How to get the most out of Retail - RMI - Retail Marketing International

How to getthe most out ofRetail Marketing“For a long time we focused on what we termed the SecondMoment of Truth, the point at which the consumer uses theproduct. But we realised we were missing half the story bynot looking at the First Moment of Truth when the consumeractually chooses the product.”Matthew ParryHead of Customer Shopper Marketing & CommercialInnovation UK & Eire, P&GThis document and all of its content is copyright of Retail Marketing International Limited 2010. All rightsreserved. Any redistribution or reproduction of part or all of the contents in any form is prohibited other thanthe following: 1. you may print or download to a local hard disk extracts for your personal and non-commercialuse only 2. you may copy the content to individual third parties for their personal use, but only if youacknowledge Retail Marketing International and the document name as the source of the materialYou may not, except with our express written permission, distribute or commercially exploit the content. Normay you transmit it or store it in any other document or other form of electronic retrieval system.

IntroductionThis white paper has come from bringing togethersome of the best minds in the retail marketingindustry 1 at the 2010 Instore show to shed light onhow to get the most out of retail marketing.We were united in our understanding of the four truthsabout retail marketing:1. Retail marketing positively influences shopper behaviourtowards brands.2. Retail marketing increases sales for all products in store,whether or not they are on promotion.3. Retail marketing is measurable in terms of its sales impact.EPOS data tells you that you have either sold more as a resultof your retail marketing or your have not – this information ispure and irrefutable.4. Retail marketing is widely undervalued and under-utilisedin comparison to other media.The challenge, and indeed the opportunity, for brands andtheir agencies is to create a rule book for the integration ofretail communication channels with traditional above the linemedia to deliver cohesive and effective campaigns.To this end we agreed that there are five keyareas you need to understand to get the mostout of retail marketing:1Matthew Parry P&G, Anthony Hopper Saatchi X, David Norbury REL,Dave Buckingham LMG, Stuart Tiedeman rmi.2

1. Retail marketing is about more than justsales promotions and point of sale; it’s aboutemotion and stand out.“Shoppers make decisions based on emotional reason,which will often be supported by rational thoughts. Buyinga house – although a little larger than an in-store purchase– is a prime example. People buy based on a feeling theyget when they walk through the door, while it may beunderlined by rational requirements (number of bedrooms,size of garden etc) it is still an emotional purchase… thereality is that all purchases are based on this process.”Anthony HopperUK Managing Director of retail and experientialagency Saatchi XThere have been fundamental shifts in the way shoppersbehave and their attitudes to brands over the past 10 years.Furthermore, shopping environments have developed. Thismeans that brands have had to evolve the way they think abouttheir communications.Understanding theshopper mindset, theirneeds and how theymake their decisionsis crucial. Shoppersare much more in themoment and on-taskthan a consumer athome watching the TV.Shoppers are not lookingfor brands to tell themall about themselves andwhy they’re great, theyare looking for brandsto help them solve theirspecific needs.3

Connect with the shopper’s emotionsEmotional connections play a key role in the purchase decisioneven in a busy retail environment. This means a brand’sapproach to retail and marketing communications needsto focus it on driving an emotional connection between theshopper, the environment and the brand. If a brand can showhow they can improve a consumer’s life it is likely to makethem buy.The store is one of the only places where shoppers can havereal, visceral, multi-sensorial, interactive experience withbrands. The problem is, clean store policies, especially in theUK, mean that brands can lose control of how their brands aremerchandised and marketed in this environment.However, there are examplesof where brands and retailershave collaborated to makea difference. For example,Pampers reinvented theBabycare category inWalmart China by removing50% of the product fromthe shelves, and saw a 50%sales increase of the wholebabycare category and over85% growth for Pampers.They gave more time forinformation and inspirationand created an environmentwhere people wanted tospend time exploring.4

