Forethoughts on Retail

"Moments of Truth" and White Lies

2011-08-23T16:31:00.000-04:00

Ever since P&G "discovered" how important retail presence is aka "1st Moment of Truth (FMOT)" a few years ago, the rest of the world seems enraptured with "moments of truth" nomenclature. It is almost as if the world of "in-store" marketing did not exist until a giant light bulb illuminated the sky over Cincinnati. But this has really come to a head recently..

A few years ago Google one-downed P&G by introducing the term "Zero Moment of Truth (ZMOT)", meaning you need to get all your ducks in a row on the internet and search, way before customers come to the store (or web site) to purchase. Here is the link to learn about ZMOT:

http://www.zeromomentoftruth.com/

Then recently Joel Rubinson talked about minus one moment of truth ... oh my!

http://blog.joelrubinson.net/2011/07/what-is-missing-from-moments-of-truth-marketing/

And recently Campbell USA touted new research of theirs which says (and I quote from CPGMatters)

New research from the Campbell Soup Company proves instead that shoppers make 80% of their decisions to fill a specific food-consumption mission before they enter a supermarket. This is true for mainstream, center-store categories with recognizable brands such as soups and shelf-stable juices

I haven't seen this research, so obviously I can't knowledgeably comment beyond saying that I doubt very much 80% of "mainstream center-store categories" consumers decide before they go into the store what specific product(s) they will buy, and ACTUALLY buy it(them) ... just ... doesn't ... happen.

All of these discussions are of course relevant and interesting. But they get my dander up, because I consider them all little white lies. They either don't address, don't admit, or skirt around the fact, that the product with the better in-store position (however that is defined at that moment at that buying point) is much more likely to be purchased than all the other products there. If your product, or your display, or your Shopper Marketing programme isn't there, or visible, all the prework you have done is USELESS.

It's as if marketers are baseball batters now and should be doing more research to see what the pitcher throws with a 3 and 1 count with 2 out situation. Doesn't matter, if it means you take your eye off the ball. And marketers don't have their eye on the ball. What marketers should be concentrating on is getting their in-store batting average above .500 ... that's right you've got a 50-50 chance of having your promotion executed properly.

Ponder that truth for a moment .

"Make It So" ... Un Shopper Marketing

2011-04-28T12:57:00.005-04:00

Not many shoppers in Chain "M" were ever well exposed to this unit

At Foreknowledge, we are heavily involved in helping our clients monitor the implementation at retail of their Shopper Marketing programmes. We tell them where it is, where it isn't, is it implemented properly, timing, all the basic nuts and bolts that have to be in place in order for the shopper to actually be exposed to the programme that has involved so much thought, time, and money to develop. Despite several decades in this business, I continue to be astounded at the naivité of many manufacturers. Since they have developed the programme and paid very good money to the retail organization to implement it, just like Captain Jean-Luc Picard, some feel all they have to do next is say "Make it so".

Ahhh ... actually, no ... it takes more than that to ensure compliance. A lot more. Retail organizations, as technologically savvy and as supply chain sophisticated as they claim (and we assume and expect them) to be, on the shop floor are very human driven , or not driven as the case may be.

Let me share with you a brief case history. This example, from a couple of years ago, is NOT a client of ours. But it was a major Shopper Marketing initiative from a top selling brand. So major, in fact, that the brand's top competitor (our client) wanted to measure its implementation.

This brand's promotion involved a very heavy payment to a major Drug organization for prominent placement opposite the pharmacist's counter of a large display unit, complete with brochures and other product information, also tied in to TV ads. The display was to be up for a 6-month period.

Some time after this programme had ended, I ran into a senior sales executive at this firm, and we got around to discussing this particular promotion. "How successful was it?" I asked. "Not very", he replied. "Didn't seem to get a lot of traction".

What he apparently inexplicably didn't realize, and what I and his competition did know, was that the promotion, as well thought out as it was, was never going to get traction. Why not? Simply because it never really happened. We monitored its retail exposure 3 times over 5 months. It never got more than 40% distribution in that time. Above all, not in the high volume "A" stores.

if you would like to see what we do visit our web site www.foreknowledge.ca

Whither FreshCo?

2011-03-24T13:38:00.004-04:00

There hasn't been a whole lot of news and discussion lately on Sobey's progress in converting its Price Chopper stores into its new banner FreshCo. FreshCo was launched in May 2010 with an initial conversion of 8 Price Choppers in Brampton and Mississauga, ON.

As a review for those who may be unfamiliar, Sobey's with its 87 Price Choppers, was running a distant 3rd in the "limited assortment" grocery channel in Ontario, behind Loblaws Inc no frills (with 155 stores) and Métro Inc food Basic$ (with 118 stores). The word on the street was that Price Chopper's profit margin was negligible. And the "limited assortment" or "hard discount" sector as it is sometimes called, accounts for a huge and growing, portion of the Ontario grocery business. Over the past 2 years, with the launch of Walmart Supercentres, the grocery landscape has become uber competitive. So Sobey's had to take some corrective action.

