There are two new presentations available for download today:
NACS Redefining the C-store: Moving from functional convenience stores to creating convenience stores, which was presented at the November 2008 In-Store Marketing Instute Expo in Las Vegas.
Insight Into Action, which was presented at the May 2009 PMA Shopper Marketing Confrence in Dallas.
To download, visit our Presentations section or click here.
What’s one part consumer-insights incubator, one part product-development micro-machine, and one (maybe even two) parts trend hunter? It’s The 400, an independent creative-services firm in Denver that is also a retail storefront where you can buy limited-edition sneakers and lifestyle apparel.
Leaving focus groups and post-analysis lag time in the dust, The 400 is rethinking the way marketers use beta culture and apply shopper insights about ‘core’ cultures. For these guys, the most valuable wisdom is pulled directly from the source. It’s insight hunting in real-time, and that’s what makes it so compelling. When every retail transaction can inform future marketing communications, there’s a lot of reason to pay attention.
Case in point: The partnership The 400 has established with brand licensing and management firm Collective International, LLC (whose clients include Airwalk, Sims, and Lamar). Several times a year, The 400 pulls youth-culture insights on behalf of Collective International and creates custom marketing and design tools based on the findings. Insight reports, ranging from Consumer Usage Trends to Footwear Market Direction, help Collective International keep their fingers on the pulse of key influencers in youth fashion, music, technology, and sports.
This approach has led to some dynamic marketing work for skate/snow/art/punk culture brands, a result of blurring (and breaching) the lines between the brand and the consumer. It could be argued that the brand and the consumer sometimes meld into one. It’s a group-mind approach that reflects The 400’s goal of creating “brand communication solutions that resonate and form emotionally driven loyalty between consumers and brands.”
The 400 believe the insights they gather for their clients at their own store will help them stay plugged into the ever-evolving landscape of core consumer behavior. For us, the implications of this experiment are just as telling: the closer we can get to the front lines of retail, the more organic the insights become, and the more our brands become a part of the conversation.
Get the scoop on what’s going on at The 400 at the400.net.
- Contributed by Patrick Sullivan
ShopperCulture.com recently published a post on who's up and who's down in the current retail climate. Not surprisingly, retailers with a strong value proposition lead, like BJ's Wholesale Club, Ross, Costco and Wal-Mart. Recently a somewhat overlooked format has emerged as a leader for today's economy-conscious shoppers: Dollar Stores.
You may be surprised to know that two dollar stores chains appear in the Fortune 500 list of America's biggest companies: Dollar General (#259) and Dollar Tree (#499). Still a long shot from Wal-Mart, Fortune's no.2 company following Exxon Mobil, Dollar Stores are nonetheless growing faster than other retail formats, according to a recent article in The New York Times.
My personal recollection of dollar stores is that of cluttered, disorganized environments usually set in a downscale strip mall, with boxes blocking the aisles, cleaning products, stacks of Little Debbie cakes and dusty two-liter Coke bottles, and no assistance to be found without dislodging a cashier who is already serving a long checkout queue. According to The New York Times report, times are changing. Dollar Stores are becoming more mainstream: selecting better locations (often left unoccupied by failed retail tenants), widening aisles, reorganizing store layout, even adding refrigerators and freezers in order to steal share from Grocery.
Family Dollar plans to open 200 new stores this year; Dollar Tree will open 235 new stores and relocate 90 existing ones; and Dollar General, the category leader, will open 450 new stores and relocate or remodel another 400. Dollar store executives realize that time is of the essence.
There is a strong element of psychology behind dollar store merchandising. Most dollar stores attempt to stay true to the promise of goods for $1 or under. Last Year, Dollar Tree tried selling items for more than $1, but the result was lackluster and prices have been adjusted back to the dollar-or-less price point.
