Shopper Culture

Safeway to Market Private Label Brand to Other Supermarkets

With the rise in demand for organically produced products, Safeway's private label O Organics brand is expected to do $400 million this year, with sales in the first quarter alone up 50% over last year. In an announcement this week, Safeway's Chairman, Steve Burd, outlined a plan for the company to begin marketing its O Organics brand to supermarkets "other than Safeway" Supermarket News

No small player, the O Organics brand is represented by more than 300 SKU's. From eggs to orange juice, cookies to pretzels and olive oil to frozen dinner entrees, the O Organics brand ranges across multiple product categories. The decision to market these items outside of Safeway to other grocery chains represents a very large endeavor and a break from the traditional role of the retailer.

So goes the recent trend of retailers moving upstream the supply chain to begin taking on the role of manufacturer, or even grower for that matter. Why and what are the implications?

Certainly retailers, like Safeway, create private label brands to increase revenue. More importantly however, these retail exclusive brands build equity that supports the retailer's unique positioning.

In the case of Safeway, the O Organics brand connects directly with Safeway's core positioning - "Ingredients for Life". It provides shoppers with a clear and tangible reason to believe and clearly differentiates the Safeway brand from other retailers. While the packaging does not carry the Safeway name, the O Organics brand is exclusively sold only in Safeway stores (for now). This exclusivity is what reinforces the Safeway brand positioning to its shopper.

So here's where things become a bit paradoxical. On the one hand, Safeway's move up the supply chain offers them a new revenue stream. It offers them a chance to convert competitors ( Kroger) to customers.

On the contrary, when shoppers find that they can buy the O Organics brand at grocery chains other than Safeway will they react? If indeed Safeway is defining itself by the exclusive brands that it carries, will the fact that these brand are no longer exclusive to Safeway erode their equity and lessen the impact of "Ingredients for Life"? Wouldn't Safeway be better served by trying to maintain "Shoppers for Life"?

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Paper or Plastic?

If you've ever felt alone and without a friend, like nobody understands you and the world is out to get you, remind yourself: things could be worse. You could be a plastic bag.

Plastic bags suffer disdain rarely known outside dog catchers and tax collectors. Global consumption of non-degradable plastic bags is estimated between four and five trillion each year. The vast majority are never recycled and wind up in landfill, sewer systems, oceans, lakes and rivers. They are known jokingly as the National Flower of South Africa their ubiquitous discarded presence. The clog waterways, choke marine animals, and take 1,000 years to decompose. What's more, the thoughtless use of plastic bags deepens our reliance on foreign oil: to produce the global supply requires 17 billion gallons of oil annually. (Source: San Francisco Chronicle; Worldwatch Institute)

The problem is, plastic bags are such a common part of our lives that individuals have a hard time conceiving the ruinous effect on the environment. Using plastic bags is one of the few things nearly every human on earth has in common, young and old, rich and poor. Severe, large-scale cultural change seems to be the only way to reverse the trend of plastic bag abuse.

Several countries, including South Africa, Rwanda, Bhutan and Bangladesh have banned non-recyclable plastic bags outright. Individual cities like Paris, Mumbai and San Francisco have recently initiated bans. Progressive countries like Australia, Taiwan and Singapore are considering drastic bag reduction programs.

One of the most successful plastic bag reduction initiatives comes from Ireland, where in 2002 the government legislated a tax on plastic bags at the register. Within weeks, plastic bag use dropped by 94 percent, and people began adopting reusable cloth bags. But then something unexpected happened: carrying a plastic bag became a stigma akin to wearing a fur coat. Irish people became generally more mindful of the role of the individual in creating global change. England is considering a similar tax. (Source: New York Times)

In the United States there are no broad measures in the works, though individual cities have taken their own initiatives. Los Angeles, Boston and Phoenix are considering bag reduction proposals. New York City may soon require stores that distribute bags to recycle them, although this is a pale compromise to an outright ban. A national bag ban would be an excellent statement of environmental leadership but in our legislative system is almost certain to never see the light of day.

