The April edition of Competitive Edge by Willard Bishop Consulting tells us that convenience stores may face some challenging times ahead. The usually recession proof format is now faced with shrinking margins from fuel and tobacco sales and is largely dependent on just a few categories for profitability. The rush to alleviate the concern has lead to an over assortment of products and non-shopper friendly environments. Author Paul Wietzel makes several suggestions to reach a new level of c-store category management in a channel where every inch of the shelf truly does count. The suggestions fall into three categories:
Focus on the Core. Non-core SKUs have been making their way into the c-store channel. It has lead to clutter and driving up of handling costs. As a result, some leading distributors are offering category management support to create effective shelf-sets for their retail customers.
Minimize Shopper Confusion. Traditionally, the bigger selling categories in a c-store are featured in several locations of the store. This is an intentional strategy to pick up additional impulse buys. But there is evidence to suggest that this old technique may not be working any longer and that consumers find it difficult to make purchase decision when categories are broken up. Consolidating some of these categories might eliminate some SKUs, reinforce the need for core SKUs and leave room for new products.
Set Categories Based on How Consumers Shop. The author finds that many c-stores are not merchandised based on how the consumer shops, but rather to create vendor efficiencies. This is done for several reasons, none of which are based on helping the consumer. He suggests that it is time for the channel to take a new approach to category management and redesign stores to really make the shopping experience convenient.
Members of the at-retail merchandising and marketing services industry are always looking for new ways to demonstrate their value to manufacturer, retailer and distributor customers. We cannot help but notice that all of the suggestions above revolve around remerchandising and resetting the store. Who better then the members of NARMS to turn strategic category management plans into tactical and operational sales and profitability building realities?
According to the March 2011 issue of Competitive Edge by Willard Bishop Consulting, food inflation is expected to reach 3.5% to 4.5% overall. Compare that to the 1% annual food inflation rate of the last two years and you can foresee more significant challenges for manufacturers and food retailers. As members of the at-retail merchandising and marketing service industry, the concerns of our customers become concerns to us, but they also provide opportunities to be of even more service.
The most obvious strategy for food retailers would be to pass along price increases to the consumer and hope for the best. However, author Jon Hauptman offers some more thoughtful responses that focus on enhancing overall value. Not coincidently, these suggestions may provide NARMS members with some openings.
Clear communication to consumers as to how they can save money and get value in the store is one such response. Being completely open about price increases or fluctuations by calling out weekly ads, temporary price reductions, private label options and shopper frequency programs is a way to build trust and loyalty. Signage, shelf tags, end caps and temporary displays become critical to retail communication programs. Combine that with shrinking store staffs, and third-party service providers become even more valuable for getting things done in-store.
Private label has picked up a lot of steam the last few years as a means for consumers to save money. At the same time, the quality of store brands has improved so consumers do not feel like they are compromising. As more and more chains utilize private label, the need for professional at-retail merchandising and marketing services for these products will reach the same level as national brands.
Many food retailers are discovering that the 80/20 rule is a huge driver of their business. In other words, 20% of their shoppers are producing 80% of their business. In order to cater product selection and price to these Top Shoppers, the ability to quickly collect and analyze at-retail shelf data becomes an extremely valuable commodity. Something that many NARMS members are already equipped to do.
Although Assortment Rationalization did not work out too well for some national retailers, it is still very difficult to carry a large variety of SKUs in an environment of rising cost and prices. Retailers may again take another stab at right sizing their assortment to remove clutter and create space for popular items and new items. Shelf level data is again important, as is the ability to perform product and category resets to minimize out-of-stocks and benefit from new item lift more quickly.
You can download the latest Competitive Edge report by clicking here. Keeping a finger on the pulse of industry thought leadership can provide many strategic advantages to the savvy third-party service provider. We thank Willard Bishop Consulting for the contribution.