Which leads us to two questions. What happens when inflation (which is low these days) makes it impossible to sell goods under the $1 price point. Smaller packaging? 10 eggs for a dollar instead of 12? And what happens when the economy recovers? Dollar store executives are banking on the format to become mainstream and to enjoy growth even in a strong economy. But old perceptions, like mine, may prevent dollar stores from ever becoming mainstream. ShopperCulture welcomes your thoughts.
A recent article in The Wall Street Journal begins to tell a story about which retailers are winning -- and struggling -- in the current downturn. March year-on-year sales across a range of national retailers indicate an emerging, and unsurprising, pattern.
What does this tell us? Americans are buying, but they are choosing those retailers that offer the greatest possible value. The six retailers here showing year-on-year increases are each known for offering the lowest possible prices in their own category. Traditional department stores, on the other hand, are feeling the heat. Saks and Nieman Marcus, long associated with designer luxury apparel, suffer double-digit losses. Even the more mainstream Macy's cannot keep the pace.
The only real surprises here are Target and J.C. Penney, two great "discount" department stores. We would expect that Americans would continue to seek reasonable value in addition to store experience and customer service, but these losses suggest that the only real driver of retail growth lies in "lowest possible price."
Are things really this bad? Will early indications of a possible recovery begin to turn the tide in favor of those stores that continue to offer customer service and store experience? Time will tell. In the meantime, we welcome your comments.
We are not normally in the business of predicting the future, but because there are many dramatic changes taking place in the world at the moment and because we have been asked a number of times by a number of clients recently, we thought we would outline some internal thoughts we have on what might happen in the world of retail during the coming years. Some of this might seem obvious, and there are bound to be things we have missed, but the intention is to revisit these in two years to see how we did.
Macro Retail Changes
Economic factors will continue to have a significant impact on the retail industry in the U.S. during the next 24 months.
We expect to see:
Let’s face it. Dinner isn’t as easy as it used to be. Running to your neighborhood restaurant or ordering take-out on a daily basis is a thing of the past. The recession has caused consumers to change their eating behavior and make numerous compromises to stay within their shrinking budgets.
One trade-off is that consumers are cooking at home more often to save money. Therefore, consumers are giving up many things associated with this new behavior − the restaurant dining experience, trying new and unique foods, and and sampling meals from talented chefs who get the food right every time. Just because consumers are cooking at home more often doesn’t mean that they know what they’re doing in the kitchen.
What does this all mean? Less money, less time, and less confidence to create meal solutions every single day.
Luckily, many retailers and manufacturers are responding to the concerns of their distressed shoppers. They have rolled out programs that offer shoppers easy-to-make meal solutions on a tight budget or chef-quality meal solutions for less than the restaurant price. Both types of programs have been well received with different types of shoppers. Here are a few examples:
• Kraft® iFood Assistant. This app gives consumers simple, delicious food ideas, anytime and anywhere they go. It provides how-to videos, smart 1-2-3 recipes, shortcut tips, and a built-in shopping list − all of which are designed to save time. It is now one of the 100 most popular iPhone® paid applications.
• ConAgra Foods® Simple & Delicious e-Newsletter. This weekly e-mail newsletter provides shoppers with a database to find recipes, meal ideas, meal-planning tips, and special offers that are all related to ConAgra products. In a recent newsletter, Simple & Delicious featured “Meal Ideas for Under $10” − an enticing offer in today’s environment. The Simple & Delicious website also offers Simple & Quick Meals, Budget-Friendly Meals, and Cooking 101 videos − solutions for every type of cook.
As you walk into the grocery store, pull out a shopping cart, and start your walk through the store, there is a moment when you look at where you place your hands on the shopping cart and think, “How many other hands have touched this thing? How clean is this? Do I really have to touch this thing?” And then you get over that brief moment of repulsion and think, “I’ll wash my hands when I get home.”
Clorox®, in conjunction with King Soopers® and City Market®, has done a great
job of alleviating this concern by helping you have a more germ-free shopping
experience.
