New Technology, Store Formats
To Shake Up CPG Marketing
By Lynne Cooke
With all eyes on the economic recession, it’s easy to underestimate the major trends currently reshaping the consumer packaged goods (CPG) industry. According to The Nielsen Company’s Retail 2015 Forecast, revealed at its recent Consumer 360 Conference in Las Vegas, the pace of change is only accelerating as technology, marketing trends and retail formats converge to redefine how CPG retailers and manufacturers interact with consumers.
By 2015, Nielsen predicts mass supercenters and e-commerce to be the big winners by dollar share gains, growing by a combined five share points between 2009 and 2015. Warehouse club, dollar store and pet stores will also grow share positions. Nielsen forecasts that supermarkets will continue to lose share, but at a declining rate. While both high-end and low-end niche grocers will grow share, overall share positions will remain fairly low given lower per-store sales compared to larger formats. Other key CPG channels, including drug stores, mass merchandisers and convenience stores, will grow dollar sales but will suffer share losses.
“While e-commerce sales felt the recessionary pain in 2008 and 2009, Q4 2009 sales were solid and interest from both CPG manufacturers and retailers to provide online buying options has never been stronger,” said Todd Hale, senior vice president, Consumer & Shopper Insights, The Nielsen Company. “With tech-savvy Generation X and Millennials growing in importance in both numbers and spending power, the time is ripe for the next step in the evolution of online searching and buying.”
Hale also suggests that while supercenter expansion may be slowing down from recent years, past performance would suggest there is still room for growth.
Nielsen expects to see further CPG retail consolidation as retailers look for scale and opportunities to expand their footprint into existing and new areas. Retail consolidation will be most active within the supermarket and convenience channels in the race for scale.
“Today’s big players will only grow bigger,” said Hale. “Industry change will grow faster and more intense in the next five years, requiring advanced, future-focused change management skills among CPG professionals.”
Smart Phone Impact
One of the biggest CPG shifts Nielsen sees by 2015 is already underway: the use of smart phones to engage consumers and help them make better shopping choices. According to Nielsen, smart phone penetration stands at 23% of all mobile subscribers and is expected to overtake feature phones in the U.S. by the end of 2011. Nielsen predicts that by 2015, smart phones will be the primary enabler of consumer shopping engagements and new technology innovations will generate additional opportunities for retailers and manufacturers.
“Without question, the smart phone has revolutionized how consumers leverage technology to simplify their lives and make better, informed shopping decisions,” said Hale. “At the same time, CPG manufacturers and retailers have developed online and social marketing and brand/banner-specific apps to increase consumer loyalty, build sales and create a competitive advantage. This trend will undoubtedly continue and bring about game-changing innovations to our retail world.”
Personalized Shopping
Driving the rapid adoption of smart phones is the seemingly endless variety of apps, which take full advantage of the smart phone’s geographic location and interactive capabilities. Retailers are already using smart phones as a replacement for frequent shopper cards, sending store coupons and deals directly to a shopper’s phone. Nielsen expects CPG companies to further leverage the smart phone’s location tracking abilities to target communications and promotions to shoppers both in and out of stores, and up-sell consumers on other items based on prior purchases. In addition, consumers will have the ability to locate the best available price for a given item, access real-time product reviews and promotions and manage everything from household budgets and pantry inventory to tax preparation and filing.
“When technology enables consumers to quickly locate the best price in their area, retailers will be forced to compete and differentiate themselves through factors other than price,” said Hale. “We’re at the beginning of a whole new world when it comes to consumer online and social marketing, and companies need to be developing and updating their digital and social media strategies now to remain competitive.”
Future Planning
According to Nielsen, CPG retailers and manufacturers should focus on the following initiatives now to position their businesses for future success:
- Develop or buy online/digital/social marketing expertise. If you don’t have this expertise today, get it.
- Plan for diminishing returns from traditional media. Newspaper feature ads and free standing insert (paper-based) coupons dominate today, but for how long?
- Nurture your retailer/supplier relationships. Have contingency plans dealing with consolidation impact.
- Format planning. Consumers today are flexible – completely mobile – which means we need to get more flexible about how and where we sell our products. Study emerging economies to understand flexible markets. Think about future format planning for your next one to three generations of formats.
- Demand forecasting by category and consumer segment. Understand how changes in demand at the category and consumer level will provide risks or opportunities.
- Expand via regional or global opportunities. With slowing domestic population growth impacting sales growth, seek opportunities outside traditional geographies to reach more households.
- Make future management a company strength. Given the pace of change that we will experience over the next five years, future management needs to be a core competency or the chances of your stores or brands being a part of the future will be in serious jeopardy.
- Understand the new faces of opportunity. With an increasingly aging and ethnic population, you can’t afford to ignore generational and multi-cultural consumers. It is critical for CPG companies to adapt in order to gain the attention and brand/shopper loyalty of diverse generations and multi-cultural families of the future.
“Gone are the days when online marketing was led solely by the dot-coms of the world,” said Hale. “Today, many CPG companies have embraced online and social marketing and are pushing the envelope further each day. In the midst of considerable consolidation and change, the future will be owned by those companies that harness technology to the make the consumer shopping experience easy, efficient and fun.”
Shopper Insights Event
Two of the industry’s most-watched technologies – virtual shopping and video analysis of shopper behavior – will take center stage at the annual Shopper Insights in Action conference July 11-14 in Chicago.
Alex Sodek, Senior Vice President at Decision Insight will present with Russ Onish, Director of Category Management and Shopper Insights at Dreyer’s Grand Ice Cream/Nestle USA. Using virtual shopping research, the company determined the best merchandising strategy for its single-serve ice cream cups.
