No Shopper Media
In Tesco’s Fresh & Easy
By Jack Grant
The hottest trend in retail marketing is “shopper media,” which refers largely to high-tech communications in stores. Meanwhile, the hottest format in retail is Tesco’s Fresh & Easy, which debuted
last month in Southern California after much publicity and anticipation. Ironically, there was no evidence of shopper media in Fresh & Easy.
Craig Johnson of Customer Growth Partners said, “In my conversations with Tesco, shopper media didn’t come up. I’m not saying they would be against that in all circumstances, but it was not something they were looking to do.”
So what was Tesco looking to do and why wasn’t shopper media part of the mix?
“They’re saying to the consumer, ‘We’re giving you great and interesting products that meet your lifestyle, and we’re also doing it without spending a lot of money on decorations and needless pizzazz,’” said Brian Sharoff, president of the Private Label Manufacturers Association (PLMA) and a long-time observer of Tesco, a dominant grocer in the United Kingdom.
Tesco’s first Fresh & Easy Neighorhood Market grocery stores kick off a rollout of hundreds of small-format units that will cover Southern California, Arizona and Nevada in the coming year. The retailer aims to attract on-the-go shoppers by largely offering ready-to-eat meals and fresh produce in a footprint of 10,000 to 15,000 sq. ft. – about the size of a Trader Joe’s.
It’s not like Fresh & Easy couldn’t use some pizzazz. Early appraisals in the media say the stores are “plain” and “bare-bones.” Other than sampling stations, the stores lack any promotional flair.
“I haven’t seen anything to suggest that there’s going to be any advanced shopper media activity going on in those new stores,” said James Tenser, principal, VSN Strategies in Tucson, Ariz. “Maybe, like any other experiment, you can only have so many variables in motion at a time. Tesco is a company that I think is not likely to be unaware of digital signage or the in-store media innovation that’s going on. It’s happening with plenty of vigor in Europe as well as in the United States.”
Tenser pointed out that the stores would be stocking a lot of private label product – a strong suit for Tesco in the U.K. Most shopper media promote national brands and give the retailer new revenue streams from CPG promotional budgets.
“If these stores are going to be largely private label, then Tesco is not necessarily going to pay itself trying to promote its own brand. These items are not necessarily going to be deriving incremental, upfront revenue. But there are some ideas floating out there about store brands doing that. Would a retailer develop a network primarily to support its own store brands at the shelf using in-store media? Maybe. However, the program would have to justify itself entirely based on incremental sales and profit,” he said.
Johnson, president of the consultancy in New Canaan, Conn., said the small size of Fresh & Easy makes it difficult to find space for digital signage, interactive kiosks and other devices.
Other observers agree, but acknowledge that small retail units can accommodate some forms of shopper media. For example, Harvest Foods is enjoying early success with a meal-planning kiosk in its 19,000 sq. ft. store in Bedford, N.H. The kiosk, provided by ShoptoCook in Buffalo, N.Y., is also installed in other independent grocery stores that don’t have the large footprint of chain competitors.
Tenser of VSN Strategies sees a place in Fresh & Easy for small, self-contained video units that can be placed at the shelf very close to a product that’s being promoted.
“Those concepts ultimately will have more clout than some of these flashy, large sign systems that are being installed,” he said. “The idea that the items promoted in your weekly circular could also be highlighted at the shelf with small devices that may incorporate video or some kind of electronic display is very interesting.”
Tesco has a very active loyalty marketing program in the U.K. that often gets credit for its enormous success and popularity with consumers. Although the retailer says there are no plans to unveil a similar program in the U.S., Johnson believes that loyalty promotions will one day debut in Tesco’s U.S. stores.
But maybe that will be in another format, which will also be equipped with shopper media of various types. Retail experts don’t believe that Fresh & Easy will be Tesco’s only retail format in the U.S. That’s certainly not the case in the U.K. where the retailer operates grocery stores that are big and small, urban and suburban, as well as unique convenience store/petrol stops where motorists can partake of a variety of ready-to-serve foods.
“The thing you have to understand about the Tesco stores in the U.K. is they do not follow a uniform, cookie-cutter approach,” said Sharoff of PLMA.
Market Watch
Harvest Markets Pilots
Recipe/Meal Planning Kiosk
By Lynne Cooke
Harvest Markets, a supermarket owned by Associated Grocers of New England (AGNE), is testing a unique in-store touch-screen kiosk for recipes and meal planning in one of its two supermarkets. The kiosk is located in the produce department near the entrance of the 19,000 sq. ft. store in the affluent town of Bedford, N.H.
ShoptoCook Recipe Centers provide shoppers a unique opportunity to discover new and exciting solutions to their shopping dilemma; namely, what’s for dinner? The device engages shoppers at the most influential point in their buying process. They can print their favorite recipes from an in-store kiosk typically located in the perishables department of the supermarket.