Inside a local grocery store, King Soopers, right where you select your shopping cart, Clorox has placed its Disinfecting Wipes product demonstration so you can clean the surface of your shopping cart before you touch it. The header card reads, "Healthier Shopping at King Soopers and City Market. Use this complimentary wipe to kill 99.9% of germs on shopping cart surfaces." Clorox even provides a place to discard your used wipe.
The only thing missing? A nearby
display that gives you an opportunity to actually buy the product, which
would’ve been nice. Overall though, good job, Clorox.
I checked out a small pet store/food store in a strip mall where I have considered buying my dog food from. In just the 3 small dog food aisles I found this typed up letter from the store.
In essence, the note stated the store was reducing the # of SKUs from a particular dog food mfg – AVO – because AVO had increased their prices, and in the store’s opinion, didn’t seem right. For the past 2 months the store had conducted extensive research to find comparable dog foods that were just as good, if not better, and cost less. This way in the end, as the note stated, it was a “win-win” for both the store’s customers and their dogs. The dog foods they recommended in place of AVO were Merricks, Royal Canin and Pro Plan.
Impressive. Store is no longer going to carry a beloved food a customer wants, lets them know why they are no longer carrying it and then provides 3 alternatives to fit the needs of their customers.
This is the kind of passion, commitment and behavior I love and appreciate from small retailers. You’re left feeling that the store is your partner in raising your dog and cares what kind of nutrition you feed your dog.
Have you experienced a retailer as transparent as this about price increases?
Who says bigger is always better?
During the last 18 months,
large format grocery stores have experienced significant change.
Instead of clearing acres of land to put in a 100,000 square foot
mega-store, retailers are seeking out small community corner lots in
order to put in smaller, approximately 15,000 square foot stores.
Retailers are following the example set by UK-based Tesco who already
operates a number of small format ‘Fresh & Easy Neighborhood
Markets’ in the U.S.
One might think that these retailers are simply creating smaller versions of their original stores, however the focus of these stores has actually changed. Retailers are taking advantage of a few prominent trends that have emerged over the last few years – green living with natural and organic foods, meals on the run, and the promoting health trend du jour. As the ‘Super Size Me’ mentality continues to disappear, consumers are looking for healthy and quick alternatives to fast food that are less expensive than running into your local Whole Foods and faster than stopping by the gargantuan King Sooper on the corner.
Albertson’s owner, SuperValu, is currently testing a compact supermarket called ‘Urban Fresh’ that will focus on ready-to-go meals, along with a selection of fresh meats, seafood, and produce in Chicago’s Lincoln Park neighborhood. Just think – you can run into 'Urban Fresh' to grab chicken breast for dinner or chips and salsa for a friend’s party in less than 10 minutes. Less time shopping...more time for you.
Even the mother of all retailers, Walmart, has
opened several ‘Marketside’ convenience format stores in the suburbs of
Phoenix, Arizona. Marketside’s tagline, “Deliciously Affordable,’
reflects its dual commitment to value and quality. Unlike Walmart’s
Neighborhood Market and Walmart Super Centers, Marketside does not
identify its parent company in stores or markting materials. Stores
carry a limited assortment of SKUs, including prepared meals, fresh and
packaged foods, packaged non-foods, health and beauty products, and
gift items. Twenty percent of merchandise at Marketside is natural and
organic, and it also touts a selection of fresh and locally grown food.
The perimeter of the store supplies ready-to-eat meals and fresh made
food items. This area is called “The Kitchen,” and former restaurant
chefs offer a 50-item menu of proprietary Marketside Meals that range
from simple side dishes to more gourmet offerings. All meal items are
free of trans fats, artificial colors and artificial flavoring.
(Source: In-Store Marketing Institute.)
Affordable? Yes. Fresh? Yes. Healthy? Yes. Small and easily navigated? Yes. Now that the biggest retailer in the world has admitted to everyone that bigger is not in fact always better – this winning combination just may be the new ‘it’ format for 2009. Stay tuned.