The conceptual positioning behind FreshCo seems based on 5 pillars

-- more "fresh" selling space (produce, meat, seafood, deli, local bakery)
-- more ethnic (international food sections)
-- cleaner appearance (white fixtures), more open
-- still "hard discount" (but probably a little less)
-- better assortment tailoring to neighbourhood demographics

To date there now have been 49 Price Chopper conversions, and the feedback from all that I have personally seen and read has generally been quite favourable. However, Sobeys President Bill McEwan recently stated "We're very pleased with the top line ... The bottom line associated with these stores are not what we had anticipated but they are what we were prepared for".

So profitability is lagging expectations, but apparently the die is cast, and conversions will continue.

if you would like to see what we do visit our web site www.foreknowledge.ca

Target's Entry into Canada

2011-01-24T15:18:00.003-05:00

Much of the retail discussion here in Canada the past week or so, has been Target's official announcement of its future Canadian launch. Mind you, according to the news release, they won't be here until 2013, giving Walmart 2 years to improve and fine tune their preparations. I'm betting Supercentres are going to continue to be developed at an even faster pace.

The financials are also a bit mind boggling. Target is paying $ 1.825 billion (Cdn) for (up to) 220 Zellers' leases ... not actual real estate, just leases. That's averagely $8.3 million per location, to be able to lease the space. Somewhat offsetting that number presumably would be Zellers subleasing back the space until the conversion begins. Target also says it will spend over $1 billion remodeling and renovating 100-150 stores in 2013-2014 to make them Targets. Let's call it 125 stores. That's $8 million per store to renovate.

That's somewhere around $16 million/store to get into business here. A big investment, and giving Walmart (and Canadian Tire) a 2 year heads up.

Here is Target's press release:

http://investors.target.com/phoenix.zhtml?c=65828&p=irol-newsArticle&ID=1515822&highlight=

and here's Target's CEO (Gregg Steinhafel) explaining it to Canadian Press.

http://www.theglobeandmail.com/report-on-business/video/target-boss-outlines-canadian-vision/article1869859/?from=1868308

Makes me wonder ...

if you would like to see what we do visit our web site www.foreknowledge.ca

In-Store TV ... still a work in progess

2010-10-04T12:51:00.002-04:00

An interesting article today in Advertising Age, discussing the lack of progress of promotion via "in-store TV".

See here: http://adage.com/article?article_id=146257

Of particular interest to me was the tortoise-like rollout of the Walmart TV Network, which when it was launched 2 years ago, gave every impression of being a killer application of in-store advertising. Several potential reasons were given for the tardiness, but to my mind, and beyond the Walmart situation, the 2 key elements to overcome are:

- the high cost of wiring a store
- the messages need to do the job in 3 to 7 seconds

... one factor boosts the costs, the other affects results/revenue

Clearly this new medium has bigger challenges than originally forecast, and even in a captive "network" like Walmart, it's no lay down.

if you would like to see what we do visit our web site www.foreknowledge.ca

The ground is beginning to shake ...

2010-09-28T13:42:00.001-04:00

Traditional marketing theory tells us that the purchase is the successful outcome of consumer-directed messages that create awareness which begets interest, desire, and action.
What happens when that is wrong? What does marketing do when it STARTS with the purchase?

So wrote blogger Joel Rubinson a couple of months ago
http://blog.joelrubinson.net/2010/07/what-if-it-all-starts-with-the-purchase/

Joel is more than "just" a blogger on market research, of course. Beyond having his own market research consultancy, he is also Chief Research Officer for the ARF (Advertising Research Foundation). With a "bent" for advertising if you will and his background in consumer research, his several posts on the sales impact of in-store conditions may be a further eye-opener for more traditional (i.e. advertising focused) marketers. In this particular post he goes on to say

... based on shopper insights research I have conducted, I believe that, for grocery products, over half of first-time purchases are unplanned; in fact, the shopper might not even have been aware of the product before buying it. In those cases, it all STARTS with the purchase and ENDS with awareness. The purchase funnel is totally flipped.

The traditional ground really began to shake, of course, back in 2005 when P&G (usually North America's largest major media advertiser) was featured in a front page article in the Wall Street Journal about P&G's "First Moment of Truth" (shoppers making their buying decision in 3-7 seconds in the store) and the growing emphasis FMOT was playing on the marketing of its products. While this isn't news for many people, for others to have P&G seemingly acknowledge that advertising wasn't the biggest factor in the consumer's final buying decision was a shocker.