Kelly Dillon David, director of research for Food Lion, will speak with Dr. Rajeev Sharma, founder and CEO of VideoMining Corporation and Priya Baboo, executive vice president of Shopper Insights and Strategy for VideoMining. They will explain how continuous innovation at retail is made possible by using video analysis of shopper behavior in a real-world learning lab.
New P&G Website
Procter & Gamble has a new website that aims to give men advice on parenting, cooking and cleaning. ManoftheHouse.com is designed to offer “the kind of advice on child-rearing, cleaning and cooking more often found in women's magazines.”
The site will also market P&G products to the male audience. The thinking behind the site: more men are doing household chores because of the recession.
JUNE 2010
Five Convenience Store Chains Join
National Study of Shopping Behavior
By Lynne Cooke
A national study of shopping behavior in convenience stores has been launched by VideoMining Corporation, the leading provider of in-store intelligence for consumer product manufacturers and retailers.
The program, called C-Store Shopper Insights (CSI-2, will be conducted in cooperation with
five leading convenience store retailers: 7-Eleven, AM/PM, Circle K, Sheetz and Cumberland Farms.
The goal of the landmark national study is to develop an in-depth understanding of the shopping process in convenience stores and to uncover innovative opportunities to improve performance. The research will help consumer product manufacturers and retailers evolve their marketing and merchandising programs to match the needs of C-store shoppers.
The syndicated program will rely on VideoMining’s breakthrough in-store measurement and analytics technology to quantitatively analyze several million convenience shopping trips in 60 stores across 11 major U.S. markets. This comprehensive program follows a successful convenience store study conducted nationwide by VideoMining in 2008.
“We are delighted to partner with some of most innovate convenience retailers and manufacturers,” said David Haubert, who recently left Safeway to become Vice President of Business Development at VideoMining. “It demonstrates the strong interest in the industry for understanding and improving the retail shopping experience.”
Dr. Rajeev Sharma, Founder & CEO of VideoMining, said, “The C-store channel offers strong opportunities for growth for consumer product manufacturers. This program has been designed to help realize this growth potential by improving the connection with convenience shoppers through a deeper understanding of their needs.”
Besides offering an extensive list of “deep dive” syndicated reports for all product categories, the program will offer an opportunity for ongoing custom testing, research and trend analysis in cooperation with the participating retailers.
Shopper Insights in Action
Leading-edge manufacturers and retailers will be on the agenda of Shopper Insights in Action, July 11-14 at the Marriott Downtown in Chicago.
The event is “where brands, retailers, and their partners analyze the changing shopper mindset, translate insights into opportunities and explore emerging trends influencing the retail world,” according to a spokesperson for the Institute for International Research (IIR), which will host the gathering.
The agenda will include the following speakes:
- Lori Aulfinger, Consumer & Market Knowledge Director – North America Retailer Pillar Leader, The Procter & Gamble Company
- Michael Twitty, Director of Shopper Insights, Unilever Americas
- Mike Boylson, Executive Vice President & Chief Marketing Officer, JC Penny
- Geoff Sherman, Director of Pricing, Promotion & Trade Fund Management, Walgreens
- Aaron Arter, Marketing Merchandise Manager, Home Depot
- Roger White, Director of Marketing, Associated Food Stores
- Liz Mohr with ConAgra Foods
- Kelly Dillon Davis with Food Lion
- Thomas Ewing with T.Marzetti Company.
Kraft Tests and Learns at FMI
At the FMI show in Las Vegas recently, Kraft Foods joined Applied Predictive Technologies (APT) in highlighting opportunities for consumer goods companies and retailers to partner to improve returns from in-market testing. The companies worked together to share insights on how leading retailers can profitably improve shelf layouts, merchandising, marketing and servicing strategies base on tests led by the manufacturer’s In-market Testing for Growth (IMTG) group.
Under its “First to the Table” theme, Kraft Foods showcased an innovative product assortment at this year’s exhibition, highlighting the role that collaboration with retailers and in market tests played in identifying opportunities to better serve customers. Presenting jointly as part of Kraft Food’s “Collaboration,” theme, APT and the In Market Testing for Growth (IMTG) group discussed best practice methods to deploy and measure in-market testing initiatives and Kraft Food’s ability to collaborate with interested partners across the Food Retailing spectrum on a wide range of potential programs and product opportunities.
Award for P&G’s Lafley
A.G. Lafley, the retired Chairman of the Board, President and CEO of The Procter & Gamble Company, has been selected to receive the 2010 Hall of Achievement Award from the Grocery Manufacturers Association (GMA).
”The Hall of Achievement Award was established to recognize those individuals who have demonstrated life-long commitment to, and achievement within, the consumer packaged goods industry,” said GMA President and CEO Pamela G. Bailey. “If anyone is deserving of such an honor, it is A.G. Lafley. His contributions to our industry and the American business community at large are great and many. We look forward to presenting him with this award, GMA’s highest honor, at the Executive Conference in August.” (Aug. 28-31 at The Broadmoor in Colorado Springs, Colo.).
More Optimization Services
Shopper insights, allowance billing and price optimization capabilities are among the many enhancements delivered to the software-as-a-service suite from DemandTec, a leading provider of on-demand optimization services for retailers and consumer products companies.
This latest quarterly software update extends the firm’s nextGEN capabilities. It delivers new applications and major feature enhancements enabling companies to better collaborate and make more informed business decisions around pricing, promotion and shopper analytics.
