There's a lot of gloom and doom in the media these days about retailing. Brands are shuttering stores, foot traffic is losing to ecommerce, and so on. But CPG brands are still competing, constantly looking for advantages that can help win at the shelf. And some are doing well at it.
McKinsey & Company analyzed 53 CPG companies to see where revenue growth is being found in the changing retail landscape. The study found that the old 80/20 rule is alive and well: "With economic uncertainty growing and competition rising, CPG executives may be tempted to pursue numerous opportunities. In our analysis, players typically managed hundreds or even thousands of business 'cells'—defined as specific combinations of products and geographies, such as facial moisturizers in South Korea. But within these broad portfolios, most revenue growth came from the top 20 percent of cells."
To me that means you've got to focus on the categories you can win. Doing that successfully takes a combination of product integrity – meaning its design and function match the customer's need, desire, or perception of the product – and execution at the shelf, where lighter foot traffic means stiffer competition for consumer dollars.
In my mind, you've got to build brand loyalty to win at the shelf. It's not always easy. But there's one thing you can do that will help you win: use your data wisely.
There's NO REASON to avoid using the data you're collecting to improve and extend brand loyalty. Data collection and analytics advancements now give you information that provides insights that were once impossible to capture easily and quickly.
That information can improve marketing, product development, sales, shelf placement, and helps to target your prime customers for loyalty building.
Let's look at millenials as an example. Millennials tend to have a "trade up-trade down" mentality when it comes to purchases. This means they'll spend money on premium brands that they value, but also buy private-label options when a brand has failed to create a strong value proposition to justify a premium. Often they'll trade down or out of some categories in order to afford the higher prices of natural and organic. Those who are burdened with college debt look to value retailers and online outlets in order to stretch their budgets.
Understanding why they will trade up or down for is key building loyalty. So you need data. Using "big data", you can uncover who your customers are and what they want. POS, ecommerce and retail execution data are a few key areas that CPG brands are analyzing today.
According to McKinsey & Company, winners in the CPG space "allocate funding to secure exhaustive retailer information, so their shopper-insights teams can mine the data, looking beyond full-basket data to analyze shopper-panel, loyalty, and coupon-redemption information."
Of course, that information is extremely useful. It can reveal shopper behavior and intents. But one area that can get overlooked is how the execution at the store and shelf levels can impact sales.
What happens when a shopper approaches a set with signage that sends a mixed message or sees an empty facing? THEY MOVE ON.
Here's how poor execution can hurt. Look at Target's experience in Canada – stockouts killed their highly anticipated brand opening in 2015. Shoppers weren't thrilled about seeing empty shelves, and data backs up Target's experience. According to a Globe and Mail story:
"When stockouts happen, as much as one-quarter of shoppers keep browsing but do not buy a substitute for the product they really wanted, according to a 2004 study of more than 71,000 consumers around the world. In the study, 21 to 43 percent went to another store to find what they were looking for. The researchers estimated that for an average retailer, those customers who leave amount to roughly 4 percent in sales lost."
Having store execution data gives you more context about potential problems. Without that data, could you tell whether a product's slumping sales is due to consumer interest or poor execution at the shelf?
Look at data that includes:
- Shelf-level data: reports on product availability, damaged goods, audit data, missing tags, and more
- Store visit data: details that reveal missed visits, incomplete projects, overdue tasks, and other issues
- Store issue data: information on stockouts, missing signs, distribution voids, and similar problems
If you're not collecting and analyzing store execution data, you may be missing key reasons your brand isn't performing at the shelf.
There's plenty of data available. It's what you do with it that counts. And if you're going to focus on winning a narrow range of "business cells", then you need to include as many data points as possible to build brand loyalty and win at the shelf. If you're not getting the execution data you need, contact Every Store Perfect to get all the details.