This column has focused on eCommerce for the last few weeks. That is not likely to change in the future as eCommerce is quickly becoming part of the new normal in retailing. But it is not a one-way migration. As pointed out in the August issue of Competitive Edge by Willard Bishop, Omni-Channel means in all ways or places.
Perhaps the most vivid example provided in the publication is the fact that Walmart continues to invest huge sums of money in mobile and online technology. The retail giant achieved a 30 percent increase in online sales in the second quarter. Conversely, Amazon continues to work feverishly to expand their distribution and home delivery network with talks of expanded warehouses and possible physical stores in the future. Each wants what the other one has to reach the promised land of Omni-Channel. Here are some examples of other factors provided by Competitive Edge:
Endless Aisle – It means to provide the shopper with anything they want regardless of whether they carry it in the store.
E-Coupons and Discounts – Retailers are looking for ways to deliver value and use the traditional vehicle of coupons. There are services that allow retailers to do this for very little investment; however, the ability to own their message and branding is causing some to make investments in proprietary infrastructure.
Social Media – Facebook, Twitter, Instagram and Pinterest are the billboards of the modern retailing landscape.
Virtual Stores – As pointed out by the example above, brick-and-mortar stores are looking to provide a digital experience and eCommerce players are trying to provide a physical store experience.
Not so long ago, we talked about channel migration as a challenge and opportunity for the members of World Alliance for Retail Excellence & Standards who provide at-retail merchandising and marketing services to both manufacturers and retailers. Now we are looking at the ultimate in channel migration, the search for the new world order called Omni-Channel.
Last week we brought your attention to the 2nd Annual Retail Conference on September 24 hosted by Cleveland Research. The event will focus on eCommerce insights, including the direct impact from Amazon and other e-tailers to the strategic response from bricks and mortar retailers. This week, we will continue to keep one eye on Amazon. In a recent post in his Viewpoints Blog on Supermarket News, Editor-in-Chief David Orgel discussed the company that he says has the potential to make a major impact on the traditional food retail market share.
Orgel cites an analysis by consultant Oliver Wyman who recently did some strategic planning with Food Marketing Institute (FMI). The key points should make supermarket operators sit up and listen.
-The AmazonFresh concept is a dangerous online and multi-channel competitor because it can cover a wide range of consumer needs and does not need each to act as a profit center.
-Product assortment is substantial with over 700 produce items, 600 meat and seafood items, and 2,000 beverage items.
- Rapid expansion capability due to a recognizable brand the need to only build distribution centers and networks instead of stores.
-Success could mean a major number of supermarket store closings.
What can food retailers do? Here are three things:
-Build a multi-channel offering.
-Prepare to operate fewer stores.
-Get good at fresh.
The members of World Alliance for Retail Excellence & Standards will need to fully understand the impact of Amazon and other emerging e-tailers if we are to help our manufacturer and retailer customers navigate this serious challenge to their market share. Here are a couple of ways to do so: Register for the Cleveland Research 2nd Annual Retail Conference and visit Supermarket News and read the recent Viewpoints Blog.
Cleveland Research is hosting its 2nd Annual Retail Conference in Chicago on September 24. The event will have a deeper focus on eCommerce insights, including the direct impact from Amazon/etailers to the strategic response from bricks & mortar retailers. CRC has also scheduled in more networking and interaction for participants to discuss and share best practices. You can register by clicking here.
In order to provide additional context to this rapidly changing environment, the event will feature four guest speakers and panelists who will share their expertise:
-Ted Souder is the Head of Retail at Google and will bring his 20 year of eCommerce experience as the keynote speaker.
-Matt Jeffers of the The Javelin Group will compare US developments to the UK which is ahead of the curve for eCommerce penetration.
- Barnaby Montgomery, CEO of yummy.com, will offer perspective on same-day delivery and a focus on grocery.
– Yousuf Hashim, Price for Profit, will facilitate our workshop on eCommerce pricing strategies and best practices.
The afternoon agenda for the conference will be broken into three interactive workshop sessions around 10 key eCommerce themes/issues led by Cleveland Research retail teams and a few guest speakers/facilitators. Some of the sessions will be repeated so you can attend multiple breakouts. See the full agenda and workshop topics for more details.
Cleveland Research is also hosting an Amazon Forum scheduled in Seattle on August 27th that will be a smaller roundtable discussion with CRC and peers specifically focused on Amazon.
You can visit http://marketinsights.cleveland-research.com/ for other upcoming events and calls over the next 90 days, specifically Walmart Forum, Pet Retail Webinar, Target Webinar, Drug Store Forum, Foodservice Forum, and Club Store Webinar.
The members of Word Alliance for Retail Excellence & Standards often find themselves on the backside of the supply chain, providing merchandising and marketing services for the last few feet to the shelf. But they know they are deeply affected by what happens on the front end. In a recent blog on DSN Retailing Today, Rick Blagsen, president and CEO of Council of Supply Chain Management Professionals (CSCMP), reports on some of the trends he is seeing. Among those trends are:
-A diminishing manufacturing cost advantage that foreign countries have over the U.S. He lists reasons for this as rising wages, inferior quality, higher U.S. productivity, a weaker dollar and other factors. This will result in manufacturing moving closer to markets.
