Loyalty one webinar Delivering on the Promise of Shopper-Centricity 2013-07_23

Delivering on the Promise of Shopper-Centricity

July 23, 2013

Graeme McVie VP & GM, Business Development & Client Service

[email protected]; 301 652 0694

The Path to True Sustainable Competitive Advantage

mailto:[email protected]

All information contained herein is confidential and/or proprietary information of LoyaltyOne, Inc. and any unauthorized use and/or any disclosure is strictly prohibited. Page 2

We’ll address the question: Do retailers really need to become more shopper-centric?

Showcase best practice approach to shopper-centricity

Layout roadmap to become more shopper-centric while achieving shorter-term objectives

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Do retailers really need to become more shopper-centric?


POLL QUESTION

What’s your opinion?

1. Retailers use shopper data when making decisions: a) All of the time b) Most of the time c) Some of the time d) Rarely e) Never


POLL RESPONSES

0% 10% 20% 30% 40% 50%

a)All of the time

b)Most of the time

c)Some of the time

d)Rarely

e)Never

Retailers use shopper data when making decisions (% of Responses):


Commodity Price Changes Over Last Decade

+271% +189%

+279% +327%

WHEAT CORN

SUGAR CRUDE OIL


U.S. Consumer Spending (Year Over Year % Change) 2000 – 2010

~-1%

~+3%


Five 24%

Six 28%

Seven 19%

Eight 5%

One 1%

Two 2%

Three 7%

Four 14%

Consumers are shopping multiple channels ….

3%

8%

8%

14%

21%

24%

31%

35%

35%

36%

I purchase my groceries online andhave them delivered

I research products on blogs

I use social media sources to researchproducts

I look for updates fromretailers/manufacturers via email

I visit online deal sites

I research products on websites

I download coupons from couponingsites

I download coupons from retailerwebsites

I download coupons frommanufacturer websites

I download recipes off websites

… and are doing more research on the internet

# of Channels Shopped % of Consumers


Traditional retailers are stepping up

their game

Safeway: Lifestyle stores, Just4U

Kroger: Targeted marketing, Vendor Collaboration

Walgreens: Loyalty program launch

New types of competitors are gathering pace

Amazon: Selling groceries, opening DCs close to urban areas, offering same day delivery

Alice: Enabling manufacturers to sell directly to consumers

Drugstore.com: Online pure play with niche offering

Target: Red Card, targeted marketing, new localized formats/assortments

Alternative formats are proliferating

Aldi: Ultra low cost, lots of private label

Whole Foods: Organic, fresh, healthy

Club stores: Low prices, larger pack sizes

Dollar stores: Lots of stores, simple prices, small foot print


Focus Still Mainly on Quarterly Financial

Objectives

Shopper Insights not Sufficiently Specific

or Timely

• In the past, shopper insights grouped shoppers into large generic segments reducing relevance and value

•Static shopper insights did not allow for changes in behavior over time

Shopper Insights not Easily Connected to

Actions

•Disconnect between shopper insights and concrete actions

•Decision-makers have to use judgment to translate insights into actions

Negative Feedback Loop

•Retailers need to hit their quarterly financial objectives

•Using the same tried-and-trusted approaches minimizes short-term risks

•Limited appetite exists to fix the car while driving it


POLL QUESTION

What’s your opinion? 2. Which of the following decision areas do you

believe makes best use of shopper data on a regular basis when making decisions:

a) Corporate strategy b) Merchandising c) Marketing d) Store Operations e) Real estate planning f) Supply chain/logistics


POLL RESPONSES

0% 10% 20% 30% 40% 50% 60%

a)Corporate strategy

b)Merchandising

c)Marketing

d)Store Operations

e)Real estate planning

f)Supply chain/logistics

Which of the following decision areas do you believe makes best use of shopper data on a regular basis

when making decisions (% of Responses):


Merchandising

Marketing

Store Operations

Traditional Focus

Performance Objectives

Category-centric

Campaign-centric

Store-centric

Category sales & profit

Campaign response

Store sales & direct store costs


Store

Week 1


Week 2

Store


Store

Week 3

Organic Milk


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% share of shopper’s spend by category (top shoppers, 50 largest categories)

Avg: 50%-70%

Current Spend

Opportunity Spend


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“There’s going to come a point where our shelf pricing is pretty irrelevant because we can be so personalized in what we offer people.”

Safeway ex-CEO Steve Burd, earlier this year,

according to the AP.


