A few days ago, Supermarket News Editor-in-Chief David Orgel wrote about what he believes is still the most crucial factor in the success of retail outlets. In-store interactions between customers and associates, he says, is a fundamental that is often overlooked as we seek to improve the customer experience.
Orgel cites an article in the Harvard Business Review that states customer-associate interactions will become even more important for a couple of reasons. With all of the technology and social networking that we now experience in our day to day lives, a trip to the market could be just what that doctor ordered to help fulfill our fundamental need for human interaction. In a sense, everything old is new again with attention to personal service potentially becoming a key driver in retail success.
The key will be to maintain both a high degree of direct customer interaction with the speed, efficiency and convenience brought by in-home shopping. In effect, the need to execute efficiently at-retail becomes even more important. For a case in point, look at how a professionally staffed and run product sample or demo can greatly enhance both the customer experience and the bottom line.
This argument can be taken to another level. The members of NARMS, at-retail merchandising and marketing service specialists, are in the people business. No amount of shopper data can have the desired effect on retail without the human element of getting boots on the ground to implement the resulting in-store initiatives. Most of this work is done during business hours meaning NARMS member associates are trained to interact with customers because they are often identified as store staff.
The bottom line is that it is harder than ever to get customers in the store, so it is more important than ever to make sure their experience makes them want to buy from you and return often. Great looking stores with well-stocked shelves, convenient adjacencies, strategic displays and well run samples are a means to this end. We all need the human touch.
A great self-checkout debate began this year. Some retailers began taking them out of stores saying that the benefits are limited and that the use of self-checkout robs them of an opportunity to display exceptional customer service. Others say there is no proof of that argument and that consumers enjoy the speed and convenience of self-service. A news item in CSP Daily News takes the debate to a whole new level. Kraft Foods will begin using an automated sample dispensing machine in the Chicago market in the near future.
The machine will hand out Temptations dessert by Jell-O. It will get by potential exposure abuse by using technology that can detect the facial age of the user. In this case, the product is targeted to adults so the machine scans the users face to determine if it will dispense a sample or not.
As is the case with self-checkout, shopper experience experts are weighing in on the use of the device. Some say the wow factor is too good to ignore. Others are calling it gimmicky and not very useful.
The investment in the technology and the pilot test speaks volumes as to the importance of sampling programs to CPG manufacturers. According to the story, the food and beverage industry spends somewhere in the neighborhood of $1 billion annually on product sampling. It is all about getting the right sample in the right hands.
For NARMS members who specialize in event marketing, sampling and demos, the news might be somewhat disturbing. But widespread use of such devices is likely to run into the same debate as self-checkout. No matter how hard we try, shopping at retail stores is largely a social experience. No amount of technology will ever be able to replace the services of a professional and well-trained event marketer whose ability to act as a real life brand ambassador is priceless.
A few days ago, we brought you a Times & Trends Report from SymphonyIRI that stressed taking care of the ultimate consumer. This week, another grocery consumer survey seems to compliment those observations. A story in Progressive Grocer reports on the findings of a Coinstar study that found that 81 percent of consumers are spending the same or more the past three months on groceries, but they are asking for more when it comes to value and service. As the story describes, these consumers are taking a back to the basics approach. Today, we will look at some of the other findings.
Over half of those surveyed said they have used more coupons than in the past. The same amount said they prefer loyalty or value cards that offer instant rewards. The use of debit cards and cash are the primary forms of payment when it comes to groceries. These consumers said they are buying more grocery brands than private label and less non-necessity items. They say they are being careful with their dollars, but will spend providing they see a streamlined and value-oriented approach.
As the story reports, the National Retail Federation predicts an average holiday shopping season expecting a 2.8 percent increase versus the 5.2 they experienced last year.
What does this all mean? The holidays are providing an opportunity to attract and build consumer loyalty and increase market share, but the margin for error is shrinking. The doorway to success is through excellent execution and paying mind to the customer experience. Sixty-two percent said a varied, well-organized inventory was the key. Sixty-one percent cited ease and speed of the shopping trip.
