapids, Mich.-based mass discounter, and other retail chains. Kraft also has been proactive about shopper-marketing experiments with Meijer – one of the retail commission’s charter members – and with other retailers.
But so far, effective shopper marketing collaborations like these have been the exception rather than the rule.
The problem often begins with a disconnect between shopper insights and shopper marketing. “There’s a lot of unproductive work being done, when it’s not plugged into a comprehensive models of how shopper insights should be gained and where the biggest gaps are that need to be bridged,” Harris said.
“The trend is to budget more money into in-store activities and influencing shopper behavior. That’s great for retailers, but if there isn’t a disciplined approach, [shopper marketing] will be a money pit. Investments keep getting bigger, and you can spend a lot of money – poorly – if you don’t understand that and don’t have a platform that’s manageable.”
Retail Commission founders want to make the entire discipline of shopper marketing more reliable and repeatable.
“We’re trying to convey to retailers the notion that there’s lots of energy, creativity and resources on the manufacturers’ side that can be tapped into if [retailers and manufacturers] would get some thought alignment on this issue,” said Steve Frenda, managing director of strategy and development for the In-Store Marketing Institute in Skokie, Ill.
The Retail Commission was launched with the overall goals of defining retailer requirements – strategic, operational and organizational – for effective shopper marketing, integrating shopper marketing into current business practices, and establishing a new collaborative model for growth and shopper satisfaction.
Already, commission members have come up with several general principles that they’re recommending to serve as the foundation of an effective shopper marketing program.
First, any plan should be shopper and consumer focused. It should be retailer-sponsored and enabled. It must deliver “execution excellence,” including creation of a “critical linkage” between category management and shopper marketing. The planning process needs to be collaborative and strategic, linked to retailer and manufacturer business plans and bolstering the brand equity of each. It should deliver real shopper value “as promised” at the “moment of truth.” And it must create efficiencies and improved returns on investment.
Beyond inculcating and spreading these principles, the Retail Commission on Shopper Marketing wants to provide a common approach to wielding the practice effectively, which is collaborative and comprehensive – but not exclusionary. In other words, it should be robust enough to help the leading shopper marketing practitioners, but be applicable to novice practitioners as well. And charter members want to make sure that the “program” they come up with isn’t “over-template-ized,” providing room for flexibility for partners to leverage their unique capabilities.
To test its principles, the commission is launching what a handful of what Frenda called “smallish” pilots between specific retailers and manufacturers who already are part of the commission. Harris said that members are to “develop approaches – and get excited about
the potential.”
Still, Frenda conceded an obvious challenge for a group that purports to be working only for the best interests of both sides of the supplier-retailer equation: The concerns of manufacturers and supermarkets don’t overlap completely. One area where this is clear is branding.
“This new model of collaboration is needed in the wake of retailer-branding efforts – and I’m not just talking about private label lines of merchandise,” he explained. “The ultimate [practitioner] of that is Target, which is taking control of virtually every piece of branding that goes on in their store. And other retailers are starting to follow suit.”
All in all, said Harris, the Retail Commission on Shopper Marketing should help put the practice for retailers on a pathway similar to that blazed by category management.
“It builds on the infrastructure of category management, but it has taken a different path so far,” he said. “There’s no doubt that shopper marketing is the next wave, and we’re putting together a model for it. Like category management, until there is a method, people don’t do it.”
Market Watch
CPGs Facing Sales Opportunity
With ‘Millennial’ Shoppers
By Rose Anthony
One of the largest demographics in the country – dubbed ‘millenials’ – will soon be entering a strong growth period in both income and CPG spending, according to Information Resources, Inc. (IRI) in its latest report: Winning with Millennial Women Shoppers. Millennials are Americans born between1979-1989.
“Future CPG spending growth from Millenials, driven by women shoppers, will be a major source of new sales growth for retailers and manufacturers, who are continuing to compete in a volatile economic environment,” said KK Davey, executive vice president, IRI Consulting & Innovation. “This consumer group is even larger and more diverse than Generation X, and they are on the brink of experiencing a broad range of lifestyle changes, such as first home purchases, marriage, parenthood, career development and larger incomes.”
Millennials will impact the U.S. economy during the next decade in four key ways: overall population, age, where they live and will live, and what they buy and will buy.
“Contrary to popular belief, it is Millennials, not Baby Boomers, who will dominate U.S. domestic migration in the decade ahead,” said Sean Seitzinger, senior vice president, IRI Consulting & Innovation. “In fact, a household led by a person in their 20s is eight times more likely to move to another region of the country than a Boomer in their 60s.”
