NOVEMBER 2008

IN-STORE MARKETING

Industry Support Widens for Merchandising Execution

Schnucks, Brookshire's Introduce
Meal Planning/Recipe Centers

Nestle, Honest Tea Stage Unique
Sampling Events to Boost Brands

Wal-Mart Rolls Out Smart Network TV System

Sections
Departments
Industry Support Widens for
Merchandising Execution

By James Tenser

When asked how he felt about his new team’s execution after an embarrassing football loss, Tampa Bay Buccaneers’ coach John McKay famously declared, “I’m in favor of it.”

That sentiment is often shared by CPG category and promotion managers, who invest great effort in planning schematics and promotional programs only to see their efforts fail to meet their full potential at retail due to inconsistent store-level execution and compliance.

“Everyone wants to know that what they are paying for is being done and worthwhile. All participants need to know and be accountable,” said Dan Borshke, president & CEO of NARMS International, the association of retail merchandising services companies.

While these sentiments have long existed, they were brought into sharper focus in April of this year, when the In-Store Implementation (ISI) Sharegroup published its working paper “In-Store Implementation: Current Status and Future Solutions.” Its release – and the multi-billion dollar opportunity it defined – earned significant media attention in the trade and helped spark a wider dialog around the search for practical ISI solutions.

In the ensuing months the paper has been downloaded more
than 500 times [http://instoreimplementation.com] and the Sharegroup has received numerous offers of cooperation from
across the industry.

The core findings were not controversial, as underscored by results of a CPGmatters.com Instant Poll conducted in October. Readers were asked, “With the millions of dollars that are spent on in-store marketing, merchandising, advertising and promotion, what value do you place on retail execution of your programs?” Nearly half of respondents (44%) rated that value as “Very High – We expect 100% execution,” while more than a third (36%) gave execution a “High” rating, with an expectation of 90% execution effectiveness.

“Improving store level execution is the biggest single opportunity we have in the industry,” said one respondent in the comments section of the poll. Several other survey comments reflected on the contradiction between high importance and high performance expectations. “While we value execution at 100%, we know that seldom, if ever, happens,” said another respondent.

“Implementation is of crucial importance,” added another, “but even 90% compliance rates are unreachable without new, superior implementation tools.”

Now the dialog surrounding In-Store Implementation and store-level compliance has shifted from justification to action. “The industry realizes that manufacturers and retailers have to collaborate in a real sense on this,” said Joe Nassour, CEO of Retail Tactics, one of the founding member companies in the ISI Sharegroup. “We now understand it goes way beyond data sharing to collaborative processes using common tools.”

Sharegroup members have turned their attentions to the identification of case studies and practices that may be published for the industry’s benefit. They have identified ISI solution opportunities in four main areas:
  • Promotion Compliance Solutions
  • Collaborative Space Planning Solutions
  • Merchandising Labor Management Solutions
  • Communications Platforms

Promotion compliance is one area where performance too frequently comes in well below the desired standard identified in the above-cited poll responses.

“One in-store coupon distribution program we audited could confirm only 75% compliance,” said Gerry Marrone, senior vice president of  brand and agency development at ICC Decision Services, a provider of retail audit and mystery shop programs. Data from ISI Sharegroup member companies cited in the Working Paper indicate that display promotions average about a 50% compliance rate in supermarkets.

In another nationwide in-store demo audit ICC conducted last summer, Marrone reports that the no-show rate for demonstrators was so high that fewer than 70% of stores actually ran the program. Perhaps worse yet, “Nearly 40%” of the reps who did show were not prepared to discuss the features and benefits of the product.

He cites this as a strong rationale favoring use of performance audits by brand marketers: “They need to know, is it there or not there? Then, what is the experience that the shopper gets?”

Store labor management solutions have also been regarded as an area of low-hanging fruit by many in the industry, according to Paula Rosenblum, managing partner, Retail Systems Research, who authored a report on Retail Execution Management in April 2008. “What apparently is a labor problem is also a matter that the right plans are there.”

This can apply to both routine merchandising tasks and promotions, she added. “In a retail chain, there is a dichotomy between the home office and store. More often than not, stores are being asked to put 10 pounds of potatoes into a five-pound sack.”

Rosenblum agreed that the focus must be on identifying tools and practices that can support improved performance on merchandising tasks. She suggests this may lead to better compliance rates, but also to better editing of plans – attempting fewer tasks that have no chance of ever being implemented.

“You have to take the physics of the very small – the individual shelf or display – and the physics of very large – the economies of scale of large retailer – and bring them together. You can’t do that by hand,” she said.