It has never been more important for brand marketers to execute exceptional at-retail merchandising and marketing programs. Being in-stock, having promotional material on display and providing professional sample and demo programs appeal to the more grass roots approach being displayed by grocery shoppers. To not execute means to lose that hard-earned shopper and now thinner dollar to another store or brand.
The knee jerk reaction to retaining brand loyalty and market share during the newly discovered consumer frugality is to compete based on price. According to Symphony/IRI in the August edition of Times & Trends, that is exactly what not to do. The report says that leading with price has a significant negative impact on brand loyalty. Here are some more highlights of the report:
Brand loyalty has actually increased across 45 of the top 100 CPG categories. Product innovation is a key driver in that growth. However, the task of bringing new products to the market has been made tougher due to conservative shoppers, SKU rationalization practices and shrinking pantries. Of course, this means that brand loyalty has fallen in 55 of the top 100. Private label has been identified as a key factor in these categories.
Other key drivers of loyalty are price, promotion and assortment. In terms of price, it really depends on the category. Some categories are negatively impacted by price increases while others seem insulated. When it comes to promotion, the four categories that have seen the largest jump in promotional support have also experienced increased brand loyalty. The promotions in these areas tend to focus on value rather than low price. Assortment is somewhat a double edged sword. Consumers have seemed to cast their vote for increased assortment by rejecting SKU rationalization. More choices make it more difficult to establish and maintain flagship brands.
Although not significantly mentioned in the Times & Trends report, at-retail merchandising and marketing support certainly play a huge role in the battle for brand loyalty. Remember, if it is not on the shelf, it is not for sale. New product launches need to be cut in on-time and on-budget to coincide with advertising and promotion. In-store displays and shelf material are of little use sitting in the back room. Out-of-stocks and distribution voids are a sure fire way to drive a loyal shopper to another brand. Perhaps that is straight into the arms of a product who is conducting a professional product sample or demonstration in the store. Mystery shopping and at-retail intelligence gathering is needed to ensure frequent and granular assessments of what shoppers perceive to be their real needs.
Could it be that brand loyalty is ultimately achieved by keeping promises? The members of NARMS, through professional at-retail merchandising, event marketing and installation help keep the brand promise every day. You can download your copy of Times & Trends by clicking here.
Supermarket News this week features an issue dedicated to strategic planning for 2011. In his column - Resolve to Reboot the In-Store Experience - Editor-in-Chief David Orgel tells us that gradual improvements in the economy will nudge shoppers just enough to where the in-store experience, not just price, will once again become an important factor. Orgel quotes a Mintel source as saying this retail rebirth will emphasize creativity to drive shoppers back into stores. The column suggests several initiatives to enhance the in-store experience.
The first initiative is the increased and enhanced use of Demos. Many retailers are undertaking plans to take this classic tool to new levels by including not only sampling, but also retail events such as cooking demonstrations, and product knowledge talks from suppliers. Although this movement is not new, the rediscovery of the effectiveness of at-retail Event Marketing seems to back the findings produced by Dr. Kenney Herbst of Wake Forest University on behalf of the NARMS Event Marketing Division.
A couple of other ideas involve storytelling and programs for children. Again this falls in the realm of professional Event Marketing companies who do so much more than just hand a consumer a product sample. Product Knowledge sessions pass along information about where products come from, how they are made and how to use them. This romancing of the product can go a long way toward the consumer thinking about it as more than just a commodity. Fun programs for kids including positive reinforcement about nutrition and health can make shopping a family adventure and build customer loyalty.
No doubt that retailers and suppliers will be spending at least some of their time and budget improving the in-store experience in 2011. It is helpful to know that they will not have to reinvent the wheel because the members of NARMS and specifically the Event Marketing members are standing by to flawlessly execute these and other at-retail initiatives. You can read the Supermarket News story by clicking here.
