You are here: Home / Archives for shopper marketing

New Buying Behaviour Threatens UK Brands

by 1 Comment

veg-subscribe-1024x502

A study by Engage Management Consultants has revealed new trends in buying behaviour. These will almost certainly have an impact on the future performance of brands in the UK. The study which looks at behavioural trends of shoppers worldwide suggests that the one-stop shopping may be in long-term decline. One stop shopping has been the dominant driver of the growth of supermarkets worldwide. This could well mean bad news for brands in the UK market.

The one-stop shop

Since the foundation of the first supermarkets in the 1920s and 30s, the almost inexorable rise of the one-stop shop has been the dominant trend in buying behaviour. In the last 60 years, shoppers’ desire to buy everything under one roof has given rise to huge retail conglomerates such as WalMart and Tesco. However, data uncovered by Engage indicates that our love affair with this long-standing format may well be coming to an end.

Globally, footfall in supermarkets and hypermarkets is in decline and innovative new ways of shopping are emerging.

A whole new world of buying behaviour

In many developed economies, the rise in relative incomes has meant that grocery shopping is no longer as important a part of the household budget as it once used to be. For a long time shoppers have complained that grocery shopping is, at best, a necessary evil and, at worst, down-right boring. It’s no surprise, therefore, that, as new ways of buying emerge, shoppers will continually seek improved ways to fill their store cupboards.

Perhaps the most visible changes are in the emergence of online channels. But this space, once considered to be the sole purview of Amazon and online grocery stores, has rapidly developed into a vast array of shopping opportunities. We’ve discussed in the past link the emergence of and of hyper-specialist sites dedicated to single categories. However, in the last two years, we’ve seen an explosion of investment in recipe box operators like Gousto and Hello Fresh as well as the exploitation of IOT (internet of things) opportunities in the form of Alexa and Amazon Dash.

But it’s not just online developments that are changing buying behaviour: Discounters have exploded globally and re-positioned themselves as highly credible alternatives to supermarkets. Further, our love of convenience has led to the global expansion of these types of stores. Other new formats continue to emerge, particularly as online brands move offline. All of this means that now no one single retail format can claim dominance of a shopper’s heart as supermarkets were once able to. This has profound implications for the one-stop shop

Fragmentation of the grocery basket

Overall this leads to one significant global trend – the fragmentation of the grocery basket. Whereas at one time the consumer goods industry might have assumed that the shopping basket was likely to be filled during one stop at a supermarket, it must now consider that the grocery basket is likely to be filled from multiple environments. Many of these spaces may be unfamiliar to brand owners or, worse, simply not conducive to brand sales at all.

It is here where the greatest source of threat to UK brand managers lies. Most UK brands depend on supermarkets and hypermarkets for up to 70% of their sales. The wide ranges displayed on supermarket shelves help brands to encourage shoppers to try new variants, tempt shoppers to sample new products and give marketers the opportunity to entice shoppers to switch brands.

Brands perform less well in discount stores which shun major brands in the main. They also struggle to break through in convenience stores where limited ranges lead to a focus on only the biggest of brand names. Online, many brands are battling to secure cut through. Whilst an infinite range might appear to be a panacea, few shoppers venture beyond a single page of products. Many shoppers rely on predefined shopping lists to drive their weekly shop. All in all, therefore, growth in these emerging retail environments does not necessarily lead to growth for the UK brands.

Engage’s study examines the possibility that for many brands this could lead to a major collapse in growth this year, in 2019 and beyond. The study also suggests that, on average, a brand in the UK could see market share decline by 5 percentage points in the coming years with smaller brands coming off much worse in the future.

Already many brands have cut growth forecasts for the UK over the next 5 years, with even some of the largest brand names planning on a decline. This has led to a reduction in brand budgets with many brand managers and insights teams finding their investment plans curtailed or cut altogether.

Industry leaders respond

The leading lights in the industry are rapidly taking proactive steps to mitigate risk and even prosper from the countless opportunities that this new environment presents. Many of the largest players are taking action to better understand the fast-evolving UK retail landscape, to reassess retail channel priorities as well as to redefine and crystallise future sources of brand growth.

This is leading to a concerted multi-functional effort across consumer marketing, customer marketing, and sales, as these combined teams collectively reconsider customer priorities, build more integrated brand and customer plans and determine a vision for the ‘store of the future’. Many of these leaders are taking the opportunity to assemble real and virtual customer-focused teams across all relevant commercial, financial, operational as well as human capital development functions. This with the aim of blending the best resources to deliver against cross-functional initiatives which will underpin future sustainable growth.

These businesses are well placed to weather the storm, however, they represent only a small minority of the UK’s branded manufacturers. Many of the others are struggling to identify where to start and how to engage cross-functionally to formulate a response.

Accessible solutions at hand

To support leaders and managers in the industry during these tempestuous times, Engage has partnered with a team of UK and Global industry experts in order to build a roadmap that describes the key actions that companies should be planning for the future as well as helping them to identify immediate opportunities to begin working together ever more closely as a team.

Both the roadmap and Engage’s findings are freely available to managers in the consumer goods sector. If you would like our experts to share these with you as well as taking the opportunity to discuss some of the specific issues that you face, then please don’t hesitate to contact me by emailing toby@engageconsultants.com today.