The December edition of the Willard Bishop Competitive Edge newsletter – Enhancing Promotional Effectiveness- shares some interesting findings about the uses and abuses of selling product on promotion. While some retailers feel forced into the practice because of changing consumer buying habits, it does not seem to be working. According to Competitive Edge, in many cases the glut of promotional activity is only serving to help retailers draw even, not break ahead in terms of sales or profits.
An eye catching statistic from the Bishop report is the finding that in six markets, 38% of supermarket sales are made on promotion and yet only 37% of those sales where truly incremental. That means that the remaining 64% were inefficient and only seem to subsidize the consumer in a sale that would have been made anyway. The opportunity lies in the ability to undertake strategies and tactics that result in incremental sales.
Competitive Edge identifies some significant barriers that stand in the way of promotional effectiveness. They are: Tracking and Accountability, History-Based Planning, Reactive Planning, Catching Offers and Communication. The story goes into some detail and explanation on each of these, as well as, identifies best-in-class approaches to maximize promotions.
So what can NARMS members do to help retailers and manufacturers plan and execute truly effective promotions? Almost all promotions have elements that require at-retail shelf activities. From planning, preparation and follow-up reporting, the services of at-retail merchandising and marketing companies can, almost point-for-point, address the barriers indentified in this article.
As service providers, it is always helpful to know the challenges of our client base so we can effectively communicate how we can help them reach their goals. Take a few minutes today and download the December issue of Competitive Edge by clicking here. The time is right to reinforce the message that, in addition to being dependable operational resources, NARMS members are a powerful force in truly effective promotional strategy.
The September 2010 issue of Competitive Edge, “Free the Shopper Data,” by Willard Bishop discusses the issue of selling shopper data to manufacturers in the effort to create the ultimate in one-to-one shopper marketing programs. In his article, author Jim Hertel suggests a more immediate and possibly more effective approach of retailers looking at their own shopper data to make better merchandising decisions every day. No matter where you stand on the issue, there are still some big questions that need to be asked. How do you gather shopper data and how do you execute assortment, planogram and adjacency programs after your plans are made? The jumps are potentially huge and the cost of entry high. The members of NARMS may be the answer to fill the gap between the best laid plans for shopper data and actually getting things accomplished at shelf level.
Many of the data points of shopper marketing are captured through electronic means simply by mining scanned data. This is rich and important information and will continue to be developed as not only an order and assortment tool, but also a marketing tool. However, lacking a human touch, something is always lacking. This is where the members of NARMS come in. They can be quickly mobilized to gather data in the aisles through surveys, customer intercepts and mystery shops and report back to manufacturer and retailer clients the same day.
Shopper data tells a story. It helps to incorporate purchasing behavior into store design, customer traffic flow, aisle penetration and category conversion. It can also help to pinpoint locations for display activity that may feature complimentary products that can maximize basket size. When all this data converges and the story becomes clear, the next obvious and necessary step is to make it all worthwhile by putting categories and products in the optimum location. All the data and software in world cannot physically perform category resets, planogram changes or build displays. And it really does not make sense to have store employees take time away from taking care of the customer to perform the duties. The members of NARMS are experienced companies who can come in and get the job done right for a fraction of the cost that it took to mine the data in the first place.
Like many initiatives of the past, the development of shopper data is severely compromised by the lack of meaningful execution at- retail. We again thank Willard Bishop and for their thought provoking insight. You can download the September issue of Competitive Edge by clicking here.
Private label and store brands have enjoyed a tremendous surge during recessional times as cash-strapped consumers seek comparable products at a lower price. The Willard Bishop Competitive Edge newsletter for November discusses how retailers can drive growth and draw a competitive advantage with private label. The “Four Pillars of a Successful Retailer Private Label Program” lays out a road map for retailers. The question that at-retail merchandising and marketing companies should be asking is, “How do we fit in the picture?”