Unfortunately, paper bags aren't an environmentally friendly alternative: their production generates 70% more air pollutants and 50 times more water pollutants than plastic bags, and take up nine times as much landfill space. (Source: USA Today, Environmental Protection Agency)

What, then, are environmentally conscious Americans to do?

For Retailers, the options are many. Some are adopting biodegradable bags made from corn starch or other organic components, but these are relatively expensive and unreliable: a cardboard box corner can create a small tear that will cause the bag to fail and groceries to fall. Many stores offer a credit to customers who bring their own bags; Whole Foods is planning to raise the credit from 5 to 10 cents per bag and plans to stop distributing plastic bags completely by year's end, instead offering 99-cent reusable cloth bags at checkout. Other retailers offer heavy-duty plastic bags that shoppers are encouraged to reuse; still others promote recycling programs that transforms used bags into heavy-duty wood plank replacements for commercial decking and park benches.

For the Shopper, the best option is to choose neither paper nor plastic, but to bring your own bag, box or backpack to shop. Many retailers now offer durable, inexpensive reusable bags; in some places, these bags are even fashionable. Even the best of us will occasionally forget to bring our bags, and in such cases, use as few bags as necessary and make a promise to recycle the bags you bring home. Encourage your favorite retailers to make plastic recycling available. Above all, follow the green mantra: Reduce, Reuse, Recycle.

(reusable bag images, clockwise from left: King Soopers polyurethane bag; Lunds/Byerly's compact cloth sack; reusable plastic bag from The Coop Advantage, open and compacted)

Fresh & Easy - Las Vegas

When you think of Las Vegas, you think of bright lights, glitz, glamor and a bit of excess.  That was definitely not the case when I walked into my first Fresh & Easy store.  But I have to say it was quite re"fresh"ing and definitely easy to navigate! So I guess the store lived up to its name. Picking up on a post from September 2007 about some of the factors that will make this a success in the US, we offer some observations from this particular visit:

- Key differentiation strategies appear to be (in no particular order):  sustainability, freshness/healthy food, ease of shopping & everyday low pricing (no loyalty cards or coupons).  You definitely saw all of these delivered on, even before you entered the store (i.e. front row parking for hybrid cars and even golf carts.  Yes, golf carts. We were in Vegas after all!)

- Limited space and lots of private label (50% of their inventory), which will make large consumer packaged goods manufacturers a bit nervous.  Will other grocers follow suit?

- There was no POP or promotions; packaging is the primary marketing tool for any brands allowed in.

They are definitely capitalizing on a trend that  Iconoculture have identified - that of "grocery-getters" with whom one-stop shopping is the elusive holy grail. Shoppers are starting to scrimp more than splurge (less eating out) and are time starved.  Tesco's answer: pre-made meals at a great value. 

Shoppers are also becoming choice fatigued and want their choices edited. Tesco once again answers by only carrying private label and just the category brand leaders. (One of the success factors of Tesco's small format stores in the UK).

And lastly, people are not cooking as much but are more sophisticated about eating.  Tesco once again provides a solution by offering fresh, organic healthy options that are quick and easy.

After visiting 4 of the 5 stores, it was very apparent that EVERY store followed the exact same format and delivered a consistent message, not typically what you see from other grocery retailers.  And I have to say that the best part of the store visit was when one of the employees gave the "ladies" each a bouquet of flowers (for free!).  After all, they have a strict freshness policy and I guess these flowers were past their 3 day shelf life.  Regardless, it made my day!

- Contributed by Tina Cline

How much of our shopping behaviour is pure habit?

As a relatively recent arrival to the USA, my family was put through some major changes to their lives, one of which was a change in how we undertake our weekly grocery shop.  We came from a city where we had shopped on-line for most products, including weekly groceries, for the last 5 or so years.  The convenience of having what we ordered delivered to our door within a two hour time slot is fabulous.  However, we moved to an environment where that is no longer a viable option, having instead to drive to a supermarket and walk the aisles. (And as I am at work most of the time, I confess that my role in this activity is now non-existent!)