According to Dr. Kenneth Herbst, during his presentation at the 14th Annual NARMS Spring Conference called, “To Sample or Not To Sample: The Proof Is In These Data,” the decision to use at-retail sampling is a no-brainer. Herbst used his own data as well as data provided by Stratmar which compared sales of items the week prior to being sampled against the same item in the week it was sampled. In case after case, a tremendous sales lift was experienced during the sample week. If you were not able to attend, you can check out the hand-out material on the NARMS Conference Center or tune into a NARMS Webinar this summer.
Herbst is an Assistant Professor of Marketing in the Babcock Graduate School of Management at Wake Forest University in Winston-Salem, NC. He has a Masters and Ph.D. from the University of North Carolina at Chapel Hill. In addition, he earned a B.A. from Wake Forest University where he played basketball on back-to-back ACC Championship teams in 1995 and 1996. Herbst has been interviewed about his food research and industry expertise by various news outlets and trade publications.
In 17 different product case studies, sales doubled, tripled and more during the week of a product sampling. Herbst discussed some of the factors that affect a successful sampling program such as weather conditions, store traffic, location of demo, stock conditions and consumers feeling toward the demo. He also concluded that customers who receive samples stay longer in the store, turning shopping from a chore into an experience. The customers also experience a greater satisfaction level with the retailer during sample programs.
The session was such a hit, that those in attendance requested and offered assistance in broadening the scope of the work and continuing the research. Dr. Herbst will again present the data and lessons via a NARMS Webinar on Tuesday, July 21st, 2009 at 1:00PM Central. In the meantime, he is interested in speaking with you about your ideas for in-store sampling studies. He wants to conduct research or analyze your previously collected data to assist you when you approach retailers and manufacturers to assess their interest in sampling. You can e-mail Herbst (Kenny.Herbst@mba.wfu.edu) throughout the year with your ideas for future studies. You can also visit his website at www.mba.wfu.edu/herbst.
A few weeks ago, I wrote about coupons and how they are again becoming part of the CPG landscape. This observation was made before the current financial crisis and subsequent bailout talks on Capitol Hill. Coupons are not the only remedy in a slumping economy. A Wall Street Journal article this week outlined plans by major manufacturers to change the focus of their go-to-market strategy away from premium, high margin items to feature to lower-priced, value products. Consumers are trying to find any way to stretch their food dollar. A challenge to the NARMS membership will be how to aid and assist manufacturers and retailers in merchandising value items to the front and center.
Food companies are hoping to capitalize on the economic crisis by steering consumers to cheaper, high-margin products. According to the Journal, Kellogg Company, Campbell Soup Company and Kraft Foods Inc. have undertaken aggressive campaigns to focus in on the brands that are most associated with value. It’s another opportunity to sing the praises of staple cereals, condensed soups and sandwiches, and Kool-Aid as the ultimate bargain buys. The approach is a plea to those consumers who are concerned about job stability, financial investments, fuel prices and the upcoming winter heating and holiday season.
For the members of NARMS, the question is always, “How can we help?” Now may be the time for Event Marketing companies to promote themselves as a provider who can coordinate with several manufacturers to bundle products into a meal solution sample or event. Can anyone say, “Soup and Sandwich?” MSO’s have an opportunity to keep these products in-stock and make sure that any dollars spent on POS/POP are maximized by making sure of placement. Also look for potential category resets to place more focus on the value brands. Our PIC members may see and need to refocus on the onslaught of smaller express format stores that have chosen the Phoenix area as the battleground. Several major retailers are experimenting with this concept as a way to bring a more local, targeted approach to retailing and also benefit from a more efficient inventory supply chain. And last, but certainly not least, the independent food brokers could see brand new doors opened for members of their portfolio of products as retailers may be looking for better value propositions for consumers.
In the end, history will be the judge as to how the nation survives this latest economic emergency. But in the meantime, our customers are clearly making adjustments in their marketing strategies and it is incumbent on us as world class providers of at-retail marketing services to keep in step and find ways to provide value to our clients as they seek to provide value to their consumers.