NARMS/IRI Study Seeks
Grasp of In-Store ROI
By James Tenser
Figuring out the return on in-store merchandising and marketing investments has always been a challenge for CPG firms. Some might argue that accurate answers, if obtained, would be painful to confront.
But a major new research study may help usher in a new era of accountability in the realm of in-store implementation. There are major implications for CPGs, retailers, merchandising services organizations, sampling and demo firms, and in-store media networks. The study was conducted for the National Association
for Retail Marketing Services (NARMS) by Information Resources, Inc. (IRI).
“Think of the retail store as a major media outlet,” said Steve Frenda, executive vice president of store solutions for IRI. “By that I mean not just in-store TV, but everything that touches the consumer – signs, demos, electronic media, promotions, frequent-shopper card programs. The rate of acceleration is unbelievable.”
Frenda outlined some major implications of the “The Merchandising Service Organization ROI Research Study” last month in Tucson, Ariz. at the NARMS 12th Annual Spring Conference and Exposition.
IRI researchers focused on gaining a greater understanding of new item introductions; voids and out-of-stocks; shelf performance; and display performance to shed light on their ultimate impact on volume and profitability.
The study analyzed data from 10 large metropolitan markets in the U.S., and tracked merchandising conditions at food, drug and mass merchandise stores across four center store categories – healthy snacks, shelf stable juice drinks, ready to eat cereals, and household cleaners. The researchers looked at national volumetric data across multiple brands and private labels in each study category. Wal-Mart volume was folded in, as well. Finally, data was incorporated from an IRI household panel of 100,000 members.
The work yielded insights about shopper trends and performance of at-retail activities. Among the key findings that Frenda shared in his presentation:
- In two-thirds of CPG categories, 30% or more of volume is sold with merchandising support.
- There is widespread industry frustration around lack of success of new items. Last year 100,000 new UPCs were introduced in food, drug and mass, but only 10 brands achieved $100 million “blockbuster” success.
- Contrasting the high number of new items, 75% of consumer households purchase 10 or fewer new items each year, while another 18% purchase 20 or fewer. Yet, 78% say they “like to try new products” and 68% say “it is difficult to find products I am looking for.”
- Out-of-stocks in the food, drug and mass channels run an average of 5-8%, with the highest-velocity items showing the greatest problems. But items entirely missing from stores due to upstream “voids,” have emerged in the last two years as a more insidious problem, with rates of 5-10% across categories above out-of-stock levels. “This causes planogram deterioration from day one,” said Frenda.
- Households visit an average of five retailers monthly to fulfill their needs. Frenda said the industry should anticipate continued blurring of consumer behavior fragments, which motivates interest in understanding varied trip types. “Instead of one-stop shopping, we’re seeing it go the other way.”
- As retailers continue to emphasize their own labels, the trend of declining display counts will continue. “In the last two years there has been a downturn in display opportunities. As a result you have more people chasing fewer displays.”
High-velocity items and categories require the most merchandising attention to maintain what Frenda called “holding power” at the shelf. Yet the spread between fastest and slowest-moving items seems to be widening.
“Do you know what percent of items in a supermarket sell less than one unit per store per week?” Frenda asked, pausing for emphasis. “Thirty-five percent. So my question to you is: Are we running museums or grocery stores?”
The variation in sales rates for items across stores and within categories poses a significant challenge for category and in-store labor planning. In an example at one retailer, shelf-stable bottled juices had sales ratio of 8:1 between the top-volume store and the lowest-volume store. Within one juice brand in study, stores’ unit sales varied even more, with a ratio of 29:1 comparing the top-selling item to the bottom-selling item.
Frenda observed that hot-selling categories generally lag behind in space needed to sustain sales. “They require supplemental in-store work to maintain their holding power.”
The NARMS/IRI study anticipates that fragmentation of consumer preferences will continue, calling into question the desirability of one-stop shopping as a merchandising imperative. “As an industry we got fooled ten years ago by consolidation. The coming SKU rationalization will hit manufacturers hard,” said Frenda.
Build Brands by Engaging Shoppers
Through ‘Discoverable Media’
By Jack Grant
A sophisticated way to build brands in supermarkets is emerging by engaging the shopper with “Discoverable Media.” Delivering brand messages through various digital applications also helps to differentiate the retailer in a competitive marketplace.