We were discussing this with friends the other week though and I was amazed at quite how quickly my wife had fallen into a pattern of behaviour that, when we thought about it, is driven purely by habit.  Very quickly she fell into a new routine - she uses the same supermarkets, walks the aisles in the same order, buying the same brands, on the same day of the week at about the same time.  It's clockwork.  She doesn't even particularly like one of the supermarkets she uses - it is cluttered, cramped and not the nicest environment.  Yet there is little incentive to change going there, and when I asked her about why if she is not that impressed, she doesn't go somewhere else, she hadn't really thought about it. It's just part of how she lives her life now.

So how much of our shopping behaviour is actually driven out of habit? How sedimented do we become with regular purchases like this?  How much more difficult is it to change our shopping behaviour than to establish it?  When was the last time you thought about and changed how you shop? 

And what impact would a change in the store environment have on our shopping basket? I guess the impulse to act is not that great for my wife, but how much better could shopping be (and how much more money a supermarket, in this case, might extract?) if they could break down this cycle of habit? What could the store and/or brands be doing to make this a better experience, to help her discover new things and make it interesting?

Who's Hungry?

From a macro point of view we know that we feel good when we purchase a product that helps contribute to a cause.  From Susan G. Komen to (PRODUCT) RED, a lot of marketing support is put behind these efforts to make us aware and encourage us to purchase these products.

From an in-store perspective I think this is one of the best executions I've ever seen.  Leo Burnett Canada and Campbell's soup teamed together in the grocery channel for local foodbanks.  Here is a description of the program from directdaily:

In a grocery store 4,820 can s of Campbell's Soup were used to build an installation piece that spelled HUNGER. Signage beside the piece encouraged shoppers to buy one and donate it to their local food bank. As shoppers bought cans from the display the word HUNGER slowly disappeared. This allowed people to see how their individual effort could help bring an end to the problem of hunger.

This example works on a variety of levels, it 1) increases sales of Campbell's products 2) supports a great cause 3) provides a visual example of the difference one person can make.

- Contributed by Todd Cameron

Retail Surveillance

As I was reading the December 6, 2007 issue of the Economist, I couldn’t help but think of the irony involved as retailers attempt to create more personal environments for their customers.  The article, Watching As You Shop, points out the very impersonal technologies being developed and utilized by retailers around the world to learn more about their customers in order to provide them with a better shopping experience.

Customer monitoring software can now measure how long queue lines are at registers, which parts of the store are the most traveled, and how long customers stay in one place.  From Tesco in the UK to Walgreens, Best Buy, or Abercrombie & Fitch in the US, the channel is irrelevant as retailers are employing the technology to create a point of difference, and for good reason. 

In addition to a more pleasurable experience for customers, retailers are hoping to increase sales by learning what types of promotions are working and what areas are “hot spots” in the store for traffic flow.  Combine increased sales with more efficient staffing and retailers are not only increasing sales, they are cutting costs.

The players specializing in customer monitoring software range from companies such as Irisys and Brickstream to a consortium including manufacturers such as Coke and Procter & Gamble (P.R.I.S.M.) to university initiatives like VideoMining a spin-off from Penn State.

With this kind of focus already placed on how we shop, the technology to understand our actions in-store is only going to get more specific and actionable, begging the question: As consumers become aware of the technologies used to study their behavior, will they care? 

There is a lesson to be learned here from American Express.  When they openly discussed how they review cardholders' spending patterns to tailor offers to them, they faced a significant consumer backlash.  Even though they had been doing this for years, their cardholders felt betrayed.  My guess is that we as a culture are getting more comfortable with this type of information being gathered about us and as long as we believe we are getting a better deal or experience we won’t mind too much.

[Image: Irisys]

- Contributed by Todd Cameron

Shopping cart media: two visions of the future

The recent Springwise newsletter shares a new breed of smart shopping cart that displays text ads on a small screen right on the handle.  Its simplicity allows retailers to run messages for one store or for a whole chain, and the retailer can easily change messages for dayparts and clearance items.  It's manufactured by Modstream, a New York based company that claims:

Modstream’s messages are so powerful that national retailers have reported sales lifts of featured products up to 35%! These extraordinary sales results are possible because Modstream requires no change in shopper’s behavior.