If most experts’ predictions of permanent shopper behavior lasting long after the recession are correct, store brands and private label will continue to be a legitimate competitive concern for brand marketers. Not to mention a viable market for our services. The four pillars of Promotion, Pricing, Assortment, and Communication provide an avenue for at-retail companies to provide service on both sides of the aisle.
As retailers become more and more dependent on private label, the more they will realize that the new, higher quality store brands will run in to the same challenges as their brand-name competitors. The ongoing battle of out-of-stocks and new item speed to shelf will continue to challenge and overload the store’s ability to execute with current resources. The need for a variable cost, high quality model for projects and roll-outs will pass directly to the retailer or perhaps to the behind the scenes private label manufacturer. As far as promotion and communication, these store brands will not differentiate themselves simply by sitting on the shelf. At-retail programs will be needed to make comparisons to the brand name counterparts.. Shelf information will be critical to measure the effectiveness of pricing, promotion and assortment. Sampling and demonstrations will still be needed to introduce products and get consumers to seek trial.
In the end, the job of getting products and promotions to the last few feet of the retail shelf remains the same. The challenges, solutions and successes still hinge on at-retail execution.
It has been awhile since we visited the pages of Willard Bishop’s Competitive Edge. In the September edition, Craig Rosenbloom writes about the proliferation of Shopper Marketing Practices and how shopper data is evolving as a force in the 21st century. Having this opportunity to intimately know the consumer is certainly a great tool for tailoring on-line and at-retail consumer promotion, but as Rosenbloom asks, “Why are we only using shopper data for such limited applications?”
As the eyes and ears, as well as the arms and legs, of CPG manufacturers and retailers around the country, NARMS members are uniquely positioned to play a vital role in both the gathering of shopper data and the execution of any resulting at-retail plans. Because of this, it’s important to know in which direction that these trading partners might be headed with the application of information.
Although Rosenbloom offers three additional ways that marketers can use shopper data beyond target marketing, there is one that jumps off the page in the eyes of at-retail merchandising and marketing companies. That is the application toward assortment and space. With the perimeter of the store growing with necessary offerings to service the customer, that space has to come from somewhere. In most cases, it means that the center of the store is shrinking. Having less space makes each facing and end cap that much more valuable to our customer. Competitive Edge says that trading partners would be wise to use shopper data to optimize assortment offered in the dwindling space.
The article also introduces a term called, “affinity score.” An affinity score helps you decide what additional items a shopper is likely to buy with the purchase of a given item. This all leads to the creation of unique product placement. He uses the example of a, “breakfast center,” where milk, eggs, bacon and cereal are all available in the same place.
Knowledge is power. Shopper marketing data is power for trading partners and knowing the application of the data is power for our group of service companies. A deep understanding of what is driving our customers is invaluable in the evolution our service offering into a valuable go-to-market partnerships.
One of the benefits of belonging to NARMS is the ability of the association to speak with one voice to key players in the retail industry. Case in point is our involvement in The Center for Retailing Excellence, the ISI ShareGroup and close communication and sharing with expert market consultants like Willard Bishop Consulting, IRI and GroupM. Many great sources of information from these sources are available on www.narms.com. Today we bring your attention to the latest report from Willard Bishop which is the annual Future of Food Retailing Report.
The Future of Food Retailing report examines changes in the retail food industry over the past year and forecasts how well all key formats will fare over the next five years. Since 1983, Willard Bishop has published this annual report containing current and projected market share and sales data across store formats comprising the retail food industry. This year’s report benchmarks and analyzes 2008 performance for each of 13 retail formats and presents a five-year forecast of each format’s sales and share.
According to the report, “2008 was a year of nearly unprecedented challenges and change in the retail food industry. The global economic slowdown—and domestic recession—caused profound shifts in consumer shopping behavior. The search for low prices and great values was a consumer divining rod that introduced shoppers to new stores and formats, and continues to impact store choice and spending today.”
