Cha, Cha, Cha, Changes
There is no denying that the retail environment is changing. Ecommerce is growing at a record-breaking speed, and there are more services available than ever to help shoppers bypass the in-store shopping experience all together. As we reflect back on 2017, a few market-disrupting events will require the industry to adapt in the coming year:
- Amazon purchased Whole Foods to strengthen their grocery logistics and supply chain models.
- Target shared their intention to purchase Shipt in 2018 in a move to challenge Amazon with same-day delivery for ecommerce orders.
- Lidl opened stores in the US, challenging the standard grocery retail model and giving Aldi its first real competition.
- Shoppers continued to explore meal delivery services like Blue Apron, Hello Fresh, and Chef'd, but took advantage of subscription loopholes and shopped around for deals.
Throwing Down The Gauntlet
As we embark on a new year, it's time for marketers and retailers alike to embrace a new way of thinking about shopper engagement. Gone are the days of relying on brick and mortar retail store optimization to drive impulse buys at shelf. Sure, there is a segment of the population that still enjoys going to the store and picking out their own produce, but more and more shoppers are opting for convenient shopping methods that save them time. These shopping methods typically include an ecommerce angle that either results in having products delivered directly to their homes via the retailer or a shipping service like InstaCart or Shipt, or instore or curbside pick-up. In any case, the only time the shopper is directly engaged with the retailer or the actual product is through an online or app-based interaction. And many retailers are incorporating 'subscribe and save' elements to their sites to guarantee repeat purchases - leaving little opportunity for manufacturers and retailers to promote new products or encourage trial purchases.
It's time to embrace a fundamental shift in the way we engage and interact with consumers. Our industry needs to find a way to promote to shoppers via ecommerce and mobile app platforms to drive consumer behavior, while still delivering an easy, convenient and interactive experience for the shopper. Manufacturers and retailers should focus on how to influence shoppers to make impulse purchases online through shopper behavior algorithms and purchase history. We need to create interactive apps with messaging functionality for "fulfillment shoppers" to use and communicate with customers as they personalize and enhance the experience for those customers. Embracing an interactive ecommerce experience is also a way for retailers and manufacturers to make shoppers aware of new products - through recommendations and digital promotions that can be redeemed online via the ecommerce platform.
Roadmap to Success
To start on this journey and adapt to the growing changes, retailers and manufacturers need access to data that will help them make smart decisions. They need data from a variety of sources and they need a way to connect the dots and help them be competitive in this quickly evolving environment. It sounds simple enough, but many are overwhelmed when confronted with a paradigm shift that requires them to make their mark in previously unexplored territory. While every retailer and manufacturer has their own set of unique challenges, there are common elements that we can all use to drive new strategies and gauge our success.
Know Your KPIs
Before you get started and run full steam ahead on a new directive, you need to know what your goals are. Common goals that we often hear are "grow market share," "increase sales," or "introduce a new product" without a specific value or benchmark to measure against. These goals tend to be too general and rarely yield results. They need to be specific, attainable and measurable. Each goal should have a KPI, or Key Performance Indicator, that you can use to understand your benchmarks and measure whether or not you have reached that goal. KPIs are especially important when competing in a changing environment; in addition to providing you with a specific benchmark for success, they service as a compass to guide you through difficult and distracting challenges that could lead you astray.
Data, Data, and more Data
You need to know what questions to ask in order to deliver actionable insights, especially when you are faced with new challenges and a changing market. To do that, you need data . . . a lot of data from various sources. For the promotion space specifically, you will need to have syndicated data, historic coupon data, industry promotion trends data, shopper behavior data, retailer basket data, trade funded promotion data, economic data, competitive data, and much more. Collecting the data is the easy part, but knowing what to do with it is another story.
It is more important than ever to use analytics to your advantage. There is a remarkable amount of data available from basket data to shopper data to promotion data. To evolve and adapt with the changing shopper mindset, you will need to incorporate data analytics in ways you haven't thought of previously. That's why synthesizing and analyzing your data is the most crucial step for your roadmap to success. Being able to look at your data from all perspectives and produce insights and actionable recommendations is the cornerstone to what we call 360 Analytics. Data should make you smarter and enable you to make the right decisions to move your directives forward. It should serve as a guide that gives you quantifiable justification to support those decisions. However, you need resources who are skilled in taking in big data and analyzing it to a productive end, whether it be internal resources at your disposal, external partners like Inmar Analytics, or, ideally, both.
Make a Plan
Data and insights alone don't drive a strategy forward. After you've gone through the process of implementing 360 Analytics, you will need to create a plan to move those insights into action. The resources you secure to synthesize and analyze your data should provide you with an optimized plan to reach your goals, based on the story the data reveals.
- Create a clear plan that outlines each action item for the year.
- Be sure to include budgeted costs and compare those to your actual results as you go.
- Include measurements that tie back to the KPIs you developed as you were creating your goals.
- Allow for the possibility that your plan may not play out exactly as you expected, and you will need to be able to adjust accordingly by utilizing your analytics experts through the whole process.
No plan should be created in a vacuum. Collaborate with your trusted partners. In the promotion space specifically, manufacturers and retailers should collaborate to create win-win solutions that enable them to be successful in our quickly changing environment. Consumer Promotion teams should collaborate with their Trade Marketing counterparts to ensure their goals and objectives complement each other and are not competing with or overlapping in a way that erodes brand equity. Brands and retailers should recruit their trusted partners to help them understand elements outside their own core competencies and let the experts advise them on things like app production, shopper behavior and 360 Analytics. Collaborating with key entities will lead to a more complete perspective and enable smarter decisions that create a win for all.
Executing a plan that drives change in the market is a marathon, not a sprint. You will need to monitor your progress as you go, noting improvement opportunities and creating dynamic strategies to address them. It will require patience; it takes time to see true results from paradigm-shifting actions. You need to give your partners time to implement the required actions or technologies. You need to give shoppers time to learn about your offerings and how to use them. Lastly, you need to observe performance over time, and have the patience to see it through to the end. By using data to drive your decisions and analyze your performance, you will have quantifiable results that will allow you to win now and innovate for the future.
The challenges that our industry will face in 2018 are not insurmountable. They will, however, require innovative thinking and an allowance for risk (and failure) as we engage with shoppers in new ways. Let the data lead the way, it will be a year for embracing disruptive opportunities and learning.