It's a slow process, but marketing mankind does evolve.

if you would like to see what we do visit our web site www.foreknowledge.ca

Update to Last Post on Loblaws

2010-09-10T12:38:00.000-04:00

The link to the Halifax Chronicle Herald in the last post now requires registering and a password. Here is a copy of the article. Hope it is readable.

You Gotta Follow Up!

2010-08-19T19:05:00.013-04:00

Pity poor Loblaws (LCL), Canada's largest grocer.

I’m sure you have heard of their recently announced National programme to highlight “locally” grown produce over the summer months.

See the Loblaws press release here
http://micro.newswire.ca/release.cgi?rkey=1808119777&view=62151-0&Start=0&htm=0

Grown Close To Home is, to me, a good idea that ties in to all those things Canucks hold dear (hard working, salt of the earth farmers, tasty fresh produce in at least part of the year), it ties in to the trendy “100 mile diet”, and it’s also an answer to those critics in the past who have complained that Loblaws carries "mostly" imported produce even in the summer. What’s not to like?

Well, wouldn’t you know it, someone in Halifax noticed some mislabeling, and incorrect signage. Seems some U.S. and Ontario produce was signed Atlantic and Grown Close To Home.

Here’s the article from the Halifax Chronicle Herald.
http://thechronicleherald.ca/Metro/1196845.html

And senior PR honcho David Primorac at Head Office in Brampton had to respond. Because this is an important National CORPORATE programme remember.

Now, is anyone in our industry actually surprised? I doubt it. I’m not a betting man, but I would be immensely shocked if that was the only LCL store across the country where the produce stocking and displays weren’t according to Hoyle. Everything we have ever done on special promotions, displays over the past almost 20 years, says somewhere between 40% and 60% of stores will be non-compliant in terms of timing, location, signage etc. for the promotion without special attention, follow-up, or checking. And this isn’t just a Loblaws issue … it’s a retail "I have too much to do and only have so many people issue".

The learning? No matter how important, no matter how high profile the promotion, if you want your programme (even LCL's head office) properly implemented … you gotta follow up and check!

if you would like to see what we do visit our web site www.foreknowledge.ca

The McNamara Fallacy (Part 3)

2010-08-13T16:56:00.006-04:00

For previous posts on the McNamara Fallacy, see these links

forethoughtsonretail.blogspot.com/2010/07/mcnamara-fallacy.html

forethoughtsonretail.blogspot.com/2010/08/mcnamara-fallacy-part-2.html

Why do I call FMCG’s in-store information resources a “data desert’? If we can agree that a very significant portion of a product’s sales (let’s say 40%-75%) are highly dependent on in-store factors (shelf position, pricing, display activity, POS etc.) then why on earth are there so few reliable in-store measures?

We probably would all agree that we have a good handle on sales, and also distribution.

The first step is to measure whatever can be easily measured. This is OK as far as it goes.

But beyond this, with in-store measurements we start getting into very arid data sets.

Let’s look first at out-of-stocks and distribution voids. There are NO standard on-going measures here. Retail chains may use DSR (Demand Signal Repository) software to indicate o-o-s, but these are notoriously inaccurate for this purpose, and manufacturers/suppliers may have their field forces gather some of this information. I would strenuously argue that self-generated o-o-s is often self-defeating (more on this subject in an upcoming post). The accepted world wide average in FMCG for out-of-stocks is 8%. Distribution voids (sku is listed in the account, but generally not carried in the store) can double that figure. Imagine the amount of lost sales if your product is missing 10%-15% of its expected distribution because these facts are ignored and not properly addressed. Yet the industry does not adequately track these basic fundamentals. The old adage “you can’t manage what you don’t measure” certainly comes to mind.

The second step is to disregard that which can’t be easily measured or to give it an arbitrary quantitative value. This is artificial and misleading

And what about planograms (POGs) and planogram compliance? The industry spends multi-millions annually, developing, changing, and implementing POGs. These are highly sophisticated computer generated shelf sets that theoretically provide the best (greatest sales, greatest profit etc.) alternative product list and shelf placement for each category for that account (and in some cases, store) based on various criteria. Yet who checks if they are ever implemented properly (properly being a rather loose term in relation to POGs)? And who (and how often) checks that the POG remains implemented properly? The truth is … no one. But in fairness, POGs have been notoriously difficult, and hence, expensive to monitor. Yet so much time, effort, and money are continuously invested in them! Presumably their proper implementation and maintenance is critical to category sales and profit. So why does no one care?

The reasons, I suspect, are four-fold
1) in-store has traditionally been second class (so-called below the line)
2) with high key account penetration and high supplier fees, the expectation is that implementation should be a fait accompli
3) if not, what do we do about it?
4) and anyway, it actually can be quite expensive and somewhat complicated to do properly

The third step is to presume that what can’t be measured easily really isn’t important. This is blindness

So there we have it. The McNamara Fallacy for FMCG. In-store determines product success to a greater degree than any other factor, and the packaged goods industry has developed no effective way of competently measuring and tracking it.

