First, we need to re-frame the way we think about our products. We need to think about the store as the consumer does; an ecosystem of products

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2 First, we need to re-frame the way we think about our products. We need to think about the store as the consumer does; an ecosystem of products across the entire store that solve a purpose or fulfill a need. In fact, nearly two-thirds of all shopping trips include items from both the perimeter and center aisles. This means how we define our competition, and our opportunities, needs to radically shift. We call this total store connectivity. 2

3 Now there are probably hundreds of reasons for a trip to the grocery store, but today we re going to focus on those occasions built around entertaining. Whether it s a Super Bowl party, baby shower, dinner with close friends or Thanksgiving with the whole family, over the course of the year we all attend a number of gatherings. So why focus specifically on gatherings? Because shopper behavior varies widely depending on the occasion, and my goal is to help unlock some of the potential for you by understanding those differences. 3

4 In order to do this, we partnered with IDDBA on a study that focused on the degree of connectivity between categories across the store. The point is to understand how to capitalize better on natural connections in the store to sell more products, making entertaining easier for the shopper and more fruitful for industry. We looked at shopping trips to understand how often categories were purchased on the same trip. We also evaluated sales correlations to understand the impact that sales trends of one category can have on another category. Neither of these metrics in isolation are revolutionary; however, the power comes from the combination to understand true competitors and opportunities. Trillions of combinations are generated from which we generate only the most relevant connections. Utilizing Nielsen s brand-new total view of the store with integrated UPC and random weight sales, this study also provides the most holistic view of the entire store as a consumer views it. For this specific study we re going to discuss today, we chose 20 categories most often purchased for an occasion to understand how connectivity could change depending on the occasion. Depending on the underlying theme of the connections be it convenience, indulgence, premium-focused I ll also highlight specific strategies both in and out of the store to execute against this new knowledge. 4

5 We also found that many of these entertaining categories shared common connections to similar products, which allowed us to group these products together to create 5 entertaining occasions which you see here on this slide; Fresh and Fancy, Holidays are a Handful, No Work Entertaining, Casual Party and DIY Entertaining. As you can see from the list of products below each name, each one features a unique basket of products which means different strategies can be implemented to maximize the shopping trip. While some occasions feature more premium items, such as shrimp, steak and pork roasts; others include more convenient products, so there are opportunities at the core of every occasion to make entertaining a little or a lot easier for the consumer. With each occasion that we ll highlight, we ll provide strategies for both in and out of store execution to drive further connectivity and sales. 5

6 The first occasion that we ll discuss we re calling Fresh and Fancy Entertaining. These are often a more premium entertaining event, catering to a smaller gathering or more dinner party style event. Some of the key entertaining times for this type of gathering might include events like a small-scale Christmas gathering, weekend formal dinners, or upscale wedding showers. Of the 20 categories analyzed, this occasion features 6 of the more premium categories such as steak, shrimp and specialty deli meats and cheeses and shared similar connections with other more premium products. This isn t to say that each of the six categories shares the same degree of connectivity to all of the products on the right. For example, specialty deli meat is more highly connected to cooking vegetables such as broccoli than specialty deli cheese. These individual differences are highlighted in detail in the full report. However, there is often a high degree of overlap in the categories listed, and one of the most common themes that we found is that when shoppers are planning for these occasions they are most often focused on products exclusively within the perimeter departments, specifically deli and produce. As this occasion is meant to impress, you ll notice that these categories are all more expensive. Shoppers are making a more upscale meal, often from scratch, with fresh, premium ingredients. There are many ways to embrace this occasion with different marketing, merchandising and product strategies. We ll focus on marketing and merchandising tactics specifically for this occasion because we can directly influence them today, but I briefly want to touch on product strategies also. While the shopper often cooks more from scratch for these meals, this doesn t mean that convenience isn t still important. It s possible that shopper is cooking more out of necessity because the items that he or she wants to serve aren t readily available. But in order to create these meal solutions/offerings, we first need to understand what shoppers are connecting with these key products before innovating and developing products that meet the shopper needs. For example, we see that mushrooms are often purchased during the fresh and fancy occasion, yet there aren t a lot of products in market such as marinated mushrooms that add the layer of convenience to the products that the shoppers want. Products on left-hand side: Deli Dips/Spreads Specialty Cheese Specialty Deli Meat Steak 6

