Recipe Kiosks Wag Tail
Of Niche Product Sales
By Dan Alaimo
Increasing sales of consumer packaged food items is a simple matter of wagging the tail.
The image of an animal with a tall body and a very long tail can illustrate retail food sales, according to Frank Beurskens, chief executive officer, Shop-to-Cook, Buffalo, N.Y. The body is the 20% of items that account for 80% of sales. The tail is the other 80% of items, and represents the greater opportunity for sales growth. For traditional supermarkets, it can also bring an advantage over the big-box competition.
“The bottom line is, the retailer may be selling a lot of these familiar items, but they are not selling the potential of the diversity of items that they stock,” Beurskens explained recently in a presentation LEAD Marketing Conference in Chicago (LEAD stands for loyalty, engagement, analytical and digital).
There may be 40,000 SKUs in a supermarket, and 5% contribute 50% of sales, he said. An average household purchases 400 SKUs in the course of a year, with 150 used on a routine basis. Additionally, customers receive an average of 3,000 in-store messages on every shopping trip.
Category management has increased efficiencies through SKU rationalization, but has also presented consumers with “the same stuff sold everywhere” appealing to “similar shopping segments,” he said.
“The result is a failure to achieve meaningful non-price differentiation. As every retailer becomes more and more sophisticated using similar technological solutions, they all end up carrying the same products, selling to the same shoppers.”
Marketers can build revenue by moving from trying to sell products to helping people to buy what they need. “The difference between those two business models is like the difference between a billboard on an interstate and a Google search – two completely different ways to deal with business. When we look at the monetize-the-shopper model, which I suggest is what interactive technology does through search, we are helping the customer buy stuff,” he said.
In another comparison, Beurskens pointed to Amazon and Netflix, online companies that
have built big businesses by providing obscure items that consumers find by searching
their databases.
“The niche items on Amazon and Netflix exceed the volume of the most popular titles. Online, you are typically not constrained by brick and mortar, by shelves, by physical space. That’s one of the reasons why the Internet has been such a powerful marketing platform because it allows Search to discover a whole array of products that previously would be very difficult to find in brick and mortar,” he said.
In the past, retailers have tried to address this with solutions like recipe racks, brochure racks, and even store maps to direct shoppers to the products they need. “Those are all good attempts at search marketing, but they are legacy. Interactive search marketing uses technology to maintain an enormous database that – with a touch – can present shoppers with a multitude of solutions to the specific problems they may be facing at any moment in time,” Beurskens said.
He noted that 60% of the population doesn’t know what to prepare for dinner at 6 p.m. most days. “As a result, we end up in a recipe rut. Americans prepare the same recipe an average of 3.4 times a month. Most families have about three to five core items, and about three to five recipes. They rotate those, and that’s pretty much the recipe regime,” he said.
Shop-to-Cook’s approach is to place interactive kiosks, with large, high-definition screens, in stores. The system has a database of 5,000 to 6,000 recipes. This creates a sense of relevancy to the purchase of featured ingredients, and steers shoppers to the perimeter, and then to the center store aisles, Beurskens said. The company has 756 of the devices placed with retailers and wholesalers like Bloom, Tops, Schnucks, Spartan, Nash Finch and Price Chopper (Kansas City).
“We’ve got a very broad footprint reflecting both independent and chain retailers.” Some stores are upscale, while most are not. “Our core market is the middle,” he said.
“It takes an enormous amount of training to be able to take employees and have them answer a question on the spot. For example, ‘I’ve heard about pomegranate. How can I use one in a meal?’ Well-trained, well-staffed retailers can do that, but the majority of retailers cannot afford both the cost of training and the number of staff that it takes to answer those questions and take advantage of product diversity. This technology is perfect for addressing that,” he said.
Market Watch
Integrated Approach Keys
Schnucks’ Recipe for Success
By Lynne Cooke
Schnuck Markets, a St. Louis-based chain of 105 supermarkets, is meeting the needs of its time-pressed shoppers with an integrated meal-solution program that involves recipe kiosks,
in-store demos, and an enhanced web site.
The highly-successful and creative approach earned the grocer the IBM LEADER award presented in Chicago recently at the LEAD Marketing Conference (the initials stand for Loyalty, Engagement, Analytics and Digital).
Schnucks operates interactive recipe centers called “Schnucks Cooks” in many of its stores. Each store features three kiosks, positioned in the meat, perishable, and wine departments.
The recipe centers, powered by content from ShoptoCook, are 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 and wellness conditions such as diabetes and gluten free foods, as well as information on preparing and storing fruits and vegetables. The kiosks have a product locator allowing shoppers to view and print the aisle locations of any item in the store.