 

 

Big Data in Shopper Marketing

by Leave a Comment

Streams Collide

It’s high time we started thinking about the implications of Big Data on Shopper Marketing. For the last five years, the promise of Big Data has begun to influence marketers’ thinking on how they might improve targeting, investment planning and the evaluation of execution. Concurrently marketers have also embraced the fundamental idea that just marketing to consumers just isn’t enough to secure a purchase.

These two streams of thought are about to collide in interesting and important ways that many marketers have yet to consider.

Shopper Marketing depends on Big Data

Shopper Marketing remains a misunderstood practice, many still labor in the mistaken belief that Shopper Marketing is all about executing activities in shops. This is wrong. Shopper Marketing is the Marketing process of determining a marketing mix which will change the purchasing behavior of a targeted group of shoppers in order to deliver specific consumption opportunities.

By its very nature, Shopper Marketing is complex: there may be numerous opportunities to drive consumption of a brand, all with different target shoppers who’s behavior might be influenced in a wide range of retail environments (both online and offline). Getting this right requires a great deal of insight.

Developing such insight requires a lot of data, from a number of sources. This data must be effectively combined and analyzed. Let me give you an example, we worked with Sony to determine the optimum mix of in-store investment required to drive TV sales in China (see The Shopper Marketing Revolution for more information). Based on behavioral research we identified over two million combinations of in-store activity might have an impact on shoppers’ behavior. Defining which combinations might be optimal, in which outlets, is a big data challenge.

Big Data means big changes in Shopper Marketing

Today’s Shopper Marketing teams are often too fixated on the execution of activity, much of which differs very little from sales promotion and merchandising tactics that have been used for decades (though perhaps now they have a few more bells and whistles). These activities are often procured from creative agencies who are briefed on the basis of scant information. The agencies themselves almost always lack the ability to develop insights for clients independently, so their process is driven by creative ideation which takes place in a data vacuum. The result is nice ideas that win awards but not shoppers.

The convergence of Big Data and Shopper Marketing is likely to make the entire process much more scientific. This doesn’t negate the role of creative thinking at all, what it means is that creative ideation will take place in the context of truth rather than assumption. Further it will shift the current power base away from the agency and toward the marketers themselves as they create better briefs and seek out better quality agency partners.

Big Data in Shopper Marketing demands big changes

This is all a tall order. According to our surveys (we’ll shortly be publishing our findings in South Africa and Ireland), Shopper Marketing teams believe they lack the capability to deliver even against today’s shopper marketing challenges. The introduction of massive data sets is likely to make things worse not better.

I’m concerned about the extent to which organizations have started to consider the implications of this. For instance we’re working today on a relatively simple brand and channel prioritization project which requires managers to combine easy to access data sets and many managers are finding this challenging. As channels proliferate and micro targeting becomes essential, the data science requirements will far outstrip the abilities of these managers.

Greater volumes of better quality data and greater complexity will demand the use of the sort of data science that is currently in play in the financial sector. The practical implication of this is that a great deal of tasks will become automated leading to widespread changes in working practices internally and in the interactions between manufacturers and retail partners.

What is to be done?

It seems to me that change is inevitable (it always has been) so I’d urge leading marketers to actively plan ahead. If you’re in this space, here’s four things I believe you should be doing now:

  1. Learn more about the implications of big data and shopper marketing – understanding the potential opportunities that are at hand and the potential pitfalls ahead will help you plan for the impending change.
  2. Act as if the change has already happened – lead the organization towards embracing big data and shopper marketing as an imperative rather than waiting to be led by your competition.
  3. Recruit better people than you – if, like me, you are in your 40’s the chances are you will never master the skills needed in the future, so it’s time to bring people into your team who already have those skills, or could develop them quickly.
  4. Demand better service – Seek out those agencies who can demonstrate their ability to drive insight from data and can show how their creative responses to this have delivered actual behavioral change.

At the very least, marketing leaders should be provoking a debate within their organisation, if you want help with that, contact me.

Image accessed from http://jalle-astro.fr/wp/tag/universite-de-bordeaux/

2012 – The end of retail as we know it?

by Leave a Comment

the end of retail as we know it?

So if you are reading this, the world hasn’t yet come to an end. The end of the Mayan calendar hasn’t yet heralded Armageddon and yet another doomsday prophecy has hopefully been put to rest.

Since the world has not come to an end, I’ve been thinking about other prophecies that have been made in 2012. One such prophecy is that offline retail is dying. I most recently heard this from Piers Fawkes during the “2013 Trends Predictions via @PSFK” Hangout when he was heard to say “The big story is that retail is dead” [Read more…]

Does your shopper marketing begin and end in-store? Big mistake!

by 4 Comments

Shopper marketing is gaining momentum as consumer and trade marketers recognize the potential to gain sustainable results in terms of profitability, brand value, and customer relationships. And that’s great! We’re thrilled that the industry is waking up to the reality that the old system isn’t working. We’ve been working at shopper marketing long enough to know that, when done correctly, the results are transformational. [Read more…]

The current approach to marketing has broken down.

by Leave a Comment

Driving a car that spews fumes, stalls out, and guzzles gas like a tractor-trailer doesn’t make sense. It’s hazardous to you (and anyone in your path), unreliable, and expensive.

Many of today’s consumer goods companies are driving these vehicles. Well, not literally, but their approach to marketing is just like these broken-down cars that should be scrapped. Handing over money and discounts to retailers just for the privilege of letting them make money is illogical when you, the consumer goods company, receive nothing in return. No profits. No brand loyalty. In fact, quite often, your brand erodes at the hands of marketers who are not fully vested in your brand’s integrity. [Read more…]