7 Shrimp Deli Snacks 6

8 Since this occasion focuses on a gourmet meal, the shopper likely feels a bit of pressure to leave good impression, so this is a great opportunity to relieve some of the burden by making it easier to prepare for the event. There s a lot of planning that goes into fresh and fancy meals so use this is an opportunity to inspire and engage the shopper during that planning process. These occasions can be more sporadic without set dates to host, engaging these shoppers outside of the store provides the most flexibility for consistent communication. Recipes that feature premium ingredients such as a steak dinner with vegetable medley can inspire the host as he or she is establishing the menu. Take it one step further and suggest a wine pairing or the perfect specialty cheese and cracker appetizer to make it a complete meal. Although the consumer isn t necessarily focused on price for this occasion, tying in promotions can help seal the deal. Of course, tailor the recipe or ingredient focus to the core demographics of your store. Certain cuts of steak index more highly with different demographics, or substitute the wine pairing with beer instead. Recipes work best in print media, but having a digital presence is critical, particularly when targeting Millennials. Consider running an ad on Facebook which has the highest average ROI of any digital media. Just remember that consumers on average spend just 5 seconds looking at digital ads, so keep the banner simple and clean with the more detailed recipe on your website. 7

9 Once the shopper is in the store, continue drawing the connections for them. Since shoppers are willing to pay a more premium price, discounting for these to gain sales for these events isn t necessary, but having the right selection is and drawing connections can make it easier for the shopper. Some cross-merchandising makes sense no matter the week or occasion such as placing wine near your specialty cheese displays. Or utilize hand-made signs featuring different pairings each week which you can place near the wine section. Given the significant number of wine and cheese offerings, this can be an overwhelming decision for a consumer so offering recommendations or having consultants on hand to offer expert advice during the weekends when sales of the products peak can make it easier. For the non-planner, having recipes or recommendations directly on packages can inspire new meal plans as well. CPG companies have long used this tactic on their packages, but fresh products have the same opportunities to recommend that meal suggestion with cooking instructions directly on the products. RETAILER PHOTOS (L to R): Whole Foods, Whole Foods, Raley s 8

10 The next occasion we ve coined Holidays Are A Handful. This is all about quick and easy solutions and preparation, as these shoppers are getting ready to cater to large holiday gatherings. The easier the solution, the better for making a retailer a one-stop shop. Some of the key entertaining times for this type of gathering include largerfamily or friend gatherings such as Christmas, Thanksgiving, Easter and 4 th of July. Of the 20 categories analyzed, four fell into this occasion and include bakery rolls and pies, nuts and fresh pork roasts. What sets this occasion apart from the others is that these categories have a high connection to categories across the entire store. This provides a significant opportunity to merchandise and promote in a manner that adds convenience for the shopper. **Do we want to call out that turkey and ham were not included in the study? I would suspect most people will wonder ** Connections on left hand side: Bakery Rolls Fresh Pork Roast Bakery Pies Nuts 9

11 Executing against these entertaining occasions is a little easier than fresh and fancy gatherings because these gatherings align to national holidays. There are two separate but critical elements to these occasions: family/friends and convenience. Consider this commercial that ran in 2015 from a retailer you might be familiar with. Nielsen s media best practices focuses on a few elements which Walmart executed nicely in this commercial. First, there s a narrative. The commercial frames the holiday process of buying the groceries, preparing the meal and enjoying it with family. Which leads to the second key benchmark which is triggering an emotion. For many the commercial evokes memories of family gatherings and shared meals. While humor tends to resonate best with Millennials, sentimentality works well with other generations. 10