No buttons to push or screens to navigate — shoppers push their cart and see your messages! And, since Modstream resides on the shopping cart handles, retailers and advertisers have 30-40 minutes to engage customers every time they shop.

This innovation seems a bit like Google text ads to me.  Low-tech text - but located where it counts.  As both a supporter and critic of new media placements in our lives, I am mixed about this one as usual.  But as long as it's quiet and shoppers can choose to ignore it, Modstream could be a win-win for both shopper and retailer.

Compare Modstreams' cart to one at the opposite end of the spectrum: the beautifully redesigned shopping cart with ad space on the side.  It looks exactly like a Volkswagen Beetle - if the Beetle were wrapped in a giant ad.  It's called the MarkitCart.

Two polarized examples in the evolution of mobile shopping containers. 

What do you think?  Are cart handles like the Internet search dashboard - best used for fast and readable low-concept messages?  Does Modstream's technology hit the sweet spot somewhere between interruption and engagement?  Does the MarkitCart take it too far?

More coupons

How many shoppers actually have the time or the motivation to work such math out is an unanswered question (and maybe we should, what do you think?) but it shows what is possible given the right kind of motivation.

And how do the manufacturers feel if there are scenrios where-by the shopper is basically paid to take away their brand? (We'd love a comment from a manufacturer if you are reading this).  Different for retailers, as we don't know the impact on this shoppers overall basket size, but still, for a premium brand it has got to feel pretty yuk to find the shopper is paid to take it home with them. 

Kroger's Shop24 Vending Experiment

Recently in Columbus, OH the Kroger company installed a giant hybrid convenience store / vending machine next to its gas pumps.

Local TV station NBC-4 reported on it, saying:

When operational, the machines will provide everything from drinks to pain relievers. In all, more than 150 products will be available at the so-called automated convenience stores.

The machines will accept credit cards, coins and cash.

"Product falls into a soft basket. Basket goes into a delivery bin, drops it in and it comes out the front," said Tom Riske, an installer.

The concept is from a company called Shop24 which is based in Belgium and has installed similar machines throughout Europe. 

For a while now there has been tension between the grocery and c-store channels, with each creeping toward the other.  In this move Kroger is dipping its toe in more automation territory.  First, along with other grocery chains, they have given shoppers the self-checkout option.  Now they are looking at a store-without-a-store.  It will be interesting to see how this catches on.  I couldn't find any pictures of the one in Columbus but here's a picture from a similar Shop24 unit attached to a Shell station in Portugal.
One of the interesting things about this concept is how people use it.  It appears to follow a purchase pattern similar to that of a standard convenience store.  On their website Shop24 outlines the highest selling Europesn items and typical dayparts for each, along with shopper needs.  It shows the breadth of occastions for this type of retail channel.  It all raises a small but significant question:  What is this channel called?  Un-manned C-Store or SuperVending?  I imagine it will live under the Vending banner.  And although it can't compare to the vending jungle that is at play in Japan, it's a pretty interesting development for us stateside.

The basket tells all

An oldie but goodie from The Onion: Shopper Insecurities Laid Bare in Wal-Mart Shopping Cart.  Thanks to Todd for forwarding.

Tesco - arriving in a US neighborhood near you soon

From Craig Elston:

Tesco.  The paragon of British retailing has been getting much press in the US as they prepare to launch their Fresh & Easy Neighborhood Market stores in the American West. 

That they generate so much coverage is of no surprise.  Tesco has talked about entering the largest grocery market on the planet for some time.  And I am in no doubt that they will be a success.  Having been a customer of Tesco for as long as I can remember in the UK, their continual development of store formats and own label products will be welcome again in our house (when they get to Colorado).

The last five years or so of grocery shopping by our house in the UK was undertaken online. The fact that when you register on Tesco.com your eons worth of Clubcard data (i.e. things you have bought in the past) automatically make up your shopping list, meant there really was little need to actually go into a store for our family shop other than for something to do on a wet Saturday afternoon. 