Photo Credits: In-Store Marketing Insititute
-- Contributed by Vanessa Munson
If you were hoping to hear good news on December retail sales results, prepare to be disappointed.
Overall U.S. retails sales dropped 1.7% in December versus a year ago despite heavy pre-Christmas discounting across retail categories, a 2.2% drop including November, according to the trade group International Council of Shopping Centers as reported Friday in the Wall Street Journal.
This brings to a close a nightmarish 2008 retail period that included the demise of numerous famous-name retailers including KB Toys, Linens 'N Things, Mervyns, Sharper Image and Steve & Barry's; a recent article in RetailWire.com analyzes the pitfalls each company faced leading up to closure. Other famous retailers that left us in 2008 include Bennigan's, Whitehall Jewelry and Wickes Furniture.
A glance at December sales total from the Wall Street Journal report begins to tell a story.
This partial list from the report show a clear trend in favor of "everyday value" retailers which continually feature low prices and regular price promotions, while upscale department stores not known for value suffered worst. To put it another way, assuming American consumers are to make holiday purchase, they are more likely to shop at stores that offer "Save Money. Live Better." as opposed to those than bring to mind the phrase "Needless Markup."
Every retailer, even the most exclusive, needs to discover ways to frame a value argument to consumers -- or face making the 2009 list of dearly departed retailers.
This is the third in a three-part report.
Never before has it been more crucial for retailers to deliver on the age-old value equation: Value = Price + Performance. With the ominous gloom of the economic crisis, credit crunch, inflation, job loss, and more, the majority of shoppers are making drastic changes in their shopping behavior, in turn directly impacting retailers’ bottom lines.
With shoppers spending less overall, shopping in new channels, trading down to lower-tier or private-label products, and clipping coupons, retailers across the board are positioning themselves as destinations for value. Here's how a few leading retailers are doing it.
Target®
Target is delivering on its Expect More. Pay Less. equity with its "A New Day" campaign, which inspires consumers to re-create experiences that they might otherwise cut from their routines in hard times. The campaign specifically calls out the price point of Target products presented in relatable and emotional contexts such as a sidewalk café in your living room or a vacation in your backyard. No matter the context, Target is packaging valuable experiences for its audience.
Whole Foods®
Known to many as Whole Paycheck, Whole Foods aims to prove to shoppers that premium products and value go hand-in-hand. Shoppers can join Value Gurus (like the one pictured here) for in-store value tours on how to shop at Whole Foods on a budget and receive Value Shopping Tips for enjoying the best savings and bargains without giving up organic and natural foods.
The Whole Deal Value Guide (available in store and online) is filled with more than $40 in coupons, recipes and money-saving tips, and highlights “Sure Deal” 365 private -label product offerings. Shoppers can also subscribe to the Whole Deal e-mail.
Publix®
Publix is offering its shoppers a Simple Strategies for Saving download on its Web site with more than 30 thrifty tips on how to stretch your dollar. This useful and practical value-add item proves to shoppers that Publix is a trusted and savvy retailer who is looking out for the shopper’s best interests. It also positions Publix as a destination for value during challenging times.
As shoppers continue to seek out value, and as their values continue to shift, retailers have a unique opportunity to reposition themselves and strengthen their equities. As Frank Bifulco, CMO of The Home Depot® recently noted, “The economy is such that people are putting a greater premium on the value that they get from the money they pay. When you look at retailers across the board…the emphasis is on price and value; I’ve never seen it as acute as it is now.” Walmart recently landed on Save Money. Live Better. as a brand proposition, which appears to be resonating with shoppers this holiday season.
Easy enough for discount retailers, but how will more upscale retailers -- like Nordstrom, Room and Board, or Brooks Brothers -- handle value messages without diluting long-term brand equity? The value-positioning frenzy has only begun, and marketers and retailers alike should keep a close eye on what else is happening in the marketplace.
- Contributed by Kristina Boyer
With Santa, his elves, interactive kiosks, perfume pouncers and more — this season is a time of turmoil when it comes to capturing a shopper’s attention.