12 Once you have the shopper thinking about your store for their occasion needs, it s time to capitalize on the convenience sought during the actual shopping trip and during the preparation so he or she can focus on what matters the most: their guests. Since the shopper is purchasing products from across the store, many different options exist to make it easier for them. Since holidays are key weeks for these occasions, it s easier to plan than some of the other entertaining occasions. Consider displays that merchandise all of the connected products together in one location. Think about it from a shopper s perspective: there s nothing worse than hunting up and down aisles for the marshmallows for the sweet potato casserole at Thanksgiving. Why leave the products scattered across the store and risk missing a sale? That would be like leaving each article of clothing for your outfit in a different room. You run the risk of forgetting something or giving up on tracking down that pair of earrings you had planned to wear. If cross-merchandising is out of the question or simply out of your control, we recommend at least structuring the circular ads with all of the connected items promoted in the same week and on the same page. You could even include a small call out of aisle locations or a fun infographic insert to get the shopper s attention. Use this an opportunity to also remind shoppers about some of the items they may have left off the shopping list. While no one forgets the turkey or potatoes when preparing for Thanksgiving, it s easier to overlook some of the other items that are 11

13 often purchased for the occasion as well such as coffee. And for this occasion, disposable dishes are a must! 11

14 The final type of occasion we want to highlight is called No Work Entertaining. These events are typically a little more casual such as graduation, Super Bowl or birthday parties. The four key categories of focus on this occasion are bakery cookies and cakes, deli platters, and deli appetizers/sides. These products offer a no time needed solution, with more of a lift the lid and pretend you prepared it yourself (or not) approach! They are often purchased with other items focused on convenient, already prepared products primarily in the deli and produce departments. This entertaining style is all about letting the store do all the work. Your communication for these events should tout the time-savings or convenience solution for the shopper. Products on left-hand side: Bakery Cookies/ Brownies/Dessert Bars Deli Platters Bakery Cakes Deli Apps/Sides/Desserts 12

15 Across the store and throughout the year, more convenient options are increasingly in demand from consumers across all demographics. It s imperative to fulfill this need year-round with the right assortment and marketing campaigns letting consumers know you re a convenient solution. These occasions would then tie naturally to your marketing. If you re running a Twitter campaigns then use slogans like convenientsolution which reinforces the value to the consumer. Offer special party packages that include a variety of appetizers, desserts, beverages and disposable dishes. For maximum convenience, offer online ordering with curbside pick up. 13

16 Doesn t sound like a realistic option to you? Check out this ad from a retailer already putting this recommendation into action for the upcoming graduation season. This idea can be scaled back for smaller gatherings, but offers the ideal one-stop-shop solution for the customer and rivals the packages offered by restaurants. RETAILER: Holiday Market, Royal Oak MI 14

17 This is also a great opportunity for companies with smaller media budgets to partner with global brands who have a broad reach and high brand equity. More and more CPG companies are embracing these partnerships as the rapid growth and increased purchase frequency of many fresh areas can drive mutual growth. This is particularly helpful for brands in mature categories with stagnant to declining sales trends. Of course, selecting products that are highly connected is a critical element when evaluating logical partnerships. As the fastest growing area of the store, and one of the most important areas for the no work entertaining occasion, the deli department provides the most natural opportunity to drive these connections. Connect chips or crackers with deli dips and spreads. Connect soft drinks or beer with deli entrees. Connect condiments and sauces with your deli prepared chicken. As we discussed at the very beginning, shoppers think of the store as an ecosystem of products meant to solve their needs. Partnerships across the store can help do this for them. RETAILER PHOTOS: Price Chopper, Kansas City, MO 15