There are also plenty of examplesof where brands have takencontrol of the retail environmentby setting up their own retailoutlets. A trend that is likelyto continue to grow. Apple isa great benchmark: it decidedthat its brand experience was soimportant, it had to regain control,so it opened its own stores and letshoppers experience it in the waythey, the shoppers, wanted to.Once Apple had gained this experience, built the business caseand the consumer demand, it then took the whole model toCurrys as a store-in-store concept, and it’s been a big successthere too. You might say that’s all well and good for Apple, butmany less “sexy” brands are also doing it: Nespresso cafes;Nivea in Dubai Mall; National Geographic on Regent Street; andnow Cadbury’s going into coffee shops.The important point here is that brands and retailers need todesign the experience around the shopper, because ultimatelyit’s the shopper that decides what’s best by voting with theirfeet and their cash.Flash: an answer, not the answer.Another example of how brands are starting to use retailmarketing for branding and awareness activity retail spaceis P&G’s rebrand of Flash where P&G worked from the “shelfback”.The Flash rebrand was a formula upgrade, including new lookpacks, logo and a national TV campaign; everything you wouldexpect from a big FMCG brand.5

The brand benefits focused on the“shine” as the proof of a clean,and this was also the key denoterof the product’s performance. Thekey visual and the holistic “glue”for the campaign was sunglasses;in other words cleaning with Flashleaves surfaces so shiny you needsunglasses. Instead of creatingeverything around the TV campaign,however, P&G started with shoppersand all visuals were looked at fromthe perspective of whether theywould work in or easily transfer tothe in-store environment.Everything down to the colour choice was driven by in-storestandout. P&G even built in flexibility so it could work with allof its retail partners (working with the system and not againstit) however making sure that a consistent look and feel wasmaintained to help bind the in-store and out-of-store brandexperience for the consumer and shopper.Key points• Understand the shopper mindset and how people makepurchase decisions.• The store is one of the few places where shoppers canhave real interactive experiences with brands and is fastbecoming the only remaining mass communication channel.Brands must look at ways to bring experience into the retailenvironment.• Ensure you are talking to people in the right way anddelivering messages that target the correct mindset.• Do not just focus on driving a sale, think about how you aredriving an emotional connection between the shopper andthe brand so make sure everything is on the brand benefit.• The first moment of truth is when a shopper choosesthe product so plan from the shelf back, but make suremessaging is consistent across all media.6

2. Work with the system, not against itTraditionally brands have seen retail marketing as somethingthat the sales team owned. But, as marketing teams havebecome more accountable they are starting to realise that it isan important part of the marketing mix which they need to beinvolved with.Manufacturers like P&G have been on a long journey in termsof their understanding of retail marketing. They understandthat the challenge now facing brands in the retail space is howto make products stand out on the shelf. This is particularlytrue when you deal with relatively low-interest functioncategories where shoppers are on autopilot, such as laundry,cleaning etc. These are areas where shoppers just want to putthe product in their basket and go, but where top brands oftenspend millions of pounds every year driving awareness of theirproduct through above the line (ATL) spend.However there are a number of barriers that make retailmarketing difficult for marketers to access, such as thefragmented nature of what media formats each retailer has,the multiple routes to accessing the media and retailers’ cleanstore policies.7

The Co-operative Media CentreThe Co-operative is one of the best examples of how a retailer hassought to minimize these barriers by setting up a centrally runretail media centre with a database of all retail media inventoryand a web based booking system. The Co-operative mediacentre, powered by planmymedia allows advertisers to havedirect access to all the retail media options available to themat a press of a button saving a huge amount of time and effortin planning and booking their retail-based communications.It also enables the retailer to have flexibility and control overwhat messaging goes out and where, ensuring consistency andcohesion in its delivery of its central in-store marketing plan.“Brands are now able to access, plan and book all theirmulti retailer, in-store media campaigns via one accesspoint.”Stuart TiedemanManaging Partner, rmiKey points• Use the power of your brand to create stand-out at the pointof purchase.• Work with the environment you’re working in not againstit. We’d all like the supermarkets to be open to letting us doeverything we want to do, but that isn’t going to happen. Weneed to understand the environment and what works and whatdoesn’t.8

