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New Buying Behaviour Threatens UK Brands

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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.

 

 

Fixing Shopper Research

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Shopper research
Market research

Over the last six months we’ve concluded a number of shopper research projects with clients and each one has left me more and more concerned about the way research is being conducted around the world. To be clear my ‘beef’ is not with the principle of conducting shopper research, which I think is essential. Rather I’m more frustrated with the process itself.

Here’s my top three peeves and what I think should be done:

Shopper research is too broad!

Have you ever sat through a research presentation? Wow, are they boring! Research presentations can run to hundreds of slides, many of which have very little practical value. In most presentations I read one chart in 20 has something useful on it and even then the data can be hidden or miss-presented.

It would be easy to blame the agencies who produce the presentations, but in reality it’s often the managers who commissioned the survey who are at fault.

Agencies in the main do a fair job of providing the information they believe the client wants. Often the client wants a lot. Many studies have objectives that are extremely broad (in the shopper space a common objective is simply “To understand shoppers”), few articulate clear hypotheses that have been evaluated before the brief and in many cases additional questions are added to make commissioning a survey ‘more efficient’.

All of this means that the agency tries to cover every eventuality and meet as many needs as possible. The end product? Ten charts out of 200 that tell you something useful.

Shopper research is too slow!

Big studies seem to take forever. Think about it, a major study can take up to twelve weeks to conclude. But that’s just the field work, add to this the time it takes to get the study of the ground: from internal approval, through briefing, into procurement then there’s questionnaire design, training and recruitment – all of which need to be done before you start field work. Accounting for data processing, ‘insight’ development (see below) and presentation it might take 24 weeks to conclude a study. That’s 6 months! Before you can do anything!

When one considers how much change there’s been in the last six months, surely there must be a way of speeding things up?

Shopper research is not insightful!

I remember a conversation with a client who’d just finished an extended piece of work into shopping behavior and when I asked how it had gone he said, “We didn’t really learn anything”.

“You mean you didn’t learn anything new?” I asked.

“No” he said, “we didn’t really learn anything at all!” Imagine the disappointment! Months spent conducting a study and you learn nothing! But the reality is that research presentations rarely do tell their recipients anything valuable. This is because the research presentation is not the end of the road, it just the beginning.

To drive real value from research, managers often have to combine the new findings with other pieces of secondary data to create insights upon which they can act. This a painstaking task which can add further delays to actually realizing business gains from the research that’s been conducted.

3 ways that make shopper research work

I believe there are three things that can be done differently to deliver better results, faster and at lower cost:

1)      Focus research on learning how to realize business opportunities:

Research projects should begin with the development of clear research hypotheses based on what is already known. For instance, we encourage our clients to focus on testing hypotheses that if true would enable teams to increase sales. These focus on learning how to drive new shoppers to the brand, how to encourage shoppers to buy more often or to spend more. By selecting only the most valuable hypotheses two things happen: 1) Research projects become more focused and therefore potentially cheaper and 2) The returns the company enjoys from acting on research can be much greater.

2)      Apply methodologies that deliver answers quickly:

With focused research hypotheses, it’s easier to apply methodologies that give accurate responses more quickly. By seeking out technical solutions that minimize the time lag between data collection and analysis teams can get into developing insights faster. For instance, we recently worked with a client who used a tablet-based app to capture traffic data in stores and to capture shoppers’ responses to focused questions. The data were instantly transmitted to a dashboard so our client could work on the outcomes of the survey immediately.

3)      Spend time and effort on creating business impact

Much of the time and effort put in by agencies after a study is directed at tabulating data and creating a presentation, which as we’ve seen above, no-one will use! It would be so much better if effort and time were spent on creating actionable insights instead.
For instance, in the shopper space, much of the work done in implementation is done by the sales team, working with customers. Sales people don’t need lengthy presentations on what the research says, they need pragmatic solutions they can discuss with their customers. Converting research findings into a compelling commercial proposition that illustrates the business benefits that your customers might enjoy helps you sales team realize business gains from research quickly.

If you’re contemplating your next research program and would like some useful tips to getting the most out of your investment, why not read our ebook “The Introductory Guide to GREAT Shopper Research” 

5 game-changing shopper insights

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Searching for Shopper Insights?
Searching for Shopper Insights?