18 The fourth entertaining occasion is Casual Party. This occasion centers on having a low maintenance, laid-back affair. This could be a spur of the moment drinks or appetizers before going out to dinner, simple weekday dinners with good friends or game day Saturdays. This occasion has very low total store connectivity as the categories of focus here are all center-store categories (such as pickles, salty snacks and crackers) which share common connections with other center-store categories, ***such as salad dressings, condiments and dairy cheeses. The goal for this occasion is to get shoppers out of their routine. These shoppers have a tendency to only shop in the center aisles and like to keep things simple. 16

19 While more can be done with this occasion-type in-store, there s definite opportunity to provide inspiration to your shoppers through circular or digital advertising, as well as retailer publications. We re seeing a lot of retailers create retail-specific magazines, highlighting recipes, events, even sample menus for specific occasions. It s all about putting the shopper in a relatable situation and focusing on how they could try new things or take it to the next level with as little or as much effort one wants to put in. 17

20 Today, there s more interest than ever in partnerships across the store. In fact, it s a great time for fresh companies or companies with smaller marketing budgets to partner with larger companies who have the budget, the broad reach and the brand equity to drive mutual growth! And brands within the center aisles are looking to the perimeter, looking to growing fresh categories to latch onto around a meal or entertaining occasion. Offer coupons to complimentary fresh products that pair well with staple crackers or get shoppers trying new things by offering samples during peak traffic hours. The overarching goal keep it simple as this occasion doesn t make food the center stage, but instead the experience and conversation between guests. 18

21 The last entertaining occasion derived from this research is Do It Yourself entertaining. This shopper is all about getting their hands dirty and adding personal touches to events of all sizes, including birthday parties, potlucks and family gettogethers. These home preparation and baking categories such as refrigerated baked goods, baking ingredients and frozen fruit are most heavily connected to other parts of grocery and dairy, ***including spices and seasonings, butter and margarine and canned fruits/vegetables. And once again, as we saw with Casual Party, these center store categories rarely connect with the fresh perimeter since this shopper isn t necessarily looking for the short-cuts some substitutable perimeter categories offer. However, everyone is looking for ways to make their lives a little bit easier, even those who want to do everything themselves. 19

22 Outside the store, use images in ads and circulars to provide inspiration and motivate shoppers to try something new! And don t just rely on retailer s websites or circulars. As we mentioned earlier social media provides great return on your advertising investment, so the more touchpoints you use the better! 20

23 And since these shoppers love getting in on the action, pull them into the perimeter departments by providing some level of do it yourself action. We re seeing so many creative ways retailers are making the full shopping trip an experience and these entertainers will be in heaven. Everything from watching a professional ice a cake, to enjoying an evening of wine and food pairings or feeling like you have a say in your cookie or brownie varieties with mix and match packaging these are just a few ways retailers can ensure consumers have the opportunity to add their own personal touches. 21

24 The concept of connecting across the store and understanding consumer drivers isn t new. But we re now at a more critical time than ever to put this into action, as consumer purchase patterns are changing and your out-of-store competition is more focused on stealing occasions from all of you. This research illustrates the power of taking a total store view and ensuring you know what impacts or drives specific consumer purchasing decisions. As you can see, there s a world of opportunity out there to connect with the savviest entertainers to those not comfortable in the spotlight. 22

25 And as consumer purchase patterns and media consumption behaviors change over time, so must our strategies. These are just a few opportunities that we ve selected to highlight. It s important to restructure our thinking to shift from a focus of product attributes to a consumer experience, while understanding that consumer experiences and values can change depending on the occasion. Acting on these principles can ultimately drive growth and position your products for success. I d like to close with a quote that I think demonstrates that message perfectly. Specialize by product, lifestyle, pursuit, service or convenience. Searching for the magic bullet is a distracting waste of resources. Adapting is a game of singles, not home runs. With that in mind, we provided several suggestions for how to put these insights into action, but we recognize the various challenges (space, labor, budgets) that can prevent you from implementing everything. However, we hope that at least one strategy fits your business model and plans and let that single start you off on a path to home runs of success. 23

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