“So far, the results have been very positive,” said Tim Merrill, general manager of the Associated Grocers supermarkets. He is banking on the kiosk to help differentiate Harvest Markets from strong local competition from such chains as Shaw’s, Stop & Shop and Hannaford Bros. He is also looking to the application to promote good health via a special module on health and wellness.
“We installed the recipe center because we thought our customers would relate well to it, and we have had a very good response from them,” said Merrill who added that the kiosk’s application of pairing wines and foods was a shopper favorite. Harvest stages wine samplings every Thursday and Friday nights. “It’s been good tie in because we are a big player in the wine business.”
In the first 40 days of installation, there were nearly 900 recipes printed from the recipe center. Collectively, there were more than 6,600 ingredients from those recipes for sale in the store. Research shows that 62% of shoppers buy at least one ingredient for the recipe they printed.
Merrill explained that ShoptoCook conducted training sessions
with the store personnel to educate them about the kiosk and its applications. “It was very important to have our managers – especially in the produce, deli, seafood and meat departments – understand the recipe center and the value it would have for
their departments.”
Merrill said if the recipe center continues to perform as expected, AGNE would consider installations in other independents that it supplies. ShoptoCook has over 750 kiosks installed at supermarkets throughout the country.
Frank Beurskens, CEO of ShoptoCook, said, “We continue to develop new media-based applications for the perishable perimeter, with the goal of engaging the consumer in the shopping experience. We understand the world of the shopper and we understand the world of technology.”
New Leadership for IFBA
Jim Hall of Riteway Sales and Marketing, Lakeland, Fla. and Steve Horowitz of Co-Sales Southern California, Sherman Oaks, Calif. have been named to the top elected positions with the Independent Food Brokers Association (IFBA). The 90-company member group operates within NARMS International, a global trade association of retail support service groups.
Hall, as Chair, and Horowitz as Vice Chair, were named at a recent meeting of the IFBA Division Committee. They replace outgoing Chair Chip O’Hare, Johnson O’Hare Company, Billerica, Mass. and outgoing Vice-Chair Don Cox, Co-Sales Company, Phoenix, Ariz.
Self-Service at Stop & Shop
Stop & Shop Supermarkets is now working with the ZoomSystems company to pioneer the emerging concept of automated retailing. Two self-service shops can now be found in select Stop & Shop locations: a Proactiv Solution Skincare shop and a Consumer Electronics shop featuring iPods, headphones and other
innovative gadgets.
These self-service shops are yet another step in the evolution of shopping, which enables consumers to get more of what they want in one place. Shoppers select items through a touch screen, finalize purchases with a credit or debit card, and receive their products immediately via robotic arm. All of ZoomSystems’ shops are networked and centrally monitored, ensuring high reliability and customer service levels. ZoomSystems enables manufacturers to place their products directly in the path of consumers in an interactive manner. This removes them from the competitive clutter
of traditional retail offers the immediate gratification of instant
product delivery.
NOVEMBER 2007
Implementation Group Aims
At ‘Elephant in the Store’
By James Tenser
Sophisticated shopper insights, automated planograms, segmentation, targeting and shopper media have the potential to revolutionize the way categories are managed and products promoted. But these advances in marketing method are frequently stymied by in-store implementation breakdowns, experts say.
“The absence of in-store implementation practice is like an elephant in your stores. Nobody likes to admit it’s there, but it is absolutely stomping on your category and promotional plans,” said Warren Dawson, corporate development officer for Retail Tactics.
Dawson spoke at the recent Category Management Conference where the was joined on a panel that included executives from Nestle Purina, Procter & Gamble, Retail Tactics and VSN Strategies. They are members of the ISI Sharegroup that is devoted to identifying and solving in-store implementation challenges.
Category management professionals need to recognize and meet the implementation challenge or risk poor return on investment (ROI) from their shopper and category development efforts, the speakers said at the conference in Bonita Springs, Fla.
“Our analysts work so hard to assess and analyze the right business problems and make sound decisions. Then they find only 30% of the work actually gets implemented,” said Brad Anderson, director of the Strategic Selling Team at Nestle Purina and an ISI Sharegroup founding member.
“There is just way too much complexity and too much work for the present process,” he added. “This is shameful and painful! The goal should be to reduce the workload on the analysts and know that the work will get done.”
The panelists made their case during a presentation titled, “Beyond Planning to Tactical Implementation, Measurement & Feedback.” The conference was produced by the Institute for International Research (IIR), and supported by Association for Category Development Professionals (CPG CatNet) and CPGmatters, among other sponsors.
Dawson told audience members that performance of their shelf space allocation, assortment, promotions, pricing, and in-store media activities all revolve around the effectiveness and efficiency of in-store implementation. He said ISI Sharegroup members advocate a “Plan-Do-Measure” approach to in-store implementation that would ensure effectiveness and confirm performance by establishing systematic, continuous processes for maintaining shelf sets and monitoring their conditions.
“If we can't positively answer the questions: ‘Did it happen?’ ‘When did it happen?’ ‘What did it cost to make it happen?’ and ‘What
was the result when it happened?’ every day, routinely, and systematically, then our programs won’t be fully effective,” he said.