The companies that best satisfy the needs of shoppers will win

To do this, retailers need to be able to achieve two objectives:

understand the needs of individual shoppers

execute actions that best satisfy shopper needs in a relevant & timely fashion

Best practice approach to shopper-centricity


POLL QUESTION

What’s your opinion? 3. What reason do you believe holds back retailers the most

from becoming more shopper centric: a) Lack of shopper data b) Shopper data exists but it is difficult to access c) It’s difficult to analyze/interpret the shopper data d) Retailers don’t believe in shopper data e) It’s too challenging to incorporate shopper data into

day-to-day operations f) Shopper-centricity is not aligned with individual

employee’s objectives/incentives


POLL RESPONSES

0% 10% 20% 30% 40% 50%

a)Lack of shopper data

b)Shopper data exists but it is difficult toaccess

c)It’s difficult to analyze/interpret the shopper data

d)Retailers don’t believe in shopper data

e)It’s too challenging to incorporate shopper data into day-to-day operations

f)Shopper-centricity is not aligned with individual employee’s objectives/incentives

What reason do you believe holds back retailers the most from becoming more shopper centric (% of Responses):


Who is the shopper and what are their

needs?

Needs

•Life-stage (e.g. Young families)

•Lifestyle (e.g. Healthy, Convenience, etc.)

•Geo-demographics

What influences the shopper’s behavior?

Response

•Offers (products/ brands & prices)

•Content (creative, copy)

•Channels (Digital, DM, mobile, social)

What is the shopper’s current & potential

value?

Value

•Current Value & Behavior

•Potential Value by Shopper

•Value overall, by category/brand


Jane’s Shopping Pattern

Shopper Analyses Engine

Health Score

Convenience Score

8.6 2.1

Julie’s Shopping Pattern

7.1 7.8

Steve’s Shopping Pattern

1.8 7.2

http://images.google.ca/imgres?imgurl=http://www.thokalath.com/images/grocery/grocery_shopping.jpg&imgrefurl=http://www.thokalath.com/grocery/shop_online.php&h=178&w=179&sz=5&tbnid=vnsFyFcAL-4J:&tbnh=94&tbnw=95&hl=en&start=14&prev=/images?q=grocery+shopping&svnum=10&hl=en&lr=


Enterprise Shopper Strategy

Analyze Shoppers Identify Growth Opportunities by Shopper, Category, Store Develop Shopper Strategy & Drive Functional Plans

Vendor Collaboration & Alignment

•Category Strategy

•Price, Promotion, Assortment

•Innovation

• Loyalty

• 1-to-1/CRM

• Targeted Mass

•Store Features/ Programs

•Macro-Space/Clustering

•Real-estate Planning

Merchandising Marketing Operations

Integrated Shopper Plans

Case Study Next Pages


Produce and HBC categories represent large current spend $’s and attractive incremental $’s; Seafood appears to offer attractive growth potential

Number of

Shoppers

All information contained herein is confidential and/or proprietary information of LoyaltyOne, Inc. and any unauthorized use and/or any disclosure is strictly prohibited. Page 28 Households with Teens present the greatest growth opportunities for seafood


Deploy demo/info stations, co-locate seafood meal solutions, use bundle pricing & provide recipe suggestions in target stores; send marketing to target shoppers


Enterprise Customer Strategy

Analyze Customers Identify Growth Opportunities by Customer, Category, Store Develop Customer Strategy & Drive Functional Plans

Vendor Collaboration & Alignment

•Category Strategy

•Price, Promotion, Assortment

•Innovation

• Loyalty

• 1-to-1

• Targeted Mass

•Store Features/ Programs

•Macro-Space/Clustering

•Real-estate Planning

Merchandising Marketing Operations

Integrated Customer Plans

Case Study Next Pages


Singles/ Couples

Who Buys?

Where to Grow?

Who Buys?

Where to Grow?

Hhld w/ Baby

Hhld w/ Child

Hhld w/ Teen

Empty Nesters

Seniors

Health Conscious

Cooking Aptitude

Time Starved

Value Sensitive

Lifestage Segments

Lifestyle Segments

To grow sales in this category send targeted marketing offers to high opportunity shoppers in Singles/Couples & Seniors segments who are value sensitive


Empty-nesters Seniors Hhld w

Teen Hhld w Child

Hhld w Baby

Singles/ Couples

Single Serve

Whole Bean

Ground

Instant

Adapt the product assortment and Planograms/facings in stores that over/under-index in the relevant sub-categories


$0

$3,000

$6,000

$9,000

$12,000

0% 10% 20% 30% 40% 50%$0

$3,000

$6,000

$9,000

$12,000

0% 10% 20% 30% 40% 50%

Infrequent Shoppers

Secondary Shoppers

Priority Shoppers

At 40%: overall Sales $s begin to decrease

Sales $’s

Sales $’s at Different Discount Depths Overall and by Segment

All Shoppers

At 30%: priority shopper Sales $s start decreasing; infrequent

shopper Sales $s increase

Discount

Change the promotion offer from Buy 1 Get 1 Free (i.e. 50% discount) to Buy 2 Get 1 Free (i.e. a 33% discount); re-invest saved promo dollars in better promos