That was the bottom line of a talk delivered by Frank Beurskens, CEO of ShoptoCook, recently in Las Vegas at the Content Strategies & Awards Summit. The Buffalo, N.Y.-based firm is a leading developer of Interactive Digital Customer Service solutions.
Discoverable Media is a term coined by Beurskens to describe interactive in-store media that enable shoppers to learn about meal solutions and other product-related how-to information, and obtain relevant promotional incentives. Interactions take place through fixed kiosk-type devices or mobile digital devices mounted on the handles of shopping carts. A potential option is to channel discovery interactions over advanced mobile phones.
The problems facing manufacturers and retailers today are driving demand for Discoverable Media, according to Beurskens. For the former, the key challenge is media fragmentation that increases the cost and complexity of delivering brand messages. For the latter, problems include channel blurring, big box proliferation, and trade dollar accountability.
“Digital interactive technology is changing the way we shop, work and live,” he said. “The days where marketers ‘shout’ at consumers by persuading their purchase decisions through ‘push’ strategies is giving way to productive ‘pull’ strategies where the consumer seeks out a desired brand regardless of price.”
ShoptoCook’s Answers software includes Meal Planning, Wine Pairing, Item Locator, Price Check, and Health & Wellness. Its basic Answers Center gives shoppers a unique opportunity to discover new and exciting solutions to their shopping dilemmas. They can print their favorite recipes, accompaniment ideas, and coupons. The Answers Center is typically located near the supermarket’s meat, seafood, produce, wine and cheese departments.
“We offer branded manufacturers a media channel that places their message where most meal planning takes place – in the perishable aisle,” said Beurskens. “We use kiosks as a vehicle to promote branded ingredients in the context of a meal solution for a shopper.”
ShoptoCook is installed in over 200 AholdUSA divisions of Giant and Martin stores located throughout New York and Pennsylvania. The company also provides the in-store interactive solutions technology in all Bloom stores operated by Food Lion/Delhaize Group.
More sophisticated features of the Answers Center include:
- Recipes on the Web allows integration with a retailer’s web site.
- Private Branding allows retailers to customize the interface by store location, seasonality, and promotional events with retailer–specific logos and graphics.
“We’re continually trying to provide information and resources for supermarkets to offer expert advice in everything from all the products they sell in the perishable department, to every bottle of wine they have interest in, to every item related to health and wellness,” said Beurskens. “All of it is geared to one goal: If you want to build loyalty, help solve the shopper’s problems. Loyalty is about problem solving; it’s not just about selling.”
For example, an average 200-store retail chain prints 1.5 million recipes annually from ShoptoCook’s Answers Center. An average shopper views 40 recipes photos and two recipes in detail for every recipe printed. Furthermore, the average shopper spends 1.5 minutes per visit at the center, reflecting a high degree of engagement.
APRIL 2007
Unilever and Ahold Prove
That Collaboration Works
By James Tenser
An innovative multi-brand, multi-category promotion program yielded strong incremental sales for Unilever and larger market baskets for Ahold USA shoppers. More importantly, the collaborative process may have wrought lasting changes in the way the two companies pursue future in-store programs.
“It was one of our most successful events ever,” said Amanda Kelly, Unilever Global Director Customer Marketing. “We saw the largest Unilever sales spike in two years for participating UPCs, but without a following dip.”
Stephen Vowles, Senior Vice President of Marketing at Ahold chain’s, Stop & Shop, said, “The concept was to try to get to integrated collaborative marketing on our side and on Unilever’s side. Then bring together both organizations to surround the customer and deliver. It was kind of a tall order.”
The two described the May 2006 program in a presentation in Las Vegas at a recent conference sponsored by Information Resources, Inc. (IRI).
Kelly said analytics from IRI showed that shoppers who bought one or more Unilever brands spend more per basket in Ahold stores. Unilever brand buyers had an average $78.35 basket size, versus a $31.47 average basket size overall. This was even more pronounced for Ahold’s target behavior segments: “Discerning Diners” ($80.26); “Good Lifers” ($103.62); and “Quick Fixers” ($108.08). “We set a shared goal to win with these key customer segments through collaboration,” she said.
For Ahold’s Stop & Shop and Giant stores, the objective was to drive more stock-up trips and bigger baskets. This was important because they had been losing some sales to supercenters and clubs, according to Vowles. The situation was despite a customer base of 10 million households and number one positions in key markets in the Northeast, with 600 stores.