Every marketer I know is seeking insights, but shopper insights seem to be particularly elusive. Many struggle to define what shopper insights are, where they might find them and what they might do once they have found one. This week, I thought I’d share five of the most impactful shopper insights we’ve found over the years, how we found them and what they delivered for the brands we were working for.

What are shopper insights?

Shopper insights are those little nuggets of information that help marketers see new opportunities to change purchase behavior and increase the consumption of their brands. They’re so elusive because you can’t ‘buy’ shopper insights, they have to be found. For many this is really frustrating, research programs are bought with express purpose of delivering insights but, when the presentation finally arrives, all you get is information. Turning information into insight is a process that involves both art and science, but its generally a process that starts after the researchers leave the room.

Game-changing shopper insights number 1: The consumer isn’t buying

Often marketers assume that their consumer is the buyer of their brand but for one global male grooming brand, we found that 40% of sales were made to women. This meant that a large proportion of the category’s sales were made to people who have no personal experience of using the products. Finding this information was actually easy – an exit poll asked the gender of the shoppers and also asked for whom the purchase was being made. The hard part was persuading the team that a large proportion of female shoppers were not influenced by what their men told them to buy, but by what they saw in the store.

A similar finding played a role in the Old Spice “The Man your Man Could Smell Like” campaign some years back,

where it was recognized that encouraging women to buy the brand for their partners might be more effective than leaving the decision to men alone. The outcome in both cases was a more targeted marketing approach that drove share by switching shoppers to the brand.

Game-changing shopper insights number 2: There isn’t one target shopper, there’s many

For a global coffee brand wishing to expand its distribution, we found the key factors that prevented shoppers from buying differed from person to person. Using a shopper study, we found that lapsed brand shoppers and non-buyers could be segmented based on their attitude to the brand, the price point and the availability of products in a local store. The biggest potential segments were those who felt the brand wasn’t for them or that it did meet taste expectations. When the flavor profiles and brand communication were re-configured, market share grew by 15%.

Game-changing shopper insights number 3: The biggest channel isn’t the most important

Whilst working for a global baby food brand we found that mothers switched brand only once. We mapped channel missions across a wide range of outlets and found an interesting insight: On the day shoppers switched brands, they were 70% more likely to visit a pharmacist than their regular supermarket or hypermarket. The sales created by this single visit made this small channel one of the most important for the brand. This created the potential to build a new relationship with a much lower cost channel than the major key accounts the brand had been investing in.

Game-changing shopper insights number 4: Shoppers don’t notice off-shelf activity

For one major dairy producer, we were asked to consider if promotions were working. Having observed shoppers walking straight past promotional ends we decided to test empirically how many had seen a promotion in store – the finding? Less that 7% had! For a brand pumping heavy investment into ends and price off deals this was an uncomfortable insight, but one that lead the team to re-focus investment onto more profitable activity on the home shelf.

Game-changing shopper insights number 5: The brand is more important to shoppers than you think

Ever wondered if retailers care about your brand? Whilst working with a team in Singapore we found that not only was one key retailer failing to convert nearly half of purchase intenders into buyers because shopper’s couldn’t find they brand they wanted, but worse, half of these shoppers left their entire basket behind in-store. Overall the retailer was loosing 14 million dollars in sales every year. This insight lead to an extensive program of re-merchandising and supply chain re-engineering and put our client in a leadership position for three years.

Searching for shopper insights?

In all these cases our clients had done extensive research before we got involved and had failed to gain insight from the data they had bought. Why? They expected to find it in a report. In my experience you’ll rarely find insights this way. Its far better to develop a set of hypotheses about what might grow your business and then look to the data to see how well it supports those hypotheses.

If you’re searching for shopper insights right now, or have recently something you’d like to share, contact me!

Leveraging Retailers Loyalty Card Data

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Retailers Loyalty Card DataFollowing my blog  last week on the volume of narrative data now available to marketers, I’ve been thinking a lot about the relative value of retailers’ loyalty card data and whether it can help manufacturers. I got the chance to chat with two friends, Nik Laming (formerly at Aimia and now working with an airline to build their loyalty program) and Mike Hawkins (a Dunnhumby and Kantar World Panel veteran) to get their points of view and see if they resonated with mine. Here are some of the key questions we debated and my conclusions:

Why do retailers invest in loyalty cards?

