GMDC: Exclusive products, differentiated marketing key to capturing today’s shoppers
Consumers are continuing to view shopping in new ways, and experts say retailers need to adjust their merchandising efforts to keep up with the dynamics of this rapidly evolving market.
“The modern-day shopper is looking for a unique message that speaks directly to them,” Edgewood Consulting Group account director Bernie Wojtas said during a recent Global Marketing Development Center Infocast webinar on merchandising differentiation.
With online shopping, an increasingly competitive brick-and-mortar environment and a host of other options available for customers, creating a notable point of difference and making shoppers feel that a store understands them is more crucial than ever, Wojtas said during his 40-minute presentation, titled “Successful Merchandising Differentiation in an Ever-evolving Retail Landscape.”
Wojtas and GMDC director of insights and communications Mark Mechelse, who hosted the lunchtime webcast, noted that consumers’ shopping experiences and what they expect from retailers continues to evolve and bears little resemblance to what it was just a few years ago.
“Shoppers are seeking a more personal connection to products they use,” he said. “Especially in recent years, they are looking for the notion of exclusivity. They want products that are personally designed for them.”
With some analysts estimating that between 20% and 25% of the products found on store shelves today will only be available online by 2020, it is critical for retailers to optimize their mix. However, Wojtas and executives at GMDC warn that merchandising optimization is not the same as merchandising differentiation.
Despite retailers in every channel working diligently to offer the right products and set themselves apart from the competition, the majority of these efforts have focused on varying assortment and/or pricing strategies, Wojtas said. In recent years, however, the importance of merchandising and so-called “shopability” have taken on more significance as retailers look for ways to stay competitive and levels of shopper loyalty continue to erode.
“Merchandising is first and foremost about optimization,” Wojtas said. “We all spend countless hours optimizing assortment, pricing strategies, navigation, what mix we have on the shelf and other things like promotion. But, since everyone is optimizing well, nobody really stands out. The target has to be optimization and differentiation. Optimization and differentiation drive efficiency and effectiveness.”
The emphasis that retailers have put on merchandise optimization and the growing number of shopping alternatives that have sprung up in recent years has led to an erosion of consumer loyalty, he said, and it is essential for retailers to find ways to get that loyalty back.
One of the best ways to do that, he stressed, is to create a memorable shopping experience, employing a wide range of technology and sensory experiences that make customers feel that the retailer truly is offering something unique, giving them a reason to return to that store.
“Engage shoppers and bring go-to-market strategies to life through visual, personal solutions,” Wojtas said, offering the experience of a retailer who used a combination of unique lighting, signage and displays to transform an ordinary men’s grooming aisle into a “Man Zone” as an example of how to make a lasting impression on shoppers and help make them repeat customers.
“This is how a traditional retailer can compete versus e-commerce retailers who don’t have the luxury of connecting with shoppers on a multisensory level,” he said.
The other key to providing shoppers with unique and memorable experiences, Wojtas noted, is to reach consumers across a wide range of touchpoints. As shoppers have become extremely dependent on technology for research, advice and feedback, merchandising vehicles that take advantage of this phenomenon can prove highly effective, he said.
Like so many past marketing and merchandising innovations, these efforts require collaboration between retailers and suppliers, Wojtas said, noting that a growing number of vendors have begun to embrace this new approach to merchandising.
“Retailers are moving from best practices to next practices,” he said. “Historically, conversation concerning merchandising circled around optimization. Now, optimization is considered a cost of doing business.”
However, he said, only a handful of these retailer-supplier collaborations have been able to make the most of the multiple touch-point strategy that is required to achieve differentiation.
“The reality is that customers see multiple touchpoints acting independently,” Wojtas said. “Retailers’ channel knowledge and operations exist in technical and functional silos.”
Ideally, he said, customers will view multiple touchpoints as part of the same brand, and retailers will develop “a single view of the customer but operate in functional silos.”
However, what Wojtas terms the “nirvana” scenario will see customers experiencing a brand, not a channel within a brand as “retailers leverage their single view of the customer in coordinated and strategic ways.”
As essential as creating a unique and personalized experience is to ensuring that retailers continue to attract shoppers into their stores, even the most Herculean efforts will fail if they are not executed well, he said.
Wojtas said that if retailers and suppliers adhere to what he calls the four Es (exclusive, experience, ever present and execution), they will stand out in the marketplace and move beyond just optimization and into differentiation. Doing so, he stressed, will help them maximize sales and margins, grow their return on investment, increase shopper loyalty and increase conversion rates.
Ultimately, he said, this strategy will allow retailers to stay ahead of the competition.
“The future is in optimization and differentiation,” Wojtas said. “That will determine retail winners.”
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Kroger launches new ‘global’ brand
CINCINNATI — Kroger has a history of successful private brand launches and it is putting that track record to the test with a new globally inspired line called HemisFares.
The names HemisFares doesn’t exactly roll off the tongue, but it plays nicely on the word hemisphere to capture the essence of a globally inspired food brand. The company said the new products will be imported directly from the most food-rich regions of the world and that HemisFares offers shoppers a guided tour of the best-of-the-best tastes the planet has to offer. The brand was launched with 27 Italian products and plans call for more products from other countries such as Spain and Japan to be added soon.
"Just like American barbeque can mean many different flavors: spicy, smoky, more of a vinegar base, Italian food changes considerably as you travel across the country," said Gil Phipps, Kroger vice president of corporate brands. "Imagine landing in Italy and getting an in-depth, guided tour from village to village, experiencing the single best example of the most beloved foods from each region. Our goal with HemisFares is to bring only the best food finds to our customers."
If the company is successful with that goal it stands to further deepen the penetration of store brands as a percentage of total sales. In 2014, private brands accounted for 25.5% of Kroger’s annual sales of $108.5 billion. Clearly, Kroger knows what it doing when it comes to building brands. The best most recent example that has won the company acclaim is the Simple Truth line of natural and organic products. Introduced in the fall of 2012, by the end of last year sales had already surpassed $1 billion.
It is unlikely that HemisFares will enjoy such a strong rate of sales growth given the more limited appeal country-specific foods. However, the company is committed to finding the best of what the planet has to offer and bringing it to domestic shoppers.
"Whether you're epi-curious or just like eating and sharing incredibly tasty food, when you see our HemisFares brand, you can trust the product within is the best this planet has to offer – bar none," said Phipps. "We're sure customers will enjoy them as much as we enjoy finding them.”
Kroger said it is working side-by-side with the best food connoisseurs, some with decades of experience, to identify the most delectable, regional culinary treasures from around the world. Kroger's Corporate Brands team travels to those regions, diving into what makes each edible treasure and locality unique.
The packaging on each product is also unique, as it tells the story of the food find. It takes customers on a journey, explaining precisely where it came from and what makes that product the best-of-the-best. Each HemisFares item has a "find number" on the packaging to direct customers to other similar products in the HemisFares brand that they may enjoy.