While stores have evolved into a media platform, the complexities of the environment are often forgotten and good efforts at connecting can be lost. As today’s in-store technology moves beyond visual and sound senses, marketers should identify how to optimize their approach to gain the most attention. Today you need a communications AND sensory hierarchy. 
The Sensory Prism allows you to qualify which senses work best to get your product noticed and integrate your brand messages.
Read more on Tools of the Trade in the December issue of Integer Pulse from our Midwest office here.
Las Vegas plays host to the In-Store Marketing Expo this year from November 12th to 14th. The Integer Group will be presenting two bodies of recent work.
Our Dallas office will be presenting some of the findings from their Consumer Electronics work. Their presentation is entitled "The Consumer Electric: How and Why People Buy Electronics" and is at on Thursday, November 13, from 2:30 – 3:30 PM.
Our Denver office will be presenting some of the recent work undertaken on the Convenience Store Channel. Their presentation is entitled "Redefining the C-Store: Moving from Functional Convenience Stores to Creating Convenience Stories" and is on the same day in the morning from 10:45 – 11:45 AM.
If you are travelling to Vegas, then do drop by, catch the presentations and say hello. If you can't make it, we hope to make the presentations available here later in the month, so check back.
What Avanza Supermarkets gives you on sale prices in the aisles, it takes away in the fine print at the register.
Fine print on circulars (see the top right corner below) and shelf price tags says “plus 10% at the register.” What does that mean? It’s perniciously vague.
The answer is at the register, where receipts show a “10% plus” line item that adds that money back onto your bill (see below).
A local news network reported that most people don’t notice the fine print or the mark-up on the receipt. Avanza defended itself, asserting that they fully disclose the plus-10% system to shoppers. And besides, other chains like Elrod’s in Texas use this pricing system too (see below).
The scheme is certainly built on two shopper insights: people are lured by low prices, and people don’t always read the fine print. But it smells like deceptive marketing aimed at low-income and Hispanic segments. Companies are always trying to find a way to tip the balance of power in their favor with customers. But is this going too far? I think it stinks.
As big-box retailers like Walmart and Whole Foods grow in size - some stores exceeding 200,000 square feet and carrying more than 60,000 products - an opposite effect is developing nationwide: small-footprint stores that offer a quicker shopping experience.
A recent New York Times article indicates that shoppers' priorities change depending on the shopping occasion: when value is an issue, we tend to travel further and spend more time shopping in larger stores; but when time and convenience are an issue, we travel less far and want the experience to be as brief as possible. As everyone knows, you don't drive to Walmart if you only need milk for cereal.
Safeway has been pioneering convenience formats, such as smaller-formats stores in Southern California and an experimental format, located in Denver, with a built-in convenience section. Giant Eagle opened Giant Eagle Express in suburban Pittsburgh that is about one-sixth the size of a traditional location. Whole Foods is building smaller format stores and also converting former Wild Oats locations into Whole Foods Neighborhood Market locations like the one pictured below. While these smaller formats lack the great variety offered in a large-format store, not to mention pizza ovens, sushi counters and burrito bars, shoppers appreciate that they can stock up on basics and enjoy the same prices and promotions offered by larger locations - in a visit lasting fewer than 20 minutes.
One key reason big grocery is experimenting with these formats is to mitigate the threat posted by Tesco, whose format in the United States is 10,000-square-foot Fresh & Easy Markets designed to take a bite out of larger format grocery stores. What makes Tesco unique is that the selection is "edited": rather than be comprehensive, store buyers choose a small number of high-quality products in each category. And unlike the corner grocer we grew up with, Fresh & Easy Markets are engineered for maximum consumer experience.
Will the trend expand to other categories? It's safe to assume that progressive retailers are willing to experiment with new formats based on local shopper trends. A recent ShopperCulture post described Target's Bullseye Bodega concept in Manhattan. What's next: a Best Buy corner store?