Nassour of Retail Tactics concurred. “Report and email-based methods won’t be sufficient. We envision a publish-subscribe methodology, that manages formatted and unformatted data on a shared communications platform,” he said.

A successful reset management program at Supervalu, known internally as OLRS, for “on-line reporting system,” has quietly put this premise to the test for nearly two years. Some 2,500 users and 40 reset providers (merchandising services organizations, brokers and others) access the system on a daily basis through a Web-based application. The interface permits benchmarking of compliance rates, hours-to-complete, and other performance measures.

For merchandising services firms, the In-Store Implementation initiatives and availability of new and emerging technologies and practices promise to help lift in-store labor from its former commodity status. When hourly labor rates may be examined alongside compliance rates and other performance metrics, CPG companies will be better able to choose among resources. When reliable audit trails and accountability are added to the mix, reset providers will compete on quality as well as price.

“We believe demonstrating compliance will lead to better results and more contracts,” summed up Borshke of NARMS.

Editor’s Note: James Tenser was principal author of the ISI paper.


Market Watch
Schnucks, Brookshire’s Introduce
Meal Planning/Recipe Centers

By Rose Anthony

Shoppers in two regional grocery chains have an easier time figuring out what’s for dinner nowadays. That’s because they have access to an in-store kiosk that provides meal planning suggestions and recipes, while providing a marketing platform for participating brands.    
Schnuck Markets has rolled out the ShoptoCook Recipe Solutions Center to 27 stores, while Brookshire Grocery Company has done so in ten stores. The installations follow a successful pilot in one of the chains’ flagship supermarkets last year.

“Leading retailers around the country recognize the strategic importance that interactive recipe solutions play in increasing category sales. Shoppers are searching for new ideas to break out of their recipe routine. New ideas encourage another meal prepared at home and lead to increased loyalty and incremental sales,” said Frank Beurskens, CEO of ShoptoCook in Buffalo, N.Y.

ShoptoCook Recipe Centers provide consumers with a unique opportunity to discover new and exciting solutions to their
recurring shopping dilemma: “What’s for dinner?”   ShoptoCook’s solution engages shoppers at the most influential point in their buying process.

Each Schnucks store features three kiosks, positioned in the meat, perishable, and wine departments. The retailer had plans to roll out the kiosk to additional supermarkets starting last month {October}, according to Larry Maggio, director of marketing services of the St. Louis-based chain of 103 supermarkets.

“Our shoppers appreciate the recipe center because it makes their job a little easier,” said Maggio. “People have less free time because they are busy taking kids to soccer practice or piano lessons. They really appreciate the recipe ideas and the suggested wine pairings.” 

The wine parings recommended in the ShoptoCook Recipe Center will be selected by Chris Wong, beverage category manager at Schnucks, who has been certified as a wine specialist by the Society of Wine Educators.  Wong will pick the pairings from Schnucks’ vast selection of local, national and international wines.

The chain has a popular demo program called Schnucks Cooks
in 17 of its supermarkets.  A chef prepares hot meals every day of
the week at a work station and gives samples to shoppers along
with a free recipe card. All of the ingredients to prepare the meal
are available for sale at the work station. These recipes are also
included in the ShoptoCook Recipe Center which is branded as Schnucks Cooks. 

“It allows us to serve our customers better. That’s the bottom line,” said Maggio. “We’re in business to serve our customers and the recipe center allows us to pass along our food expertise to them on a daily basis.” 

Brookshire’s has positioned one kiosk in the Meat Department of each store in Texas and Louisiana. Gary Butler, CIO of the Tyler, Texas-based chain of 156 stores, is impressed with the overall interaction that shoppers have had with the kiosks. ShoptoCook data logs show that over 6,000 shoppers have used the kiosks in the first month of operation in all ten stores.

“We see customer printing out recipes and we’re translating that to products being sold in the store. Chances are that when they print out a recipe, they don’t have all of the ingredients,” he said.  

The ShoptoCook Recipe Center is typically located along the perishable perimeter in the supermarket’s meat, seafood, produce, wine and cheese departments where meal-planning takes place. The kiosks provide printed recipes, accompaniment ideas, information and recipes on a variety of health & wellness conditions such as diabetes and glutten free foods, as well as, information on the preparation and storage of all fruits and vegetables.  The kiosks in Brookshire’s also feature a button showcasing their own “Brookshire’s Best” recipes.