Kelly added that Unilever’s shopping mission analyses of stock-up trips showed many customers were shopping by habit on the perimeter of the stores. “Unilever’s objectives were to convert customers to our brands in center store categories.”
Unilever has a strong portfolio of 27 brands in six departments.
Both companies leveraged strong national and local CPG
marketing vehicles.
“We thought it matched up pretty well,” said Kelley. ”We wanted to use a lot of our retail marketing funds to drive sales.”
Aligning multiple brands and store categories was an organizational challenge that required Kelly and Vowles to act as charismatic champions who could bring marketing and sales people together behind the larger goal. They articulated three principles for collaboration:
1) Identify where our needs align with customers
2) We both invest to execute
3) We collaboratively measure and improve.
Structure of the promotion was innovative. It focused on in-ad stock-up items across Unilever categories (Georgia-Pacific partnered also, with several non-competing items). Consumers who spent $15 or more on participating products received $5.00 off the bill on their next shopping trip. The discount was delivered using the Stop & Shop frequent shopper card.
Unilever developed several customized national and targeted promotion vehicles – including ads in Real Simple magazine and inserts. Stop & Shop and Giant promoted the event in its weekly circulars, direct mail to card holders, and in-store. The retailers also distributed in-store “shopping list” flyers that reiterated the offer and identified participating products. Signs and in-aisle “violators” were used to draw attention to participating products.
An unusual feature of the event was the use of five multi-item end-cap displays that featured products grouped by theme. A “laundry room” display, for example, included detergent, stain remover, and paper products. Other themes included “grilling,” “pantry,” “home” and “beauty.” Color-coded end-cap signs signaled them to shoppers, and reinforced the notion to spend $15 to get a $5 deal.
The outcome was outstanding, according to Kelly. “We achieved 7% household penetration during the promotion week of shoppers who reached the $15 threshold. It was the largest Unilever sales spike in two years for participating UPCs, but without a following dip.”
She added, “Fewer people bought only one category; more bought two or more categories.” “Shoppers who bought one category went from 81.1% to 69.4%, while those who bought 2 or more categories went from 18.9% to 30.6%.”
A post-event survey showed two of three (67%) shoppers felt more positively about Stop & Shop and Giant. “We very successfully converted customers into more categories on stock-up trips. These were real incremental sales, not just brand switchers,” said Vowles.
The two executives said the results are evidence that their companies can continue to collaborate successfully to drive sales in the store.
“It all was built on good will,” said Kelley. “It was hold hands and jump. Do it on trust. Once it works one time, then it becomes easier.”
Move Marketing Dollars In-Store
To Fight Childhood Obesity: Study
By Jack Grant
Makers of food and beverage products should move their marketing dollars in-store to promote health and wellness and fight childhood obesity, urges a new study.
“The obvious approach of joint promotions seem less appealing to retailers than other practices. Programs aimed at retailers will have better success addressing activity promotions and enhancing retailers’ in-store tours,” states Nancy Childs, Ph.D., professor of food marketing, St. Joseph’s University, Philadelphia.
She is he author of “Marketing Activities Addressing Childhood Obesity in the Food Retail Sector.” A preliminary research summary was released last month at the first annual Food Industry Summit sponsored by the university.
According to the study, the public policy environment for food marketing to children will encourage manufacturers to move their marketing expenditures in-store. Manufacturers can gain insight for working with retailers by examining their preferences in approaching the health and wellness issue.
“(Retailers) are interested in partners that bring promotional entertainment into their stores,” writes Childs. “There are a wide range of practices and activities the retailer can consider for store differentiation while advancing health and wellness.”
These activities include education clinics for kids, cooking classes for health, in-store child activity areas, and in-store kid BMI checks.
According to the study, retailers are thankful for help with health messages, especially those promoting the need to balance calories and physical activity. This works well with their activity-based
in-store events which generate fun and excitement through brand mascots and well-known children’s characters with a healthy message.
“Branded manufacturers will need to be proactive in controlling how their in-store marketing dollars are directed,” warns Childs. “Programs addressing the retailer’s preferred interests will be well received and allow positive brand exposure with consumers It should also neutralize negative publicity surrounding food marketing to children and promote better messaging and education for healthier food choices to families.”
Trading partners need to consider their optimum alternatives in promoting healthier foods to children, according to the study. It leads to responsible marketing practices for health food products and health behaviors in a self-regulated environment. Leveraging retailer interests in health and wellness should “unleash a triple opportunity for brands, retailers, and consumers.”
