When I speak at events, conferences or meet with clients, many complain that their shopper marketing funds and retail investment budgets are being spread too thinly and not delivering returns. Sadly, this is going to get worse, not better. Existing retailers are under more pressure than ever as shoppers turn to new retail formats. And a retailer under pressure turns first to their suppliers for relief. At the same time suppliers are facing new, fast growing channels that they want to invest in. Shopper marketing and retail investment budgets are under more and more pressure, but with growth hard to come by, those budgets aren’t going to grow. So how to manage that pressure? The key to improving retail investment decisions lies in understanding… consumers!
Those of you who are regular readers of this column might be surprised. I bet you were expecting me to say ‘shoppers’ or ‘shopper marketing’. Before you panic, or worry that I’ve lost my mind, and forgotten all my previous ranting about the difference between consumers and shoppers, that consumers and shoppers aren’t the same – hold on a minute. Let me explain!
Two choices to improve returns on retail investment
When faced with this pressure brands have two choices. The first is to spread shopper marketing and trade spend budgets ever thinly, trying to keep all retailers happy and probably failing completely. This approach is unlikely to be optimized and creates a significant long-term problem. Spreading trade spend around effectively means that slow growth channels (often large, incumbent retailers) will have spend growth ahead of sales growth: reducing profitability. Fast growth channels will have less investment, meaning that growth opportunities may be missed. A company that takes this approach will miss sales opportunities and create long-term customer profitability problems.
The only way to win with retail investment is to focus
Not a good option then, so what is the alternative? The alternative is to focus: to focus spend on channels where growth will be delivered. I’m not saying that brand owners should stop investing in large, slow growth channels, but the balance must be shifted to where the growth is. At the heart of this concept is targeting – more specifically – focusing on your target shoppers. Unless you are targeting 100% market share, you don’t need to win with every shopper on every shopping trip. By identifying which shoppers and shopper missions are key, brands can focus their investment on the right channels.
Retail investment should be guided by your target shoppers
Which target shoppers should I focus on? Typically, there are two groups. Those that are responsible for your current sales, and those that will be responsible for your growth (that’s a little bit of an oversimplification, but for the purposes of a 1,000-word blog it’ll have to do! If you want more, why not invite me to come and share it face to face with your team? – I’d love to come visit!)
We should be able to identify our current shoppers quite easily, and where they shop, but how about the shoppers who are key to growth? The answer to this lies in what might seem a strange place – consumer marketing!
Retail investment is actually guided by consumers
At the heart of winning profitably at retail is targeting shoppers. At the heart of targeting shoppers lies consumer growth drivers! Our growth target shoppers are the ones that will enable growth in consumption of our brands and our categories.
Is your consumer marketing team able to help?
Consumer marketing teams should be able to provide this information:
- Which consumers will change their behavior to drive our future growth?
- What is their current consumption behavior?
- What will their future consumption behavior be?
This should be quantified so that different consumer growth drivers can be prioritized. By the way, if your marketing team can’t give you this information, don’t’ be surprised – it amazes me how consumer marketers can do their job without knowing this, but there are lots who seem to do so! (maybe invite them along when I come and visit 😊)
The consumer lies at the hear of identifying your target shopper
This information lies at the heart of understanding your target shopper. For consumption to grow – consumers need to consume differently. For that to happen a shopper needs to shop differently. For each consumption growth driver, we can identify a target shopper: their current behavior, and how it needs to change. We can use our understanding of these shoppers to understand which channels will be influential on these shoppers: and that helps us prioritize channels. And that can guide retail investment.
Retail investment – Two wins from one strategy
In this way we achieve two amazing outcomes. Firstly, we invest in channels that are important to our brand growth, rather than those that are large, or fast growing. But also, we align marketing and sales plans and investment. And that is a big win!
If you’d like to know more about how to connect marketing to sales, or to manage your shopper marketing and trade investment budgets better, just let me know – I’d be happy to talk through your situation with no obligation. And yes, I’d love to come and meet you are your team!