Shoppers often hesitate to cook unfamiliar – and often more expensive – cuts of meat simply because they are not sure how to prepare them. ShoptoCook’s Answers™ interactive solutions provide shoppers with thousands of ideas and detailed product information for every item sold in the fresh department. Printed recipes include preparation instructions and shopping list, providing all the confidence needed to try a new item, or prepare a familiar item in new ways.

Butler said the chain conducts special training for store associates so they can easily answer shopper questions and provide shopper demonstrations of the kiosks.  If all goes well, he said there will be more installations in his other stores. 

ShoptoCook solutions are installed in progressive supermarkets across the country including Schnucks, Spartan, Bloom, Nash Finch, Giant Carlisle, Tops Friendly Markets, Spartan, Harris Teeter, and numerous independents.

Record Number of Signs
Insignia Systems has printed and distributed its twenty-eight millionth sign for its at-shelf program. The sign, with a Surround Advantage Header, features Hungry Jack Original Syrup and
was recently displayed in an American Seaway Sparkle store
in Cleveland.

Insignia’s Point-of-Purchase Services (POPS) division in Minneapolis provides the Insignia POPSign program that aims to deliver sales lift, while building brand and store equity. POPSigns enable CPG manufacturers to deliver product-specific messages quickly and accurately in designs and formats that have been pre-approved and supported by participating retailers.

Ads Boost Shopping Carts
Five CPG marketers – Unilever, Church & Dwight Co., Cadbury Adams, Bush’s Baked Beans and American Greetings – have agreed to advertise their brands on electronic shopping carts from Cabco Group. Thomson’s Premier Retail Networks (PRN), a premier provider of digital media solutions at retail, is to selling advertising for Cabco’s TV Kart, which incorporates interactive display screens into digital shopping carts designed to entertain young children.

PRN is currently developing a range of applications that will integrate Cabco’s display screen technology and PRN’s platform in order to facilitate better coordination of content, advertising, interactivity and measurement. PRN enables retailers and manufacturers to reach consumers in over 6,500 leading retail stores worldwide in creating in-store programming that engages, informs and motivates consumers where they shop.

Interactive Shopping Guide
A new in-store marketing program from Aisle7 (formerly Healthnotes®), features interactive shopping guides and tools designed to help retailers engage consumers on wellness, sustainability and saving money. The program offers a new architecture that enables retailers to create unique wellness campaigns that match their own marketing calendars and allow them to deliver relevant shopping ideas and targeted messages in high-margin departments throughout the store. 

“Shopper marketing is the fastest growing segment of retailers’ marketing budgets and grocers are in need of flexible, customizable, storewide programs that can amplify their marketing messages and brand. Our solutions help retailers capitalize on this growing trend by inspiring new ideas and driving incremental sales,” said Jeffrey Beyer CEO of the Portland, Ore.-based provider of wellness-driven shopper marketing programs for food and drug retail.

Digital Signage with Proximity Ads
A new system from DT Research extends current interactive digital signage capabilities from touch screens to events that occur in close proximity. The WebDT Event Trigger Digital Signage System detects when a customer picks up a product, walks up to a product display or enters into a demo zone. This motion triggers a multimedia advertisement or product information to begin playing on a nearby digital sign.

The system aims to give shoppers pertinent information immediately about a product that they are interested in without having to find a sales person, wait in line or leave the store to conduct research online. Retailers are able to provide timely, high-quality customer service without adding sales staff. Ultimately, the system is designed to speed up sales processes by giving shoppers accurate and up-to-date information about products they are considering buying – at the point-of-purchase.


OCTOBER 2008

Nestle, Honest Tea Stage Unique Sampling Events to Boost Brands

By Dale Buss

Honest Tea got huge spikes in sales in ten East Coast markets during a major summer program that involved giving away expensive bicycles as well as samples of the Coca-Cola Co. affiliate’s organic teas. Key to the effort was that Honest Tea personnel conducted the in-store promotion.

“You create a more authentic experience when reaching out to the consumer with in-house teams,” said Jesse Merrill, director of marketing for Bethesda, Md.-based Honest Tea, which is 40-percent-owned by Coke. “The samplers have an attachment to the brand and are more invested in it, so it creates an authentic experience when they’re reaching out to customers.”

But in addition to internal staff handing the sampling, there are two other ways to get the job done: one, use third-party outfits that bring strong attributes to the table, and two, rely on the retailers’ personnel. So which way is best?

Major players in the CPG-promotion business note that it’s usually small or regional companies that handle sampling entirely on their own. By contracting programs to sampling specialists, brands not only get the necessary scale, but also cutting-edge expertise, techniques and training.

