Although the country in no longer in a recession, the impact is having a lasting effect on the way consumers shop, and on the way that brand marketers bring their goods to market. During the recession, gas prices played a significant role in the economic cut back. Just when things looked like they were starting to recover, gas prices again have jumped and may now be the single biggest concern for consumers. SymphonyIRI recently published a Times & Trends Special Report: The Ripple Effect: High Gas Prices Bring Pain Beyond the Pump. Times & Trends is a monthly publication that brings thought leadership to both retailers and their manufacturer partners.
According to SymphonyIRI, almost half of consumers are seeing their grocery budgets being reduced by higher gas prices. Forty percent of shoppers are being forced to reduce or eliminate trips to preferred retailers and begin to use more local options. These facts bring great challenges to retailers and CPG manufacturers.
As usual, Symphony/IRI has some good advice for brand marketers to help them combat the backlash caused by high fuel prices. Most of them involve closely monitoring the marketplace and being able to make almost immediate adjustments to go-to-market strategy. The follow-up is to ensure that distribution, assortment and merchandising support is closely aligned with an ever-changing consumer shopping trip mission.
The follow-up is where the members of the at-retail merchandising and marketing service industry come in. NARMS members can help on the front-end with highly evolved shelf-level data gathering and reporting technologies. Mystery shopping, sampling and demos are just a few more ways for manufacturers and retailers to exercise quick and effective at-retail initiatives. Fast and accurate new product cut-ins and category resets can ensure that consumers can make the most of their shopping trips and maximize their shrinking budgets. With shopping trips at a premium, trading partners are going to want to make sure they are on-shelf and in-stock.
On a monthly basis, the Willard Bishop Consulting Competitive Edge newsletter provides key insight and thought leadership to brand marketers and retailers looking to gain a sustainable advantage on the competition. The August issue is no exception as author Jon Hauptman discusses, “Building a Winning Shopper Value Equation.” The Shopper Value equation is defined as a go-to-market-strategy that fills important shopper needs in a unique and appealing way.
Retailers are pulling back on some recent initiatives that were designed to enhance efficiency, but in the end pushed shoppers away. Hauptman uses Walmart as an example, citing temporary price reductions, Project Impact assortment reduction and reducing aisle displays as failed experiments that the retailer is now reversing. This recent Walmart experience is an example of a company reverting to a clear, appealing shopper value equation. In other words, they are getting back to the things that made them successful in the first place.
Why does this happen? Hauptman says many retailers try to be all things to all people rather than identifying what they are going to stand for and taking a leadership position. Another factor is not being able to keep up with the latest shopper needs. Success is some areas and categories have lulled some retailers to sleep as their own success made them blind to the fact that competitors had caught up and surpassed them. Still another factor is not being able to see new competition such as Dollar and Drug chains offering food items.
Competitive Edge says that building a successful shopper equation requires a retailer to define key elements of its value proposition and then establish and implement strategy that makes them the clear and undisputed market leader in at least two of the elements.
Of course, this is all easier said than done. Headquarter strategy often falls short at the point of at-retail execution. That is precisely where partnering with NARMS members can help retailers and suppliers balance the Shopper Value Equation. Again, we thank Willard Bishop Consulting for sharing their thought leadership and encourage our members to download and digest the August issue by clicking here.
The Tampa Bay Rays seemed to have everything going their way with a 3-1 lead in the best-of-seven American League Championship Series against the Boston Red Sox, and a 7-0 lead late in game 5. That is about the time when the force of nature known as the Red Sox mighty offense caused a significant shift in the competitive environment. The Sox came back to win game 5 and game 6 to force a pivotal game 7. But this didn’t turn out to be a crash and burn story for the Rays. They overcame the momentum shift and got back to the doing the things; namely starting pitching, solid fielding and timely hitting; that helped them win the American League East title. The result is that they are going to their first World Series against the Philadelphia Phillies. There are many CPG companies who have experienced the same thing recently. Good times have been derailed by force of nature type economic factors and unprecedented competitive forces. The October issue of Willard Bishop Consulting’s Competitive Edge suggests that manufacturers can follow the Rays example by sticking to the knitting (or hitting as it were). In this case it is providing value to their customers. Doing so can help them overcome the tough times and ultimately win the day.
As we were reminded in yesterday’s monthly NARMS webinar hosted by Mark Hunter, “Winning Sales Strategies in Difficult Times,” value is defined not by what the customer pays for a good or service, but by the benefit they derive from the service. Mark reminded us that this is quickly forgotten as competitive pressures mount. In the article for Competitive Edge, author Jim Hertel concurs, “Economic pressures on retailers can quickly translate into margin pressures and price increase pushback for suppliers. As a result, suppliers need to understand, improve, and get credit for the total value they create beyond product and price.” Hertel says there are four major levers that suppliers can use to add value and get credit for it: increase demand, reduce cost, increase merchandising impact and develop an effective go-to-market approach. It is in the latter two where NARMS members have an opportunity to add value to our customers, as they add value to theirs.
Hertel goes on to say that in order to accomplish this, suppliers may need to change the way they engage their customer, and key among these are shopper insight and shopper marketing capabilities. Again, NARMS member ears perk up.
Now that we have the point in scoring position, it’s time for the big two-out hit. Tuning in to resources like the NARMS Webinar Series, Willard Bishop’s Competitive Edge, and other such studies and publications can be a great aid in identifying areas where we can help our customers add value. In doing so, we establish our companies as a vital and reliable part of the go-to-market system and not just a switch-on service that is far too susceptible to competitive and economic pressures.