Impact to Category sales of shopper-centric decisions

Existing category shoppers buying additional products in the category

Existing category shoppers increasing consumption of existing products in the category

Existing retailer shoppers but new to the category

Test versus Control Impact (Pre/Post)

Overall cumulative impact of shopper-centric decisions (measured pre to post, test versus control) was a growth rate of over 10% in category sales

5%

10%

Roadmap to becoming more shopper-centric


POLL QUESTION

What’s your opinion? 4. Where do you think we’ll see most shopper-centric activity in the

next 12-24 months: a) Personalized pricing b) In-store promotions c) Assortment d) Customer marketing – direct mail (i.e. paper) e) Customer marketing – digital (i.e. email, website) f) Customer marketing – mobile (i.e. apps, geo-targeting) g) Store layouts h) Store programs/events/features i) Customer service


POLL RESPONSES

0% 10% 20% 30% 40% 50% 60%

a)Personalized pricing

b)In-store promotions

c)Assortment

d)Customer marketing – direct mail (i.e. paper)

e)Customer marketing – digital (i.e. email, website)

f)Customer marketing – mobile (i.e. apps, geo-targeting)

g)Store layouts

h)Store programs/events/features

i)Customer service

Where do you think we’ll see most shopper-centric activity in the next 12-24 months (% of Responses):


1. Showcase value through rapid, quick wins that deliver results in short-term

2. Expand the value in a pragmatic manner

3. Reap the full potential benefits of shopper-centricity


•Create shopper insights: ‒ Identify greatest

strategic value opportunities

•Drive strategic decisions: ‒ Allocate resources

to largest strategic opportunities

•Democratize shopper insights: ‒ Incorporate shopper

dimension into multiple reports across the company

•Drive overall strategy process: ‒ Design enterprise

loyalty strategy


Merchandising

•Promotions: ‒ Deploy

shopper/need-specific promotions

•Pricing: ‒ Identify Key Value

Items for valuable/loyal customers; manage prices within narrow competitive range

•Promotions: ‒ Consistently

execute shopper-driven promotions

‒ Proactively seek out shopper-centric promotions from manufacturers

•Pricing: ‒ Understand impact

of pricing on shoppers/segments

•Assortment: ‒ Understand de-list

impacts by shopper

•Pricing: ‒ Drive all shelf prices

by leveraging shopper-insights; personalize pricing by individual

•Assortment: ‒ Drive Store Brand

strategy/innovation •Collaboration: ‒ Align manufacturer

brand/trade investments & innovation with your shopper needs


Marketing

•Customer Marketing: ‒ Leverage shopper

insights to improve effectiveness of upcoming customer marketing campaigns

•CRM: ‒ Build shopper

engagement intelligence platform

•Customer Marketing: ‒ Consistently

execute targeted marketing campaigns that are shopper-centric rather than campaign-centric

•Branding: ‒ Design overall and

banner branding through shopper insights

•Marketing Mix: ‒ Shift marketing

budgets from mass market, untargeted activities to tailored and personalized marketing


Operations

•Demo/Info Stations: ‒ Setup in-store

demo/info stations in specific stores that are aligned with large growth opportunities

•Events/Programs: ‒ Establish shopper-

driven events/ programs in-store

•Staff Alignment: ‒ Hire, train and

allocate staff in order to satisfy large shopper needs

•Customer Experience Design: ‒ Improve the

shopping experience by designing stores around shopper needs


1.Get the lay of the land Analyze your shopper data

2.Plan your journey Take a phased approach

3.Choose the path of least resistance Start where it’s easiest


Delivering on the Promise of Shopper-Centricity Driving sustainable competitive advantage by better satisfying the needs of the shopper

Introducing the Shopper to merchandising Is it possible to make merchandising more shopper friendly rather than category friendly

Driving marketing from the shopper up Using the shopper and their needs to deliver relevant and profitable marketing performance

Enhancing the shopping experience Making store planning decisions that work for shoppers, store operations and the bottom line

Extending alignment along the value chain Permeating shopper-centricity to trading partners to align objectives and resources

Realizing true shopper loyalty Unleashing the power of your loyalty efforts to innovate, differentiate and delight

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Webinar sign-up will be available through www.Loyalty.com


The White Paper that accompanies the

webinar is available at www.Loyalty.com

Delivering on the Promise of Shopper-Centricity

July 23, 2013

Graeme McVie VP & GM, Business Development & Client Service

[email protected]; 301 652 0694

The Path to True Sustainable Competitive Advantage

mailto:[email protected]

Loyalty one webinar Delivering on the Promise of Shopper-Centricity 2013-07_23

Business

Transcript of Loyalty one webinar Delivering on the Promise of Shopper-Centricity 2013-07_23