-More cohesive and collaborative distribution strategies to cut down on empty miles and get more products in trucks and on the road.
-The use of smart technologies to manage supply chains. Big Data will lead to meaningful, decision-making.
-An explosion of talent in the field of supply chain management.
For most products, the supply chain is a long and winding road. Easing the path to purchase should be the goal of every link in the chain. It is amazing the amount of money, time and talent that is invested in the front end of the supply chain only to see efforts be wasted by poor execution on the back end.
The bottom line is that if it is not on the shelf, it’s not for sale. Driving cost and inefficiency out of the system is important, but a comparatively small investment in retail execution can more than pay for itself.
It is important for our members to know what is happening in the world of supply chain management because it will directly affect what our retail and supplier customers are asking of us in the future.
In its newest custom research report, RIS News examines retail in-store merchandising practices, identifying that this process is a broken and outdated one for a majority of national and regional retail chains. The study, which is available for download, was sponsored by RBM Technologies.
Optimizing In-Store Merchandising, which is based on survey responses from senior executives across national and large regional retail chains, identifies a new industry term – Known Problem Management (KPM). According to the report, a major KPM in retail is inaccurate planogram knowledge.
Key findings from the report include:
-A quarter of retailers have up-to-date store surveys, yet only 3.7 percent say they have accurate planogram knowledge down to the fixture level for all of their stores.
-A major part of the problem is that 63 percent of retailers are still using Excel spreadsheets for in-store merchandise planning, communication and compliance.
-A quarter of retailers do not even measure store execution and compliance regularly. In fact, 7.4 percent say they only measure it one to two times a year and 20 percent say they never do.
The report comes to the conclusion that in-store merchandising is a broken process. Many retailers are relying on spreadsheets when they really need a comprehensive solution for managing their in-store merchandising campaigns and measuring execution.
In order for retailers to regain confidence in their ability to execute local campaigns quickly and effectively at store level, the report says, executives need real-time information. This ensures every customer at any locations is seeing the intended marketing messages and correct merchandise.
Technology is a big part of the equation, but eyes, ears, arms and legs in the store are still vital. The members of World Alliance for Retail Excellence & Standards help retailers and their supplier partners with these challenges every day and are part of the solution. You can download your copy of the report by visiting the research Section of the RIS website.
It is hard to look at the retail news in the last 12 to 18 months without running into a story on Showrooming. There is evidence to support the notion that almost one-third of all shoppers check for better prices or deals on their mobile devices. From a retailer perspective, the early thoughts were to combat the practice, but there has been a shift toward accepting and evolving with the trend to create a truly omni-channel offering. With either approach at-retail merchandising and marketing services in brick-and-mortar stores becomes an important ingredient.
The Parago Dynamic Pricing Study, as reported on in Chain Store Age, says that 58 percent of U.S. smartphone owners participate in Showrooming. That equates to one-in-three shoppers. Amazon is the number one source these consumers turn toward when comparing prices in store.
The tipping point for most shoppers is a $5 price difference on Amazon. Showroomers are not brand-loyal as they will buy a similar item on their smartphone if the price is significantly lower. Shoppers will buy from a physical store if the store offers a rebate to match the Amazon or other online price. Showrooming is used across many different channels including apparel, appliance, automotive, building supplies and tools, electronics and technology, entertainment, housewares and office supplies.
Showrooming is definitely a trend that is fast becoming the norm. Whether retailers decide to combat or embrace it requires a real shift in at-retail merchandising strategy. Being in-stock, having promotional displays out and getting new products cut-in quickly become even more important when a consumer can visit the competitor right in front of your eyes. Throw in immediate customer service and product reviews on social media, and you come to the conclusion that the stakes just got higher in regards to in-store and shelf level execution.
An interesting article appeared on Drug Store News this week reporting on data from Marx, A Kantar Media Company. The report stated that retailer promotional activity increased by 21.6 percent to more than 11.3 billion Free Standing Insert (FSI) pages in the first half of 2013. For members of World Alliance for Retail Excellence & Standards this mean that with more items on promotion, it becomes even more important that shelf level activities keep pace and support those offers.
According to the report and the article, Walmart was the leader followed by Walgreens, Target and Family Dollar. Seven of the top 20 retailers more than doubled their pages circulated in the first half of 2013.
FSIs reach an average of 70 million households on a typical Sunday and are still a significant advertising vehicle for both manufacturers and retailers. The report says that FSI coupon activity increased 3.3 percent for the first six months of 2013 against the first six months of last year. This adds up to over $247 billion in consumer deals, up 8.8 percent from 2012.
Non-food categories delivered over 96.1 billion coupons, a 4.7 percent increase over the same time period last year. Food categories were at 57.2 billion coupons, an increase of 1.4 percent.
