Retail in Detail/Shopper Marketing 2010 (Interview with Jerry Singh published in journal Regal)

How to transform a “visitor of store” into a shopper

(Interview with Jerry Singh by Petr Hříbal, specialit editor, published in journal Regal)

1. Today shopper marketing is considered to be the fastest growing marketing discipline with both consumer goods producers and retailers. Do you agree with this statement? In case you do, why do you think so? What is the background of this progress?

Yes, I agree with you. This is due to the recognition that the majority of purchase decisions are made in the store, that maximizing the benefits from Category Management comes from in-store execution of category plans, and today’s technology  can enable us to measure the impact of in-store stimuli on consumer purchase behavior.

There are several industry and technology trends driving the progress in Shopper Marketing:

•         Mass marketing continues to lose effectiveness due to consumer and media fragmentation. Purchase decisions are increasingly made in the store.

•         Decreasing incremental gains from traditional Brand Management and Category Management practices.

•         Retailers face increased multi-channel competition from new retail formats and direct to consumer channels. This makes marketing to shoppers to influence channel choice and in-store decision-making ever more important.

•         Manufactures face retailer consolidation, the rise of private label products, and increasing assertiveness of banner strategies.

•          Much of the work building the brand’s value proposition gets undermined through conflicting messages, inconsistent execution of in-store programs, and misalignment of retailer and manufacturer goals.

•         Technology has enabled measurement of shopping patterns, in-store traffic, and response to marketing stimuli, making Shopper marketing both feasible and cost effective.

2. It is also widely agreed that the current business development is more and more aimed at shopper marketing and at providing shoppers with the relevant customer value, namely through shopper marketing. What exactly do you consider the relevant customer value? Can you mention some typical examples?

Consumers base their channel choice on the store’s location, price, convenience, ambience, and their previous experience at that store. Once inside the store, they want to get the products they want, at the best price and the assurance that they are getting the best price, in the shortest time possible. The challenge for the retailers is to provide the best assortment; with a store layout, shelf layout, and adjacencies that maximizes the ease of shopping, and price information with the reassurance that the prices offer the best value. Wal-Mart is a good example—they have been successful in countries where they have offered relevant customer value, and failed wherever they have not.  

3. Shopper marketing is based on producers’/retailers’ deep understanding of their customer and managing his/her experience within the point of sale. What do you think are the best ways to achieve as deep understanding of a customer as possible? Can you mention some examples of manufacturing/retail companies, which has adopted the right and efficient management of the customers’ experience in the store? Are there any "bad" examples to be mentioned?

The foundation is to understand the demographic and psychographic profiles of the best customers, and how they make their purchase decisions. Loyalty card data to identify loyal customers and their purchase patterns, in-store tests to different store layouts and assortment/shelf layouts, analysis of customer traffic patterns, simulated store tests, etc are some of the techniques used. This can be done for different formats, store clusters, individual stores or departments depending on the costs involved. Obviously this data is dynamic and needs to be updated periodically.

Some examples of manufacturing/retail companies working together to improve customer experience in the store are:

1. Kimberly-Clark and Target designed in-store training pants training center that were physically separate from the diaper aisles to improve shopper experience. This concept has increased sales across relevant categories, delighted training pants shoppers, and enhanced brand equity for both partners.

2. Unilever worked with Ahold to drive center store sales by increasing conversion from Food to Health & Beauty Care through simplifying low traffic aisles and co-marketing promotions.

 3. P&G and Wal-Mart rearranged the Pet Care aisle according to the way the shopper thinks: by type of pet, dry/wet, age of pet, package size; and provided information at the shelf on product usage.

4. Do you think that all or the majority of manufacturers/ retailers exactly know what their customers are like? Do they know their needs, wishes, dreams etc.? Or at least do they want to know it? What keeps them back in trying to understand their customers more?

No they do not. Marketing is not an “exact” science—at best we can approximate consumer behaviour. Of course, all of us would like to know more but each individual is different, as is every shopping occasion. However, we can get a good approximation of what in-store variables are likely to affect purchase decisions and continue to improve the shopping experience. Shopper marketing is a journey and not an event!

5. What would be your recommendations for manufacturers/retailers, who would like to take advantage of what is already known and successfully utilized from the point of Shopper Marketing view? What to do/not to do?

Start with the recognition that both parties need to work together as they have complementary knowledge, skill sets, resources etc. Manufactures bring a clear understanding of which consumer trends affect their categories, where they have unique shopper insights, which shopper missions can they drive at retail, and whether they can measure the impact of in-store variables on purchase decisions. Retailers should understand which shopper segments they want to target, which are the most important categories to their target customers, what kind of shopper experience they want to provide to their customers, and which suppliers to work with. It is critically important for the marketing departments of both the retailer and manufacturer to interact directly with each other for maximum efficiency.

They should recognize that Shopper marketing is still evolving, and be careful with the use of some of the techniques/metrics that are being proposed for measuring the impact of in-store stimuli. Some of the critical success factors are:

Compelling Leadership—P&G’s articulated business rationale and continuous internal evangelism of shopper marketing leadership, and work with their customers

 Realistic Expectations—Unilever’s commitment to working through challenging modification to its shopper marketing program

 Flexibility—Wal-Mart’s on-the-job experimentation and learning as it developed its shopper marketing program

Unwavering Focus on Relevance—ConAgra's bringing manufacturers together to develop cohesive program solutions 

Commitment to building Talent—Clorox’s diffusion of shopper centric skills by rotating Brand Managers through shopper marketing teams

 Willingness to tackle culture—Safeway’s surveys of manufacturers to determine how to become easier to do business with.

6. Any other comments, experience, data, studies, researches etc.

I expect the future direction to be as follows:

•         Shopper Marketing will become the third pillar of consumer marketing---along with Brand Management and Category Management.

•         Top performing companies will widen the gap versus competition-- by linking shopper insights with consumer insights, better organizational alignment, development of shopper insight skill sets, and superior execution of in-store tactics.

•         Retailer efforts to improve the shopper experience will significantly reduce the opportunities for manufacturers to use displays and other visual marketing stimuli at the point of sale.

•         Retailers will approach shopper marketing differently based upon their collaboration strategies. The leaders will partner with manufacturers to improve shopper experience and build business through increased trip frequencies and basket sizes.