The retail environment is changing rapidly. New channels, online access and online information have liberated shoppers from the limitations of 20th century retail: the 21st century shopper has more choices about where to buy than ever before. In my last post I outlined the pain that this was causing Big Retail and what those companies were doing, and likely to do, about this: A move to multi-channel and/or omichannel; reducing inventory and cutting ranges; demanding differentiation; Pushing more on price, and just asking for more money from suppliers. Many of their actions could potentially have severe implications for the brands and companies that supply them. But it appears that whilst this retail turmoil contains threats for brands, there are also opportunities. And the key to surviving and thriving in these times is simple: build shopper insight.
Know thy shopper
The starting point of winning with retailers is understanding shoppers. It has always been important, and the rise of shopper marketing teams and philosophies shows how much focus this has gained in the last decade. But now, when the pressure is really on, the shopper attains even higher importance.
Shopper insight helps prioritize retail customers
Retailers under pressure will ask for more support from their suppliers. Unless your funds are unlimited (and if they are, please give me a call!) there are tough choices need to be made. The solution is not to spend more, but to spend it with the right retailers in the right way. Shopper insight helps you understand how retailers are different from a shoppers’ point of view. A clear understanding of who your target shoppers are enables an understanding of which retail customers are important to your brands. It isn’t necessarily the ones full of shoppers: we are interested in those that are full of our target shoppers. Shopper insight also enables shopper marketers to understand how different shoppers interact in different retailers through their shopper journey. Knowing where target shoppers can be found, and influenced, allows the focusing of resource and funds against those customers.
Shopper Insight helps manage ranges
As big retail comes under pressure, ranges will be cut. Partly because on average less floor space will be given to products (as space is given over to other activities), and partly because inventory costs money. Shopper insight can help in two ways. Shopper data can be used to defend a listing, and to defend space, by explaining how important a product is to a shopper, and what the shopper will do if they can’t find that product. Without data, the retailer will merely remove slow sellers. And if some of your products have to go, it would be better if you had some data to support which ones should go, and which should stay. If they remove the wrong ones, that can hurt both parties.
Shopper insight focuses differentiation efforts
Retailers often ask for differentiation, be it promotions, product, packaging. Offer a big retailer an ‘exclusive’ and they typically love it. But differentiation is expensive, and can cause problems with other retailers who aren’t given ‘special treatment’. Shopper insight ensures that differentiation is meaningful for the shoppers in that particular retailer, and also provides at least some defense as to why it might not be appropriate for other retailers.
Shopper insight is mandatory for channel management
I guess this almost goes without saying, but it is surely inconceivable to consider managing multi-channel and omnichannel environments without understanding how shoppers see different channels, use different channels, and combine channels for different purposes through their purchase journey. Shopper marketers who truly understand this and can bring this knowledge to retailers will gain significant influence.
Only shopper insight will turn the tide away from price (eventually)
It’s hard to see major retailers reducing their focus on price in the short term but in the long term things may change. But changing retail strategy requires more than just telling them that they are wrong. It requires shopper marketers to come up with alternative strategies that drive growth and loyalty. It’s a long haul ahead, for sure, but we have to start somewhere, by ensuring that we continually offer meaningful, data-backed alternatives to yet another discount.
The opportunity for better relationships with retailers are there. The danger of getting chewed up as fodder by big retailers under pressure is also very real. The key will be to bring new thinking to the table, but to only do this with the key retailers who can support your brand. And, as shopping has changed so much, in the future these retailers may not be the same ones that were historically important. Shopper insight is key. If you’d like to learn more about how to conduct really insightful shopper research, please download our free e-book here.