The top 10 product types based on coupons dropped accounted for 36.1 percent of all FSI coupon activity during the first half of 2013. Those categories are Shave Cream/Razor, Combination/Personal, Hair Care, Vitamins, Pet Food & Treats, Snacks, CCSA, Household Cleaning Products, Meat/Refrigerated and Bar/Liquid Soap.
These are the products and categories that are most aggressively selling products on promotion using the most traditional, yet still very effective, method. They also represent high volume, quick turn products that benefit the most from regular coverage and service visits to ensure in-stock conditions and retail compliance in supporting at-retail promotions.
The convenience store channel is going through some growing pains. With much of their success tied to volatile gasoline prices and at-risk alcohol and tobacco sales, the industry is looking at ways in which it can keep its core, but also develop more. That is the key point delivered in the latest edition of Times & Trends from IRi. You can download your copy by clicking here. A free registration is required.
The main competition for c-stores is coming from the drug and dollar store channels which are expanding their product mix to gain quick turn CPG, food and beverage sales. Meanwhile c-stores are branching out into prepared foods and healthy alternatives. Here are some more findings from this report:
-The c-store channel addresses an increasing consumer on-the-go lifestyle. Growth in the channel is above average with an ever-increasing store count.
-Gasoline is still the top seller for the channel and this fact provides both challenges and opportunities as marketers wrestle with priorities versus the in-store mix.
-Regulations, taxation and a healthier consumer lifestyle are putting significant pressure on tobacco sales, which are a huge revenue producer. C-store operators may need to take a look at alternatives to replace this revenue down the road.
-Enhanced foodservice offerings and sales growth may be the driver to promote health and wellness alternatives within the channel.
C-store success in the future will revolve around its ability to adapt to an ever-changing consumer lifestyle. Fast and convenient does not necessarily mean low-quality and unhealthy anymore. This paradigm shift means massive changes to the interior and exterior of stores and the way they merchandise products. The members of the at-retail merchandising and marketing service industry, in other words the members of World Alliance, can be a major factor in helping c-store operators and their suppliers change and maintain their growth.
Top-line growth is at a standstill. A tough economy, an ever-changing retail landscape, and more competition have caused retailers and manufacturers to take a closer look at the bottom line. The June edition of Competitive Edge by Willard Bishop takes a look at the Top 10 bottom line growth opportunities available to trading partners. Here they are:
-Retail Ready Displays. These displays can reduce speed-to-shelf and handling costs for high-turn, high promotion items.
-One-Touch Merchandising. Case packs are being used in high-volume categories in high volume SKUS.
-Efficient Case Packs. Smaller size case packs can help gain distribution in smaller format stores.
-Self-Facing Fixtures. Fixtures are now available that reduce some daily shelf-maintenance work.
-Value-added Products and Services. This allows for less time to be spent preparing and selling fresh product.
-Effective Retail Coverage. Coverage is going to where it is most needed directed by data and technologies.
-Supply Chain Optimization. Manufacturers are looking at alternate methods to get product to market that may be more efficient.
-New Item Introduction Programs. Slotting programs are becoming part of manufacturer accrual programs.
-Promotion Spend Effectiveness. Manufactures are reviewing promotional budgets and ROI scorecard models are emerging.
-Efficient Direct Store Deliveries. Retailers are writing computer-generated orders with their own proprietary systems.
Several of these methods can have a direct effect on members of the at-retail merchandising and marketing industry. Bottom line sales growth is usually more about cutting costs than it is about gaining efficiencies. It is important that the members of World Alliance for Retail Excellence & Standards can demonstrate how world-class execution of in-store initiatives can do both and provide incremental sales gains. You can download Competitive Edge by clicking here.
With advanced technology and mobile devices, the rules of consumer engagement have changed. That is one of the key messages from a recent study released by GMA called, Growth Strategies: Unlocking the Power of the Consumer. The study, which appears in Progressive Grocer, is encouraging news to the members of the at-retail merchandising and marketing industry. It shows that although net sales have slowed, companies have seen positive net sales of 7 percent in food, 5.5 percent in beverage and 3.2 percent in household products.
GMA is the voice of more than 300 leading food, beverage and consumer product companies in the United States and around the globe. The story contains a link to the entire report.
Here are some more of the key findings:
-Total retail sales reached $1.1 trillion in 2012: $568 billion at grocery stores and $530 billion at food service and drinking establishments.
-While net sales had been slowly going up since the recession, both top- and bottom-performing CPG companies experienced a slowdown in net sales growth in 2012.
-Bottom performers are starting to hold onto their cash, which means they could be ready to start making more investments in research and development and marketing to launch new products.
-Many companies are embracing the need for product innovation as well as understanding consumer and market needs as part of their R&D activities.
Data from this report points to greater need for understanding of the customer and tells us that successful companies are doing better than most at understanding what the consumer wants from their shopping experience. We can all learn from understanding and adapting these best practices to our own businesses as well as identifying potential new service opportunities to support manufacturers and retailers. Download your copy of the report today.