MARCH / APRIL 2011

Fundamental Focus
Don't let the basics get lost in the shuffle at retail.

Are you as transfixed as I am by the sequences of zeros and ones that make up today’s digital shopper-marketing space? I find myself salivating at the thought of soon being able to scan UPC codes with my smart phone to complete a purchase without ever having to wait in line.

However, many of these advances in shopper-facing retail technology have not exactly been transformative. In fact, new technologies were rated as having the least impact on the customer experience in a recent survey of industry executives by RetailWire and Dechert-Hampe. The editors’ interpretation was that these enhancements are not transforming the shopper experience as much as they are refashioning aspects that were already there. For example: Mobile apps used to be called floor sales associates; in-store television was point-of-sale and signage; and shopping apps were the good, old-fashioned shopping list and coupon organizer.

It seems like we may have just developed new delivery mechanisms for age-old fundamental factors. Sample size of one here, but technology aimed at simplifying the experience sometimes can even backfire. How do I know which location-based shopping app will benefit me more at each location? Should I be opening the retailer’s own app, or see what offer it is running through Shopkick? Should I even bother with Foursquare or Loopt right now?

While everyone (myself included) is busy app-le picking in this digital orchard, other lower-hanging fruit may be ready to harvest. Interestingly, according to the RetailWire survey, many of the top factors influencing the shopper experience are related to product selection and availability. The survey indicates we can increase sales and improve shopper satisfaction by focusing on the fundamentals of balancing national and store brands, as well as providing localized assortment based on each store’s unique shopper base. We should also balance our inventory management systems to ensure timely product reorders and rationalize assortments to ensure shelf-holding power for our best-selling items.

These same fundamentals have the greatest effect on purchase decision behavior. In a previous issue of The Hub, we highlighted a recent academic study where five years of panel data suggested cumulative sales elasticities for each aspect of the marketing mix (Dare To Compare, September/October 2010). Distribution had the highest elasticity at 2.424. A 10 percent increase in traditional advertising, in-store promotion, and distribution would yield the respective sales increases of .36 percent, 2.77 percent, and 24.24 percent.

At the risk of sounding like Captain Obvious, the most effective way to drive a positive customer experience and to increase sales is to ensure that the product is on the shelf in sufficient quantities, and that planned promotions are fully executed. But if this is so obvious, why do these fundamental aspects of the game not get their fair share of the retail marketing conversation?

At least two recent Grocery Management Association (GMA) studies suggest that one fruit-bearing opportunity is to attract and develop top sales talent. While most directly responsible for getting the product on the shelf (driving customer satisfaction and sales), sales leaders are rarely stereotyped as strategic Don Draper types like their advertising counterparts.

Maybe it’s because they haven’t always been so strategic. As evidence, put aside The Hub (unless you’re reading this on its new iPad app!), log onto YouTube, type in “Super Broker Shuffle,” and relish the funny. Produced as a parody of the 1985 Chicago Bears’ “Superbowl Shuffle” video, this priceless clip epitomizes the decidedly non-strategic nature of its rapping sales reps. Sample lyrics: Grey Poupon is full of spice / spread it on a sandwich, it tastes so nice / I didn’t come here to give a rebuttal / I came here to win the Super Broker Shuffle.

But precisely a quarter century later, sales organizations no longer get a bad rap (sorry …couldn’t resist). Market factors such as the growing importance of shopper data analysis have made it necessary for today’s top sales managers to have an advanced skill set and general-management mindset; they are “thinkers” and “doers.”

They proactively mine through mountains of panel data to identify underperforming accounts and targeted opportunities. They scrutinize leakage trees and shopper insights metrics like buyer and trip conversion. They seek strategic, cross-functional collaboration opportunities to help retailers achieve their marketing, supply chain, and cost-reduction goals. They conduct customer profit-and-loss management and make assortment recommendations, perform pricing analytics using retailer point-of-sale data and calculate trade promotion return-on-investment using retailer card data.

Successful shopper marketers, of course, are leveraging these evolved sales teams as well. If that’s not common knowledge, the GMA studies reiterate it. At the most basic level, this collaboration might involve shopper marketers leaning into sales teams for data, trade plans, formats and tactical priorities to identify account opportunities and ensure that programs are on-strategy. Sales teams accompany shopper marketers to program sell-in meetings and help manage relationships, and even generate incremental display support.

Advancements within retail teams are also delivering big wins, ensuring products are actually on the shelf and promotions executed as planned. Better training and handheld technology with next-day reporting systems (including photographs of actual store conditions) have become recent game-changers, improving execution at the point-of-sale.

Retail coverage teams can greatly improve overall brand return-on-investment by conducting in-depth downstream data analysis to uncover distribution voids, phantom inventory, and shelf out-of-stocks (one manufacturer recently avoided losing $18.5-25.5 million at Walmart this way). Moreover, new deployment models have been developed to meet the customized needs of manufacturers, including everything from dedicated to syndicated teams as well as category-focused surge teams.

With the availability of real-time data from handheld technology, analytical interpretation now enables the optimal structure to be identified by brand and category. For example, in one recent analysis, the return-on-investment from optimizing retail coverage at a key account exceeded 300 percent.

In January 1986, merchandisers executing Super Bowl-themed product or trade events were likely just told to “stack it high, watch it fly” irrespective of retailer or store format. As we shopper marketers are well aware, today’s merchandising programming can be highly customized as packaged-goods companies leverage available data sources to sharpen focus and maximize return-on-investment.

Why stop there? Recent merchandising initiatives at Home Center have included associate training and interacting with shoppers. It’s fun to think about how we marketers might further tap into these enhanced retail teams. As just one example, with all of the current focus being placed on observing and understanding shopper behaviors and motivations — and the expense and cost that go into capturing this information — is it not within reason to think that the teams walking the aisles every day with handhelds can be trained to assist in this endeavor?

At the end of the day, maybe the 1986 super brokers were right to draw a parallel between football and retail. In the last 25 years, football has seen its share of sexy innovations — instant replay, fantasy overlays and even that nice yellow line that tells us where the first down marker is.

But without a doubt, the greatest advancement of all has been the level of talent on the field and the resources available so they can execute the fundamentals of the game (i.e., polycarbonate as opposed to leather helmets). Perfecting your basic blocking-and-tackling can make the greatest difference. Surely you agree. And if not, well, I didn’t come here to give a rebuttal.




WILL MINTON is senior director of innovation for Integrated Marketing Services, specialists in shopper marketing, experiential marketing, shopper-centric custom publications and field events.


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