“The sample business is really controlled at retail. They decide who and when brands will be allowed in stores and what coupons they’ll accept from manufacturers,” said Mike Kent, CEO of PromoWorks in Schaumburg, Ill. “So with us, we’ve defined the playing field and we can work for manufacturer clients as well as for retailers on an account-specific basis.”

The third model for cutting-edge sampling programs is to put it in the retailer’s hands to optimize the experience for consumers. That’s the case, for example, with Nestle Co.’s new “inner-beauty” beverage, Glowelle, which so far is being sold only in the cosmetics departments of Neiman Marcus and Bergdorf Goodman stores. Counter clerks provide consumers with product education, and waiters and waitresses from the store restaurant deliver the samples.

While Honest Tea is a national brand that Coca-Cola acquired a stake in earlier this year, the firm focused its highly successful sampling program last summer in ten markets in New York and
New Jersey.

For consumers, the centerpiece of the event was an opportunity to win a bicycle by Jamis, a top-notch brand with a strong reputation among the upscale, young clientele that Honest Tea targets. For the health-chain and mainstream supermarket retailers, the campaign – featuring samples of various Honest Tea flavors poured into three-ounce cups – notched up sales.

“With the display, we had huge spikes,” Merrill said. “Couple that with the sampling effort, and we significantly impacted case sales.”

For the brand, benefits go beyond the immediate sales surge, and a big part of the reason is that Honest Tea’s own marketing teams are hawking the stuff.

“It’s a genuine experience,” Merrill said. “People are drawn to our samplers and believe what they’re hearing because it’s an authentic message and creates a situation that is memorable. Consumers walk away becoming loyal fans.”

But Kent of PromoWorks maintained that only large, vertically-integrated sampling and demonstration companies like his can guarantee both brands and retailers of the thoroughly professional, consistent and effective results that are required of a large-scale campaign. PromoWorks handles sampling for  about 400 CPG companies and many retailers.

One reason that consistency is important, Kent noted, is that most consumers assume “the product demonstrator is working for the retailer. And retailers are looking for quality consumer engagement from any sampling program in their aisles. They’re focusing on the quality of the experience in their stores.”

Executing sampling programs to satisfy retailers begins, he said, with qualified personnel who are adequately trained in everything from food safety to field supervisors who are on-site and on top of campaigns. “You can’t manage a sales force of 36,000 demonstrators out in the field over the Internet,” Kent said.

And the only way to ensure that sampling efforts actually succeed in the field, he said, is to appropriately define the field. PromoWorks uses Nielsen demographic data to target the right stores, in the right cities and neighborhoods, with the right resources.

“One store even in the same city may get five cases and another gets 20 cases, depending on what our homework tells us,” Kent said. “You’re not just putting together 5,000 stores and handing out 300 samples per store. You have to know where the greatest opportunity for return on investment is.”

But even all those advantages don’t “close the deal” with shoppers in terms of actually getting them to sample a product when they’re cruising supermarket aisles. The key, Kent said, is to assume that any shopper who takes a sample is willing to allow some level of engagement by the sampler.

“It comes back to human nature,” he said. “People realize that nothing in the world is really free; there’s always a price. The price of taking a free sample is that you’re electing to engage in the process” and allow the demonstrator to talk up the product a bit. “Even if people actually don’t engage,” he added, “there’s still value there in that they may have taken a coupon. Though the majority of people don’t redeem them, they’ve still engaged in the process.”

With Glowelle, Nestle and Neiman Marcus have invested heavily in getting upscale shoppers engaged in checking out the new product line that represents the most ambitious mainstream attempt so far at marketing inner beauty. And they determined that the only way to pull of this fall’s launch of the product was to carefully control how shoppers first experienced it.

The product concept, of course, is that the foods and beverages that individuals consume can be optimized nutritionally and functionally to create very specific and direct effects on  the appearance and condition of their skin as well as general well-being. So Glowelle is billed as a “beauty-drink dietary supplement” and retails for $7 per ready-to-drink bottle or $3.70 for each stick of a mix that turns a bottle of water into Glowelle.

To get shoppers at Glowelle’s exclusive distributor – the 40 Neiman Marcus department stores around the U.S. and its sibling Bergdorf Goodman stores in the Northeast – to pay attention, Nestle and the upscale chain came up with a unique strategy: deploy existing personnel to do it.

The folks who cater to cosmetics shoppers, after all, already are used to explaining various products to them; so Nestle has trained 1,000 of them about Glowelle, set up an 800 phone number that beauty associates can call with questions; and ensured them a free supply of Glowelle.