JP Brackman, global presence manager for Procter & Gamble, explained that the ISI Sharegroup participants, who include nine leading CPG, retail and merchandising services companies, are coming together to address the in-store implementation challenge.
“We’re not kidding. We’re in this to bring about change,” Brackman said. “We need a logical process that allocates resources to the more meritorious activities in store. This must happen across the industry to succeed.”
Brackman explained that by putting the right tools and practices in place, a broad in-store implementation initiative will have its first dramatic and rapid impact on planogram compliance, an area where effectiveness is poor and complexity is growing fast.
He added, “If we don’t do this, the detail will bury us. Retailers with 11,000 stores already have automated planogram software.”
With the industry facing a ramp-up in implementation challenges
due to an increase in store-level planning, promotional segmentation, and shopper marketing, the ISI Sharegroup is targeting compliance as a fundamental capability. The group is preparing to release a working paper by year-end that outlines the cost to the industry of poor in-store compliance and defines areas where new best practices are needed.
“Simply throwing more labor dollars at the problem is not the answer,” Dawson said. “Our industry must adopt a ‘Plan-Do-Measure’ mentality surrounding in-store implementation – and do it soon – if we want to see real benefits from our new, sophisticated planning tools.”
James Tenser, principal of VSN Strategies, moderated the
panel discussion.
CPG Merchandising Programs
Must Fit into Retail Growth Strategies
By Lynne Cooke
Due to the declining effectiveness of traditional advertising vehicles, retailers have significantly reduced point-of-sale (POS) display space at a time when CPGs need it most. As a result, better merchandising is called for.
That is a key finding of the new Times and Trends report from Information Resources, Inc. (IRI)
“CPG companies are buffeted by the twin problems of advertising ineffectiveness, combined with the loss of in-store display options as retailers are taking charge of branding the consumer shopping experience,” said IRI Retail Solutions and Strategic Consulting President Thom Blischok. “CPG companies must demonstrate that their products and merchandising programs fit into the retailer’s comprehensive growth strategies. In addition, we envision manufacturers aggressively stepping up experimentation with new in-store technologies, such as in-store TV networks, digital signage and intelligent carts to expand consumer reach in store.”
The IRI report highlights several additional trends that will shape the next era of CPG merchandising:
Trip-Based Merchandising
Retailers can now identify high-potential shopping trips and specifically target them through merchandising, marketing and assortment. Merchandising will become more targeted and strategic as this new level of consumer understanding is leveraged. Manufacturers must build promotions that align directly with shopping patterns which will greatly increase their chances
for success.
Solutions Merchandising
Both trading partners now recognize that merchandising has the potential to deliver solutions to consumers – not just products and price points. There will be an increase in multi-category promotions around themes, such as meal solutions and spring cleaning, often involving multiple manufacturers. This will maximize display space and make shopping easier for consumers.
Sustainability
Sustainability can be defined as a guiding business principle that has the potential to dramatically change merchandising without compromising the ability of future generations. There is a growing demand for less material used in displays. As packages become more environmentally friendly, they will shrink in size. This will result in more shelf space but less package area with which to promote
a product.
Educational Platform
Products are becoming more “considered” with consumers evaluating health benefits, sustainability, and so on. This creates
a growing need for in-store education and signage that clearly identifies product benefits.
High-Tech Merchandising
New technologies present new ways to reach consumers. In-store TV networks, digital signage and intelligent carts are just a few examples. This is the future of in-store marketing as traditional merchandising methods are declining.
Make no mistake, notes the report, traditional merchandising such as displays, feature ads and price reductions are still prevalent. In nearly two-thirds of CPG categories, 30 percent or more of volume is sold with merchandising support. But activity is slowly declining as 60 percent of grocery store categories experienced declines in overall merchandising activity, and the number of grocery store displays has decreased almost 10 percent in just two years.
Further, no category appears to be immune to this trend. Even heavily-merchandised, expandable categories, such as carbonated beverages and cookies, had significantly fewer displays this year than last year. Even private label products have seen comparable declines in merchandising activity relative to branded products.
“Retailers are placing heavy restrictions on the number, size and characteristics of displays,” said Blischok. “Merchandising now needs to be much more closely aligned with overall retailer growth strategies. Account-specific merchandising plans will be required, driving a much greater need for collaboration between retailers and manufacturers.”
Merchandising support continues to drive volume sales. Among two-thirds of CPG categories, average volume increases from merchandising support are 50% or higher. But that merchandising lift is slowly deteriorating. Nearly three-quarters of CPG categories experienced a reduction in the average volume lift achieved through merchandising versus last year.
“As prime merchandising opportunities, such as front-of-store displays, diminish, average lift will continue to erode, prompting more experimentation among manufacturers with new in-store marketing vehicles, a stepped-up investment in merchandising innovation, and a greater need for pre-testing and monitoring of merchandising executions,” added Blischok.