The wine parings recommended in the recipe center are selected by Chris Wong, beverage category manager at Schnucks, who has been certified as a wine specialist by the Society of Wine Educators. Wong picks the pairings from Schnucks’ vast selection of local, national and international wines.
At the same time, the chain has a popular demo program called Schnucks Cooks in a few dozen 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
recipe center.
In addition, Schnuck Markets has enhanced its consumer web site with the same content found on the grocer’s recipe center. The online feature and in-store kiosk enables shoppers to pre-shop from the comfort of their homes.
Consumers can do more online than just browse through the mouth-watering recipes presented as “Recipe of the Week” or “Most Popular Recipe Categories.” Using a password-protected
log-in and personal account, they can also create shopping lists, save favorite recipes, and write reviews.
FAO Schwarz Boutiques in Toys ‘R’ Us
Toys “R” Us is opening FAO Schwarz toy boutiques at 585 of its stores nationwide. The boutiques, which will being opening Nov. 1, will be located largely in the front of Toys “R” Us stores and feature colorful overhead signage, as well as life-sized displays of the famous FAO Schwarz toy soldier. The retailer also is relaunching FAO’s e-commerce site, FAO.com, and publishing its famed Holiday Catalog.
FAO Schwarz, an upscale specialty toy retailer, was purchased by Toys “R” Us in May. FAO Schwarz has only two locations: one in New York City and one in Las Vegas, but had boutiques at hundreds of Macy’s stores nationwide. The presence at Macy’s will end with the switch to the Toys “R” Us locations.
NARMS Sets Springs Conference
The spring conference of the National Association of Retail Marketing Services (NARMS) will take place April 17-20 at the Saddlebrook Resort in Tampa, Fla.
Reservations can be made by calling 1-800-729 8383 during regular business hours and mentioning NARMS Spring Conference. Interested parties can also visit www.narms.com for more information and reservations.
OCTOBER 2009
Marketers Gain Efficiency with Online Sampling
By Dan Alaimo
CPG marketers want efficient promotions, while consumers welcome free stuff. The two may have common ground in the relatively new world of online sampling.
With this promotion, bargain-hunting consumers request samples from Web sites that may
be sponsored by manufacturers, retailers or companies providing the online program and fulfillment. What is lost in immediacy is gained from the efficiency of people getting the products they ask for, not what they chance upon in the store.
Among the major manufacturers that have dabbled in this promotion: Johnson & Johnson, Kimberly Clark, Con Agra, Hallmark and Nestle. Retailers include: Wal-Mart, Kroger (all banners), Costco, Sam’s, Walgreens, CVS, Supervalu, Schnucks and Pathmark.
These trading partners and other experts agree that online sampling will never supplant its in-store cousin. There are certain products – perishables, notably – that will never lend themselves to ordering online on a broad scale.
On the other hand, certain products – many in the health and beauty care categories – work very well with online requests for samples. For example, Prilosec OTC will go into the hands – and stomachs – of those who really need the product, and the explanatory information will be delivered by links to comprehensive data sources, rather than a flier handed out in-store.
Feminine hygiene products are frequently among the online sample offers, as are incontinence products. Consumers can obtain these samples without concern about neighbors seeing them picking up the item in store. Although privacy is limited, as the sampling program will know a lot about them, the trade-off is worth it to many people, and delivers crucial data to the vendors.
Baby formula, and other baby services, is another highly targeted product area that can be delivered best to families with new babies either online, and then direct to the home, or in a healthcare setting.
Meanwhile, in the online world, sampling offers can be better tailored to the specific needs of the vendors and their consumers. For example, the StartSampling.com Web site offers a free subscription to Remedy Life Magazine, diabetic product needs and offers, and a free back-to-school planning calendar with $20 of coupon savings from Nestle.
The online sampling offers can be combined with online coupons, as well as traditional in-store sampling, said Larry Burns, president, StartSampling, Carol Stream, Ill. “A brand can create a truly hybrid program that has multiple touchpoints, because consumers are ever more elusive animals. It can all be brought together in one online engine, like the one we provide,” he said.
Online sampling is right for the times in which CPG companies are operating in. “Everybody likes free stuff, but they like the stuff that they are interested in. This is a form of marketing that very much puts the consumer in control, which we perceive to be the way things are headed more and more in the future,” Burns said.
“The nice thing about the online sampling world is it can link up behind all different manner of reach vehicles, whether it is through social networks, a retailing network, or even the sponsorship of a fantasy football league,” he said.
Online sampling is not quite a revolution, “but it is certainly another arrow in the quiver for manufacturers,” said James Tenser, principal, VSN Strategies, Tucson, Ariz. “If it lets them start relationships with consumers, this is another entry point for consumer marketing.”