Similarly, the idea of sampling is hardly foreign to beauty-products buyers – they often rub some foundation on a cheek, or spritz some perfume on a wrist. But the notion of getting them to take and consume a beverage sample on the department-store floor could
be a bit incongruous to them, especially if the samples came in paper cups.

Neiman Marcus and Nestle came up with a solution: deploy waiters and waitresses from the chain’s on-site Mariposa restaurants to create the proper aura and moment of delivery for Glowelle. So they circulate among the clientele with champagne glasses filled with Glowelle while sales associates chat about the product.

“It helps that the product is either dark purple or dark reddish [depending on the flavor], so it’s very beautiful as servers walk it around the store,” said Kimberly Cooper, chief beauty officer for Glowelle. “It’s an experience we’re trying to create: a luxurious experience, versus someone just trying to get the sample into your mouth. Our purpose is to make you feel connected to the brand – and to Neiman Marcus.”


Market Watch
Wal-Mart Rolls Out
Smart Network TV System

By Rose Anthony

Wal-Mart has rolled out what it calls the first shopper-intelligent network at retail. Dubbed the Smart Network in-store TV system, it will deliver messages on “welcome screens” at the entrance of Wal-Mart’s Supercenters and on “category screens” in the departments shoppers visit most. End-cap screens will advertise select products.

Developed after two years and $10 million of R&D with participation from leading advertisers, the system – in only eight major markets so far – will be operational in all stores by early 2010.

Wal-Mart executives believe that the network represents a great opportunity to reach its 140 million-plus weekly customers precisely at the time they are making purchase decisions. Brands that have participated in the test programs have enjoyed a sales increase of anywhere from 20% to 80%.

“We've built a network tailored to the way consumers shop our stores – delivering helpful, custom, content closest to the point of decision – that helps them shop smarter,” said Stephen Quinn, chief marketing officer for Wal-Mart.

The open enterprise platform powered by Internet Protocol Television (IPTV). This technology will allow Wal-Mart to monitor and control more than 27,000 screens in more than 2,700 stores across the country. Company executives have pointed out the difference between Smart Network and the Wal-Mart TV Network – the original name for the chain’s web network of entertainment-infused programming that started in 1998. Wal-Mart TV broadcasts previews of soon-to-be-released movies, snippets of sports events and rock concerts and corporate messages.

Where Smart Network differs is that it deploys response measurement and message optimization technologies to aid in delivery of the most relevant content to shoppers whether by store, screen, day or time-of-day. All content will be customized to provide the product information customers need at the point of decision when and where needed throughout stores.

In a prepared statement, Clint McClain, Wal-Mart’s senior director of emerging media, discussed many examples of how the technology works. The network, for example, could focus on promotions based on weather conditions – soup may be promoted if it’s raining, while barbeque sauce might be highlighted when the summer is pleasant. Promotions could also be tailored around local sporting events.

Time of day is also a critical component to the platform. For instance, TV dinner advertising in the evening has already been
a great success with moms looking to make a simple meal for
their children.

General Mills Promotes Healthy Habits
General Mills partnered with Spartan Stores last month for an
in-store education and product promotion program to encourage healthy lifestyles and eating habits. Pharmacies at all D&W Fresh Market, Family Fare, Felpausch, and Glen’s stores ran the month-long program, which include heart-healthy assessment screenings, education about heart-healthy eating, product samples and coupons. In addition, giveaways included pedometers, cards to help customers track their screening results, and chances to win $100 gift cards.

The product portion of the program highlighted General Mills products such as MultiGrain Cheerios, Yoplait Yo-Plus, Yoplait Fiber One, and Green Giant vegetables. Spartan Stores supplies some 400 independent grocery stores in Michigan, Indiana and Ohio, and also owns and operates 84 supermarkets in Michigan.

SmartShopper More Affordable
A voice-activated shopping assistant called SmartShoper is now being marketed at a lower price of less than $100. The device use voice recognition software to keep track of items and errands users need to pick up on their next visit to the supermarket. It operates on four standard AA batteries, uses thermal paper that doesn’t require ink cartridges and comes pre-programmed with 2,500 items. Users may add their own unique items and brands to the master library. 

How does it work? Users press the “record” button, say the name of an item they want from the store, and it is then added to a running list displayed on an LCD screen. Items can be set with quantity or flagged with a coupon. Errands can also be added in the same fashion. When the user is ready to shop, they simply press “print” and the list comes right out of the unit. 
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