3. Customer loyalty offers powerfulopportunities to enhance retail marketingactivity“Too often consumers are ignoring brand promotions asthey are not relevant to what they want to buy. Indeed,many shoppers work on a tactical strike mentality anddon’t have time to browse around, so brands and retailersneed to be able to deliver relevant offers directly toshoppers; and this is where loyalty schemes can be a realboost.”Dave BuckinghamUK General Manager, LMG (Loyalty Management Group)Today’s retail market is complex and confusing, and themarketing noise for shoppers both in-store and out-of-homecan be deafening. Loyalty information can help retailers andbrands accurately target promotions and give them the bestpossible chance of cutting through this noise.There are five key ways loyalty information can help brandsdo this:Understanding customer segmentation.There is no longer any point in doing segmentation on a socioeconomicbasis as it doesn’t produce specific customers.Loyalty card information can drill down further and basesegmentation on anything from frequency of shopping, toloyalty to store and brands, or even propensity to buy variousproducts.9

Shaping in-store experience with customerangle.Without loyalty information, retailers are blind to very subtlebut powerful data about how important different products areto different types of customers or even where to place variousranges in store. For example, based on sales data there maybe a number of products that look to be niche from raw salesfigures, but are bought by a select, high-spending group ofcustomers in the store who also buy a number of other highvalueitems.Shaping personal experience.Through direct mail, online communications, email offers andsmart coupons delivered on high-targeted information a verypersonalised interaction with the consumer can be built andmaintained.Driving a more collaborative relationship withsuppliers.Working together with suppliers, retailers can help build amore customer-centric journey.More effective media management.When brands and retailers know who buys what and where,they can also deliver highly targeted media campaigns acrossthe store and out-of-home environments, and this has a majorrole to play in the retail marketing arena.On top of this, there are lots of areas where loyalty data canhelp retailers and brands test and learn in store, increasingcampaign execution efficiencies and understanding whatkind of shopper behaviour those campaigns create. We’vehighlighted four key areas where loyalty data can dothis:10

• Integrated brand planning.Driving consistency in terms of messaging for shoppers, withoutadding to the confusion. This data can also help retail marketingcampaigns move from tactical quick wins to a more strategicvision, driving longer-term campaigns that will create better value.• Media selection.This is an area where customer data plays a significant role.Currently, the targeting that goes on is limited - such as thetop 200 stores based on turnover. Customer data can get muchmore granular, delivering a higher proportion of shoppers thatbrands are trying to hit. It will also give an understanding ofwhat media would be most appropriate for that audience asyou can track the impact of campaigns over time.• Store selection.Much more detailed information about stores means brandsknow what customers come in and for how long. This meansthose brands are able to ensure that their campaigns are tickingall the right boxes in terms of audience profile and that theyare putting money in the right place.• Campaign evaluation.Loyalty schemes not only allow retailers to track sales data, butthey also give them access to a group of customers that willanswer their questions about the success and impact of anycampaign. This can then be used to inform future campaignsand retail marketing activity.11

Key points• Loyalty schemes can help retailers and brands accuratelytarget promotions.• Loyalty data can help brands understand customersegmentation, shape in-store experience with customerangle, drive personalisation, create a more collaborativerelationship with suppliers and more effectively managemedia.• Loyalty information can help increase campaign efficiencyby creating integrated brand planning, improving mediaselection, improving store selection and giving bettercampaign evaluation.12

4. Make sure you have the basics in place“The reality is that a lot of in-store problems can be downto placing or inadequate spacing. Field marketing canhelp fix these systemic issues. Getting it wrong in termsof promotional availability can cause significant negativeemotions in the shopper and that can be extremelydamaging for the brand.”David Norburychief executive of field marketing agency RELOffering shoppers a risk-free trial at the moment of purchasein store or a more immersive brand experience is an effectiveuse of retail marketing spend. It’s highly targeted, and brandawareness can be tracked immediately and over the longerterm. But whatever creative ideas and approaches the brandmay have, there is one stark reality: unless the in-storefundamentals are in place any campaign may well be worthless.Getting the basics right is a journey not the destination, andit’s a journey worth investing in to ensure that retail marketingspend is not wasted.One of the biggest barriersto the potential growthof retail marketing iscompliance; which canrange from 42% to 85%across the industry, with“out of stocks” currentlyrunning at around 8%.Indeed, IGD researchshows that products onpromotion not beingavailable is the biggestsingle concern forshoppers.13