It’s a trade-off of immediacy of product for immediacy of in-depth information, according to Tenser. “Clearly it is not going to be a virtual equivalent of the lady in the hairnet with the little microwave standing in the aisles of the supermarket giving out samples. It’s not the stuff, but the information about the stuff that matters the most,” he said.
“I see this as coexisting rather nicely with in-store sampling, but it is going to serve a different function, and maybe for different products,” he added.
Online sampling “opens up to a wider spectrum of product types, some of which may be difficult to distribute in a retail environment.” And the audience for these products is self-selected, and expressing interest in them, he said.
“Everybody recognizes sampling as a powerful and persuasive method to get consumers to switch their brand choices,” said StartSampling’s Burns. “The trick to online sampling – and the reason it is growing as nicely as it is – is the consumer has to affirmatively say: ‘I want one.’ They have to raise their hand. They have to engage,” he said. This makes the marketing less wasteful and the targeting more precise, he added.
Until the economy tanked last fall, StartSampling had been growing at a 100% rate each year from 2004 to 2007. In 2005, the company shipped under 20 million samples, which rose to about 50 million last year, Burns reported.
Among the most popular categories for his company: health and beauty care, fabric and home care. But food products like coffee are also starting to be sampled from online Web sites. “The products that do best are easily sample-able, not difficult to mail, and have a decent ring at retail,” he said.
Recently StartSampling has been experimenting with programs that reach social networking sites like Facebook, and has found willing participants among the big CPG companies. “The consumer packaged goods companies are generally early experimenters and explorers, but then they want to understand before they jump in with both feet,” Burns said.
The larger companies like Procter & Gamble went through the experimentation phase with online sampling back in 2001-2002 and it is now a regular line item in their brand budgets, he said. However, many companies have yet to embrace the technology. “There is still a lot of
penetration potential out there.
“Now it’s a question of how do we hone the art and make it more of a science. That’s the stage we are at right now,” Burns summed up.
Market Watch
Sales, Time in Store Increased by Sampling
By Lynne Cooke
The value of product sampling leads to increased sales levels in stores, according to a new marketplace study from the National Association of Retail Marketing Services (NARMS).
When individuals were offered a sample, their general spending in the store and the amount of time they shopped was 34% and 14% greater respectively, compared to those shoppers who were not offered a sample.
“Sampling can provide an opportunity for individuals to try items ‘on for size’ in a low-risk manner while simultaneously being exposed to a new product’s taste. At the same time, it can assuage anxiety about returning home with a product that does not pass the taste test,” said Kenny Herbst, Ph.D., a marketing professor at the Wake Forest University School of Business in Winston-Salem, N.C. He reviewed the data and consulted with NARMS on
the study.
Herbst also provided evidence pointing to:
- The value of warm and knowledgeable associates
- Increased customer satisfaction with and loyalty to retailers’ hosting sampling demos
- The need for a “completely stocked look where the product is merchandised in the store” to maximize sales.
NARMS’ nearly 450 member companies perform well over $3 billion in merchandising services, sales marketing, event marketing, demonstration, and other retail services annually. The trade group represents all classes of trade including: grocery, drug, mass, department, home and building centers, computer and office supply, electronic, value retailers, specialty, and convenience retailers.
Schnucks Opens Cooking School
Supermarket chain Schnucks Markets has opened its first cooking school in a new 74,000 sq. ft. store in Des Peres, Mo.
The school, branded Schnucks Cooks Cooking School, has been in development for more than two years, according to company executives. The store opened in September.
Blockbuster Move to Kiosks
Plans are under way for Blockbuster to close up to 960 stores by the end of the year while installing 10,000 kiosks for movie- and game-rental in grocery and other mass market stores.
The self-service kiosks, called Blockbuster Express, would compete directly with Coinstar’s Redbox units, which rent movies for $1 per night. Rental pricing for Blockbuster kiosks has not been announced.
Test of Electronic Shelf Tags
PCC, a natural food market in Seattle, will begin testing new “eco-friendly” shelf tags later this year. The tags, developed by ZBD Solutions, use small LCD displays instead of paper labels.
The “epaper” technology lets the retailer change pricing or product information on the spot without having to print out new labels. A rollout to all of PCC’s nine stores in the Seattle marketplace is planned, pending a successful test in the first unit.
Vision-Screening Kiosks at Schnucks
Thirty grocery stores operated by Schnucks Markets in the St. Louis marketplace will offer shoppers self-service vision-screening kiosks. The SoloHealth EyeSite kiosks are designed to assess users’ near and distance vision and also ask users lifestyle questions.
“Too often, people don’t realize that their vision may deteriorate so slowly that it may be imperceptible. They may think they have 20/20 vision, but in reality, eye disease may be forming,” according to a statement from SoloHealth, an Atlanta-based provider of health-screening solutions.