During the next five-to-eight years, many Millennials are expected to migrate to ‘hot spots’ in the Southeast, Southwest and the Rockies. These moderately-sized cities feature strong opportunities for entry-level jobs, affordable housing, and favorable weather, which are all factors that are highly valued by Millennials, according to Seitzinger.
Category Insights
What are the shopping patterns of today’s 46.8 million U.S. Millennials? When compared
with older shopper groups, Millennial households shop less often, spend more per trip, and
do a greater share of their CPG spending at supercenters and Walmart. Under budget constraints due to the recession, Millennials have pulled back spending in many indulgent
and convenience food categories, including frozen poultry, chewing gum, salty snacks and frozen pizza.
IRI says that Millennial non-food spending is similar to Generation X households. At a category level, hair care, suntan products and household cleaner cloths are among several categories that have potential for strong growth, since consumption in many non-food categories peak for shoppers in their 40s when their household size peaks.
Today, 70% of Millennials agree that store brands are typically of excellent quality, according to the research. Their attitudes and actual purchases of private label brands is roughly on par with older shoppers, which refutes the conventional wisdom that private label acceptance takes a long time to evolve for a given consumer.
IRI maintains that this private label acceptance also illustrates that branded manufacturers are routinely falling short in their efforts to build their brands with Millennials through traditional media, such as TV, radio and print. These traditional approaches are not nearly as influential or as effective for Millennials as it was with previous generations, and manufacturers will need to explore other non-traditional methods to reach this group.
Health and Wellness
IRI research found that compared with women in their 30s and 40s, Millennial women report an even stronger need for retailers to serve as better partners to support healthier diets and lifestyles. Weight-related issues dominate their concerns, with nearly half of Millennial women thinking they may not have a healthy weight.
Millennial women are motivated to “shop for health,” but they believe that finding healthier foods at retail is a challenge. They agree that a variety of healthy food products exist in stores, but think that retailers can still do more in terms of in-store merchandising and messaging designed to navigate shoppers to healthier options.
Across meals-focused categories, Millennials are looking for healthier options in bread, cereal, vegetables and cheese categories. Granola/cereal bars, yogurt and cracker options top the better-for-you snacking category, while indulgences, such as candy, cookies and ice cream, are less of a concern. Less emphasis is placed on finding healthy options in beverages.
Shopper Satisfaction
Compared with other segments, Millennial women spend less time and effort planning their shopping trips and make less use of ad circulars and coupons. IRI also uncovered that
most women are still making impulse purchases and only a small number have a set
grocery budget.
When selecting their primary grocery store, Millennials place high importance on the store's value proposition, location, user-friendly layout and variety. Less importance is placed on checkout service and frequent shopper cards. They are also less concerned with perimeter departments, such as fresh produce and fresh meat, which tend to become more important factors as shoppers age.
New Age of Green Pragmatism
Market research firm GfK Custom Research North America has identified a new “age of green pragmatism,” finding Americans’ attitudes towards environmentalism are shifting away from altruistic motivations towards more practical drivers such as saving money, health, getting value and promoting safety.
While more consumers are reporting that they are making lasting changes in their environmental behavior, new data from GfK Roper Consulting shows 60% of Americans find green products are still too expensive (up six points from 2006). Also, nearly one third (28%) report they are “too busy” to do what it takes to go green.
Heavy C-Store Shoppers
Heavy convenience store shoppers, defined as those visiting c-stores more than eight times per month and spending $10 or more on each visit, are critical to the success of convenience stores regardless of the economy, according to The NPD Group, a leading market research company. Heavy shoppers make up only 8% of all c-store consumers, but they generate 20% of all store visits and account for 40% of the dollars spent.
“There is no doubt that c-stores have been hard hit by consumers holding back on spending,” said David Portalatin, industry analyst for NPD. “Many consumers have significantly changed their shopping patterns by reducing trips, consolidating purchase occasions, deferring purchases, and are looking for deals and discounts.”
Nielsen, Catalina Join Forces
The Nielsen Company, the world’s largest provider of media and consumer information and analytics, and Catalina Marketing Corporation, the global leader in consumer-driven print communications, have formed Nielsen Catalina Ventures. The aim is to create the next generation of precision media solutions and return on investment (ROI) measurement tools to allow consumer packaged goods (CPG) and media companies to more effectively link the marketing exposures consumers see with what products they actually buy.
The 50-50% joint venture will integrate information from Nielsen’s industry-leading TV, Internet and household purchase panels, with purchase data from more than 50 million shoppers from a cross-section of retailers in Catalina Marketing’s network. By directly and anonymously linking consumers’ television and online usage with in-store purchase behavior, Nielsen Catalina Ventures will enable CPG marketers and media companies to understand how well media campaigns are driving actual consumer buying behavior.