So it was a shock (and surprise) to come to the US, have to go shopping for groceries and find ourselves faced with such choice.  Far too much choice in fact - it is completely overwhelming.  There are these huge sheds of food products, often quite devoid of any people, in which you have to choose from so many options in every category. 

And here-in lies what will probably be the key to success for Tesco; they are superb at editing.  They have made it clear that each store will have a limited, edited set of SKUs.  And no doubt each store will vary based on local demographic so that the SKU set is relevant. 

Back in the UK, when I used to visit the Tesco Metro near my office in Soho at lunch time, its product range was very different to the product SKUs available in the Tesco Express by the tube station close to my home.  But both were undeniably Tesco - high quality good value products.  They just understand the neighborhood and the differences in the mindset of the shopper there. They then meet their needs through a highly edited set of products. Interestingly, it never felt like you weren't getting a choice. 

There is nothing to suggest that the Fresh & Easy Neighborhood Market concept won't be the same. Nor that local residents won't be flocking there in their droves.

More to come.

Managing the Myriad Forces Impacting Retail

The more we read and hear about the retail space, the less clear it sometimes is about where things are headed. PRISM hopes to simplify the media aspects of it, while retailers are becoming more interested in custom customer specific programs as well as now customer/shopper specific efforts.

There was an interesting article in the Hub about shopper marketing which raised questions for us about the myriad forces at work in retail marketing. The article written by Chris Hoyt and Gail Peterson of Hoyt and Associates basically outlines the shift by retailers to better shopper segmentation and what it means to anyone selling goods at retail. Check it out here.

The net net is that retailers are aiming to better serve their shoppers by customizing stores (product selection, layout, etc...). The hope of the more "shopper relevant" store is, as always increased sales, but also increased loyalty. "This store understands me" seems to be the general response that retailers are looking for.

This is smart and makes complete sense, but will change what agencies are going to be tasked with in the future. The challenge will no longer be to create customer specific programming across a client's top 5 or 10 retailers (for example) but is going to grow geometrically as each customer specific program will have 4 - 8 "shopper segment" twists. This, however, is a challenge worth stepping up to as it this will inevitably lead to more targeted programming which means more effective and successful work.

 

So as planning looks to become more targeted and customized, in working with the PRISM consortium, we see the science side of in-store looking to generalize and simplify. This then raises the question, as stores differentiate further, what does this mean for attempts to create uniform measurement and planning?

One could argue the measurement factor can remain less affected as "eyeballs are eyeballs" in the world of media measurement. An impression in prime time TV is added on top of an impression in Time Magazine and then added again to a Yahoo impression is terms of overall plan delivery. Yes, the levels of engagement are different, but that's a separate consideration as a part of the planning process. As far as Nielsen is concerned, they are measuring "opportunity to see"; again eyeballs are eyeballs. (It’s the same song for TV, Print and everything else measured.)

So, this leads us to the part which is affected by all these shifts in retailer/shopper specific planning. While thanks to PRISM we will know how many people will see our in-store pieces, how to interrupt and engage will become a more important art. Encouragement on the part of retailers for more specific programs around shopper segments in particular store formats provide an opportunity to create more relevant creative.

This opportunity raises some very interesting questions from a creative insight standpoint. How do we drive relevance across different store- and shopper-types? What are the vehicles that allow the flexibility to creative these types of campaigns? What kind of creative measurement do we establish to test what works where and for whom?  How can PRISM’s science help in development and measurement of the more artistic side of planning?

Are there any sacred surfaces in store?

The POP Times recently wrote about Maybelline's conveyor belt media test. 
Conspicuously absent from the article is any mention of the clutter factor or any shopper point of view. 

It's got me wondering whether this kind of in-store is truly necessary, helpful or welcome by the actual target audience. 

And one could argue that the harried checkout experience is more about last minute impulse purchases and simply checking out, than it is a place for brand messages.  Not to mention the fact that loads of groceries will be piled upon the belt.

The reality is that as long as the retailer and advertiser feel they are reaching shoppers with impact the program will move forward.  It will probably test well in terms of reach, frequency and recall.  But will we truly hear the shopper's point of view?

Download pop_times_article_august_2007.pdf