Among the channels examined are: Traditional Supermarkets, Fresh Format, Limited Assortment, Super Warehouse, Small Grocers, Convenience, Non-Traditional Grocery, Wholesale Clubs, Dollar, Drug, Mass and Military. The sales and SKU estimates for each of the store formats include all grocery items, non-edible grocery, health and beauty items, including cosmetics and general merchandise including, but not limited to: greeting cards and magazines, alcohol, tobacco and some seasonal items.
We again thank Willard Bishop and our entire network of industry experts for sharing this information. Together, we truly do form a powerful retail community.
In the March edition of Willard Bishop’s Competitive Edge, author Craig Rosenblum extols the virtues of staying the course in, “Retail Strategy –Now is Not the Time to Walk Away From It.” Furthermore, he details a process that can help retailers validate and modify their strategic path during difficult times. The good news for NARMS members, providers of at-retail merchandising and marketing services, is that there are very clear targets of opportunity to support a well thought out strategic approach.
Central to the Bishop approach is to create a clear point of difference by developing a value proposition through the following equation: Value = (Price x Quality x Service x Assortment x Facility). At least three of these building blocks of value provide our members with a direct opportunity to be an active and vital part of the go-to-market process.
Certainly our service can help improve how retailers provide excellent service to their customers through superior execution of at-retail initiatives. While the Bishop report focuses on store employees, we can take it a step further and extend great service to include products being in-stock, new products getting to the shelf, displays getting out of the back room and products being supported by sampling programs.
Assortment is another area where NARMS members excel. The timely and accurate execution of planograms and category resets help bring proper assortment to the consumer. Our member’s get the job done faster, and in better compliance with headquarter expectations, thus assuring migration of chain strategy to the store level.
The physical condition of the store, or facility, is another area where NARMS members stand out. Be it a new store set-up, remodel, relocation, category reset or store-within-a-store, our members are all about being the agents of maintaining and adjusting facilities to fulfill and enhance the customer experience.
Download the Bishop report here and read more about the expert advice being given to manufacturers and retailers. Then decide for yourself how your company fits in to the go-to-market strategy.
During the scramble to find new at-retail programs to execute and the ongoing challenge of delivering quality service to existing customers, it is often difficult to keep up with your “Sunday” reading. The argument can be made that it is more important than ever to keep an ear to the ground and an eye in the trades to unearth new information or new opportunities. As members of NARMS, we are indeed fortunate to have quality retail research firms such as Willard Bishop, IRI and GroupM provide us with the latest thought leadership. The latest example is a new Willard Bishop “Competitive Edge”, which seems to give us a punch list of how to bring even more value to reset opportunities.
As children, one of the greatest joys our parents would experience would be when we would do choirs around the house without being asked. In, “Achieving Efficient Retail Implementation,” author Paul Weitzel takes a look at the cost drivers that can have a negative impact on our ability to serve stores. He also looks at 10 Best Practices which can help drive down implementation cost. This is valuable information for our members, as it gives us a sneak peak at the kinds of cost controls our customers are looking for. And better yet, it allows us to evaluate each one of our operations models to make sure we are building in systematic controls to make those models more marketable. Being able to predict customer needs and designing them into our operations allows us to positively sell value, rather than expense.
The search is on to drive costs out of the system. As service companies, we need to be able to play the efficiency card when it comes to resets. While reading the report, it occurs to me that the efficiency, experience and expertise we bring to the party are tailor made to fill the needs of so many manufacturers and retailers.
The report indicates that trading partners are spending 30% more on retail implementation than is necessary. NARMS members need to demonstrate we can operate within budget, eliminate discrepancy resolution time, achieve a high degree of on-time completion and get new items and category resets out to the consumer faster. The challenge isn’t easy, but it also isn’t new to our members, who have been selling the benefits of an outsourced, variable cost partner for years.
An optimistic view of this report is that the marketplace is once again opening itself up to exactly what we are selling. By listening, reading and understanding needs and concerns, we can better prepare our operational approach and our sales pitch to be a relevant force in the go-to-market system.
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.