NRF pushes for online sales tax
WASHINGTON — The National Retail Federation is urging Congress to pass legislation that would require online and remote sellers to collect state and local sales taxes, telling a House committee that lawmakers should level the playing field between local retailers and out-of-state competitors. David French, SVP of the NRF, told the House Judiciary Committee in a letter that legislation is needed to end the sales tax disparity.
While brick-and-mortar merchants are required to collect state and local sales taxes on most items, many out-of-state sellers are not required to do so, giving them what the NRF says is an unfair price and market advantage of as much as 10%. The committee is scheduled to hold a hearing on the issue Wednesday, March 12.
NRF urged the committee to consider online sales tax legislation, based on principles outlined last fall by Chairman Bob Goodlatte, R-Va., that recognizes compliance costs, eliminates the current patchwork of state laws and court decisions, and simplifies the collection process. Under the U.S. Supreme Court’s 1992 Quill ruling, online retailers are required to collect sales tax only in states where they have a physical presence, such as a headquarters, store, office or warehouse. Federal legislation passed in the Senate last year would provide states the ability to require sales tax collection.
“Members of the National Retail Federation believe that Congress must resolve the constitutional questions posed by the Quill decision in a fashion that promotes a level playing field between retail competitors,” French said. “As retailing evolves and Internet sales become a more prominent portion of total retail sales, it is critical that Congress address the sales tax collection discrimination that exists between brick-and-mortar and remote retailers.”
CVS focuses on personalization at IRI Summit
ORLANDO, Fla. — The digital marketing initiative known as “My Weekly Ad” is helping CVS Caremark grow sales and deepen engagement with loyal customers by providing them with personalized versions of the retailer’s weekly ad. The My Weekly Ad program was launched last fall, and Wednesday morning during a presentation at the IRI Summit, CVS Caremark SVP of merchandising and retail pricing Judy Sansone shared additional details regarding the program.
“We deliver a personal circular to every customer who is a member of our ExtraCare program and is registered on CVS.com,” Sansone said. “There is so much more power in delivering a truly personalized experience.”
CVS Caremark still relies on traditional print circulars, about 45 million each week, but the ongoing decline in Sunday newspaper circulation presents a major challenge for CVS Caremark and other retailers who for decades relied on the Sunday paper as a delivery vehicle for their weekly ad.
Recognizing this shift, as well as the potential for digital technology to serve customized offers, CVS Caremark sought to leverage the wealth of data found in its database of ExtraCare member behavior. The result was the creation of My Weekly Ad last fall and superior redemption metrics that have the company looking to increase its investment this year.
According to Sansone, the typical print circular features about 300 items and the average customer will purchase about eight of the featured items.
“With My Weekly Ad, we are seeing redemption rates that are seven to 10 times the rate of non-personalized offers, which is allowing us to drive a higher level of engagement,” Sansone said. “Roughly 30% of everything we spent in 2013 was on personalization tools because the investment is driving a higher level of engagement and that figure will be even higher this year.”
The opportunity for personalization and engagement is huge at CVS Caremark because the company’s 15-year-old ExtraCare program now boasts 70 million active members — defined as those who have participated in the past six months — and the shift toward further personalization is undeniable.
More than 1,000 people attended the IRI Summit, and in a message clearly intended for an audience largely comprised of CPG company representatives, Sansone said it is time for marketers to evaluate their investments.
“Review your portfolios for opportunities to reinvest from underperforming mass vehicles to more personalized and profitable offers,” Sansone said.
CVS Caremark is applying that same philosophy to the store experience with a clustering initiative designed to make assortment more locally relevant. Sansone said the company has about 8,500 planograms for 70 categories and further optimizing assortment based on local demand characteristics offers tremendous potential.
While most of her comments were focused on front of store, she made sure to mention that at CVS Caremark, “pharmacies and Minute Clinics are where personalization comes to life.”
Facebook exec shares views on social platforms and CPG brands
ORLANDO, Fla. — Campaigns on the social platform get results, according to Erin Hunter, global head of CPG strategy at Facebook, assuming they involve great creativity and speak to shoppers in the right voice.
Hunter shared her views on broad changes reshaping how CPG marketers ply their trade and offered some specifics regarding Facebook effectiveness this week during a presentation at the IRI Summit. According to Hunter, 2013 saw the media industry achieve the most significant milestone of the past 60 years when the time people spend on digital devices surpassed time spent watching television. The last time such a structural shift occurred was in the 1950s when television surpassed radio, according to Hunter.
Marketers quickly jumped on the shift and created “soap operas” to leverage the platform and growth sales of their brands.
“CPG companies have a history of turning technology into growth for our industry,” Hunter said.
Fast forward to 2014 and the transformational change taking place with how brands engage with shoppers and seek to activate purchase behavior. The competitive landscape is very different and characterized by low growth in developed markets. The barriers to entry for upstart competitors have diminished and store brands are on the rise even as CPG companies’ costs are rising, according to Hunter. Adding to the dynamics of the marketplace are non-traditional retail channels, CPG brands unable to break from dependency on promotions and digitally empowered consumers who engage with brands on their terms.
“We live in an omnichannel world,” Hunter said.
The implications for marketers is that the future is less about strategies based on demographics and more about targeting based on real people and real information, according to Hunter.
Using herself as an example, Hunter explained typically demographic models would likely peg her as a mom with two kids, between 35 and 49 who makes households decisions about groceries. In reality, she and her spouse have no kids and her husband makes all the grocery decisions.
“I don’t want to see ads for grocery products, I want to see ads for motorcycle helmets,” she said referring to her personal interests.
The integration of data sets now make such targeting possible so that CPG marketers can discern between buyers who also purchase competitor products, loyal buyers and potential brand switchers to more effectively allocated marketing dollars.
The key to winning in this new landscape, according to Hunter, is for brands to ask themselves, “What are you adding to her day to amplify her experience?”
Oftentimes that can involve engaging with shoppers via Facebook, which is a modern-day gathering place for more than a billion people. Brands need to make sure they are integrating into shoppers’ lives appropriately, speaking in the right voice and talking about subjects where they have credibility, according to Hunter.
Ultimately, it is results that matter and modern technology is allowing brands to understand the effectiveness of campaigns like never before. Hunter likened the situation to what happened when brands began allocating a larger portion of marketing budgets to trade spending because the ROI was readily apparent.
“That is where we are at today with digital and there is a big opportunity for us to work together and amplify what is going on in the store,” Hunter said.