For more than a decade, retailers have been developing loyalty propositions to greater or lesser effect. Many have watched Tesco’s success with the Clubcard in the UK with envy and sought to emulate this globally. It’s fair to say that few have been hugely successful in this, so why do they continue to invest?

The core response to this question is that engendering greater shopper loyalty is central to successfully leveraging the financial model that underpins retail. Unlike other businesses, the retail model is heavily focused on return on capital employed. The proof of this is the ongoing growth of mega-retailers despite the delivery of wafer-thin margins. Retailers drive ROCE by constantly seeking to drive topline growth and gross margin whilst minimizing inventory and leveraging available cash.

Ensuring that footfall constantly increases underpins growth, as does increasing basket sizes: The offer of tasty rewards in exchange for a shopper’s custom supports this and the potential to target those rewards on a more personal level makes the offers more enticing (or so the theory goes). Equally the promise of deep insights, increasingly targeted promotions and ‘partnership’ is enticing to vendors too. As such those retailers with a compelling loyalty offer can often secure higher margins through negotiating fees for data exchange, analytics and targeted discounts.

Is retailers loyalty card data useful to manufacturers?

The potential to understand the shoppers who frequent your largest retail customers better and to target them with specific activities is extremely compelling for many brands. Not only that but the ability to get feedback on what is working or not in-store could enable many marketers to plan investments more effectively. Indeed the really effectively applied loyalty systems can enhance the whole value chain, keeping ranges focused, driving more accurate forecasts and ultimately reducing working capital for both parties.

And yet despite this potential few retailers are actively using their data to the full extent. Beyond a few isolated success stories, many retailers continue to focus on competition on price over more elegant and targeted approaches and fall back to using their card data as a lever to drive margin rather than sales. Consequently, manufacturers often complain to me that they feel they gain little from the data they are purchasing. This is compounded by a general data overload in many businesses which often constrains the team’s ability to analyze data with sufficient pace and quality.

Should we buy a retailers loyalty card data? 

Since the decision to buy or not to buy comes with a relatively high price tag on the one hand and the thinly veiled threat of reduced support on the other, it’s worth considering a few key questions:

  1. Do you know enough about the drivers of your brand growth? Loyalty card data is narrative data. It can only tell who has done what, when. With sufficient insight into which consumers and shoppers you are targeting you can define whether or not the  retail customer you are negotiating with is valuable to you. With clear objectives for target shopper behavior, and a good understanding of the roles that each retail channel play you may decide that the retailer is either key to your strategy or not. Without this you may be purchasing a white elephant – measuring the behavior of and marketing to entirely the wrong shoppers.
  2. Does the retailer offer sufficient scale? Big retailers got big because lots of people shop in their stores. It stands to reason therefore that the larger the retailer, the greater the number of shoppers you can access in their stores. In these circumstances, even if you don’t have all the answers to the questions posed above, there is still a chance that you could derive value from large volumes of shoppers.
  3. Will the retailer work with you? Embracing and using loyalty card data is going to be cost intensive and labor intensive. Since many cite compliance as a key barrier to working effectively with retailers, you need to know that the retailer in question will act with you to implement initiatives. If not frankly you will only be increasing their margins at a greater cost to you.
  4. Can you handle it? Much loyalty card data is sold as offering huge insight. Sometimes this is true, but often it’s not. What a retailers’ loyalty card data can tell you is who has bought into the brand, at what frequency and in what quantity. Further it can offer benchmarks which might enable you to identify potential areas in which you can grow. BUT what it can’t tell is why this has happened – in order to know this you potentially face another research bill to help you realize the opportunity.

I’m always delighted to hear of case studies where things have gone well in this field so if you have successes you’d like to share, please do so. On the other hand, if you are grappling with what to do with data you’ve acquired, or just want some advice, I’m always happy to provide coaching on this. Feel free to contact me if you need help.

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Hunting For Retail Innovation In Barcelona

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I recently returned from a relatively rare business trip to Barcelona, Spain. Excited to be back in the market after a few years, I persuaded my client to take me on a tour of nearby stores. Predictably, of course Carrefour was on the list of stores we would go to, but so were Eroski’s Spanish subsidiary Caprabo and Spain’s own Mercadona. [Read more…]