Many brands are still not getting what they’ve paid for interms of compliance in the retail environment. Employingfield marketing techniques and other incentives such asinternal promotions is a simple way of ensuring retailersexecute promotions correctly and on time. This can make a realdifference to the bottom line for brands and retailers. Havingthe right space and visibility can make a huge difference. Thisrequires joined-up thinking and a thorough planning processand field marketing is the glue that binds this together.Key points• If a product isn’t available in-store, brands and retailers areundermining their own potential profits. IGD research showsthat products on promotion not being available is the biggestsingle concern for shoppers.• Getting the basics right ensures that your retail marketingspend is not wasted.• Brands and retailers should focus on ways to enhancecompliance across their network.14

5. Making use of the technology thatconsumers know“Screens present a real opportunity, but we’ve been focusedon the messages and probably on the wrong screens.Over 85% of shoppers have a mobile in their pocket whenthey’re shopping. This is a screen that they have a goodrelationship with. A screen they want to look at. A screenthe customer, not the retailer controls. So we need to lookat ways to use this as part of the shopper journey.”Anthony HopperUK Managing Director at retail and experientialagency Saatchi XWhile technology may be ever increasing in our daily lives, it’sstill not being used enough in retail and not in the right ways.Digital technology really can improve the retail experiencefor the shopper and therefore for brands and retailers, butdelivering brand and product messages to screens on shelvesis not the only answer.There is a real opportunity herefor brands to get messages andinformation direct to shoppers’mobile phones either when theyare away from the store or whenthey are in store. This is a powerfulway of getting their attentionand engaging them with a brand.One interesting application fortoday’s smart phones is pricecomparison.How many times have you walked out of a store because youthink you’re going to get it cheaper someone else, only to endup buying it for the same price somewhere else? This barriercan now be overcome instantly in store with price comparisoninformation delivered direct to the customer’s mobile.15

Another application is providing shopper with knowledge andinformation. With so many products and brands to choosefrom, shoppers get confused and frustrated and if they can’tfind a good sales assistant, they’ll leave. The reality is thatretailers and brands could provide shoppers with as muchor as little information as they want at the touch of a buttonthrough mobile or interactive screens. Clearly the additionalbenefit is that this sort of interaction is not limited to just thein-store environment and the opening hours of a shop. Brandsand retailers can now be open 24/7!Key points• The mobile represents the biggest retail communicationsopportunity for brands and retailers as it is a screen that aconsumer wants to look at and has a positive relationshipwith.• Digital technology can really improve the in storeexperience for the shopper by providing customer serviceand advice.16

SummaryAlthough Retail marketing has been around for many years itrepresents a massive growth area. The industry is beginning tolook past the tangible benefits of retail marketing and build acommon “rule book” of how to integrate retail marketing intotheir brand marketing.There is no doubt that technology is also playing an increasingrole in enabling consumers, retailers and advertisers to accessthe opportunity, with the likes of shopper focused apps onthe mobile, planning software (planmymedia.com), digitalsignage, loyalty data and targeted field marketing. Howevergetting the basics right, particularly availability is crucial asRetail marketing, more than any other media channel deliverssales... but only if the product is on the shelf.If you want to know more about the retail marketing sectorand what it can do or your brand(s), or would like advice orguidance on how to improve the effectiveness of your currentactivities, please contact rmi.Dominic RowbothamHead of Business Development,Retail Marketing International Limited2 exmoor street, London W10 6BDT - 020 8962 2300D - 020 8962 2338M - 078 0287 854217