The fourth step is to say that what can’t be easily measured really doesn’t exist. This is suicide

And now we are ready to roll out the Shopper Marketing caravan into the data desert in a very BIG way. Perverse, yes?

if you would like to see what we do visit our web site www.foreknowledge.ca

The McNamara Fallacy (Part 2)

2010-08-04T16:21:00.020-04:00

Let's start to explore the McNamara Fallacy as it might relate to FMCG (Fast Moving Consumer Goods), or at least my take on it. For the first part see my previous post.

forethoughtsonretail.blogspot.com/2010/07/mcnamara-fallacy.html

Robert McNamara responded to those who criticized him for being too numbers oriented in his book In Retrospect.

Critics point to use of the body count as an example of my obsession with numbers. “This guy McNamara,” they said, “he tries to quantify everything”. Obviously, there are things you cannot quantify: honor and beauty, for example. But things you can count, you ought to count. Loss of life is one when you are fighting a war of attrition. We tried to use body counts as a measurement to help us figure out what we should be doing in Vietnam to win the war while putting our troops at the least risk. Every attempt to monitor progress in Vietnam during my tenure as secretary of defense was directed toward those goals, but often the reports were misleading.

In Retrospect – The Tragedy and Lessons of Vietnam
Robert S McNamara pg 238

I don’t think I have any major disagreement with that … as Yankelovich adds … as far as it goes.

In FMCG, we have good stats on many things … best of all on the most important stat, consumer sales. But then, what? Since P&G came up with “the first moment of truth” a couple of years ago, all hell has broken loose in-store. Suddenly everyone in FMCG thinks “in-store” is important. No kidding? Despite a product’s in-store position being the MOST important factor in its sales performance, Marketing has tended to ignore, pooh-pooh, or cast aside in-store measures … that’s for Sales to look after. After all, positioning, advertising and all that is a lot more important (and a lot more sexy!). Except it isn’t (more important that is).

I am, of course, exaggerating to make a point. The focus has definitely NOT been on the in-store environment, until recently. Not to say there aren’t in-store measures (principally AC Nielsen’s causal data). But this is more a tracking measure, rather than a diagnostic tool. And yes, there are several Marketing Mix tools now available … good … use them. But in the main, the shop floor has been what I call a DATA DESERT. We'll explore the in-store data desert more in my next post.

if you would like to see what we do visit our web site www.foreknowledge.ca

The McNamara Fallacy

2010-07-21T15:49:00.014-04:00

Packaged goods is one of the most sophisticated industries for marketing and sales practices. At least we like to think it is. But sometimes, we aren't so smart. Have you ever heard of the McNamara Fallacy? The term was coined by well known market researcher/pollster Daniel Yankelovich.

The McNamara Fallacy
The first step is to measure whatever can be easily measured. This is OK as far as it goes.

The second step is to disregard that which can’t be easily measured or to give it an arbitrary quantitative value. This is artificial and misleading.

The third step is to presume that what can’t be measured easily really isn’t important. This is blindness.

The fourth step is to say that what can’t be easily measured really doesn’t exist. This is suicide

from Adam Smith’s book Paper Money

Robert McNamara, a former President of the Ford Motor Co., was US Secretary of Defense from 1961-1968 (Kennedy and Johnston administrations), and headed up the most powerful, most sophisticated armed forces this planet had ever seen. (He also wrote a very enlightening and mea culpa book In Retrospect: The Tragedy and Lessons of Vietnam which, if you are a history buff, I very highly recommend).

But back to the fallacy. It's all about The War in Vietnam, and the use of body counts as a proxy to measure progress in a war without battle lines and a conventional enemy. From today's vantage point, it seems so clear now. In the 1960s, it was not so cut and dried.

What has the McNamara Fallacy got to do with Packaged Goods in the 21st century? More next time.

... to be continued

if you would like to see what we do visit our web site www.foreknowledge.ca

Welcome to Forethoughts on Retail

2010-06-25T15:45:00.001-04:00

This blog is going to be about things “retail”. Mostly about how consumer products “do” at retail, or what retail is doing to “consumer products”. It will be, obviously, my “view” of things … my perspective on what I see happening. Based on 35 years in retail marketing research, and several years in retail/hospitality before that.

Yep … I’m an old fart. With a brain. And a memory, an attitude, and a need to explore the jungle that is retail. Why don’t you come along with me? And bring a mental machete, so together we can chop through a lot of the vines and underbrush BS.

if you would like to see what we do visit our web site www.foreknowledge.ca