By Wendy Liebmann
The Shopper Backlash Begins: Where’s My Brand of Tea?
When the bottom suddenly dropped out of retail sales last fall, the precipitous degree of the drop took everyone’s breath away. So no one was surprised when retailers began to slash their inventories. Retailers, from mass merchants to high-end department stores, advised vendors they would be cutting orders, eliminating SKUs and deleting brands.
At department stores, management was faced with first having to clear out their fashion merchandise to make way for the new season’s offering. That’s why we saw such gob-stopping sales pre- and post-Christmas. These retailers then took a “less is less” approach, reducing the selection of brands, sizes and colors.
Now, those shoppers brave enough to venture into the mall, into department stores, tell us in rather wistful tones that they often can’t find what they want. But, as one said, “Oh well, I don’t really need new clothes anyway.”
At the same time, drug, grocery and mass merchants took a sharp knife to their planograms. Some retailers arbitrarily lopped 20 percent off inventory levels. Many cut back on flavors, colors and sizes. Now, as time has gone on, many have eliminated brands altogether.
For example, Walmart announced it would only focus on the two or three top-selling national brands in many categories, eliminate smaller, more marginal brands, and replace them with a more aggressive private label offer.
One unhappy shopper told us of her experience at Target when she went to buy her favorite Ito En iced tea. There were fewer flavors available. The next time she went to stock up, the brand was no longer there at all.
Shoppers have complained about reduced stock levels many retailers now carry. Shoppers told us that at Walgreens everyday items such as national brands of shampoo and conditioner are often out of stock. When asked why, store staff said, “We’ve had to cut back inventory. But come back again at the end of the week. We should be back in stock by then.”
“As if…” said one shopper. Another said, “What do they think? We have the time or inclination to make another trip? Don’t they realize we can find it somewhere else? It’s a national brand of shampoo.” Said another, “You’d think they’d want our business these days.”
And there’s the rub. We all understand retailers must find means to cut their costs in these challenging times. However, when they do it in seemingly arbitrary ways, they risk antagonizing their shoppers and seriously impacting their business.
When merchants consider all SKUs are created equal, when they don’t understand an item’s more subtle value, its relationship to other items that go into the shopping basket, when they don’t understand what that item means to a family, then they risk not only creating unhappy shoppers but losing them altogether.
When they lose sight of the value a secondary brand can have (to add “texture,” differentiation, surprise) or how a new item can entice shoppers into a category for the first time, they risk alienating shoppers. And when they think price is the only issue and replace a brand with a me-too private label item, the chances are they will lose those customers.
Case in point: Our iced tea shopper doesn’t even go down that aisle any more, doesn’t pick up the impulse items she once did after putting the iced tea in her cart. Worse still, sometimes she doesn’t even go into the store. What the retailer didn’t understand was that the iced tea was one of her key trip drivers to that store.
More than ever, this is the time retailers need to know their shoppers intimately – way beyond their transactions. They need to know who they are, how they live, what categories, products, brands, price points, sizes are important to them, what drives their trips and market basket value. Without that today, arbitrary buying decisions will be made that will have more than arbitrary consequences. The wrath of the shopper is only the beginning.
For manufacturers, if you wondered whether you should invest in Shopper Insights… don’t question it anymore! They’re essential.
What’s for Dinner Tonight? A Clue to Recovery
We may have found the road to recovery – or at least the first step. A clue is buried in the eternal question, “What’s for dinner tonight, Mum?”
A
s you know, sales of food, beverages, beer and candy are holding up more than most categories these days. It’s because Americans are not eating out as often (77 percent of shoppers tell us they’ve cut back eating at restaurants compared to a year ago), they are instead making more meals at home (69 percent), and finding more affordable ways to do it. They are also entertaining more at home. The majority of Americans (61 percent) told us in our recent How America Shops PULSE of Shopping Life that being at home with family and friends is one of their small pleasures in this rough economy.
There’s the clue: We are moving from the age-old American notion of food as fuel (eat and go) to the more European concept of food as sustenance —emotional and biological.
For decades, Americans have been eating out, eating on the run or buying to eat in. Many families would only eat together on special occasions. Now, necessity is forcing us to cook again, to entertain at home again.
Consider the opportunities. As a start, how about teaching people how to cook again? There are a whole lot of us—generations in fact—who have no idea how to cook from scratch, or how to bake, what to do with leftovers, or how to do it easily, quickly, affordably. Now that’s an opportunity ripe for the cooking. How about how to mix drinks? Or what wine goes with what meal?
What about entertaining? Target featured special prices on DVDs in its “Brand New Day” campaign. This was under the banner of “the new movie night”— staying at home with the family to watch a movie, instead of going out. They featured popcorn, too.
Walmart recognized the opportunity and recently promoted board games in its power aisles.
In fact, Walmart and Sam’s Club have been fast to jump on the at-home eating and entertaining trend. The Spring Sam’s Club catalog is titled the Entertaining Guide. The first feature is headlined “Three Friends. $284.09. A Week’s Worth of Meals. A Lifetime of Memories. Start Your Own Sam’s Cooking Club.”
It lays out dinner suggestions for seven days, provides cooking tips, essentials that every pantry needs, a shopping list and a list of essential cooking equipment. Then it divides the cost per serving: three families, seven dinners, 84 servings at $3.38 each. Easy, nutritious, affordable and entertaining. And smart.
Grocery Auctions: The New Discounting
Other opportunities have emerged too, in less traditional spaces such as food auctions. Yes, auctions. Grocery auctions are popping up across the country, from Pennsylvania to Dallas. The products auctioned come from food distributors, restaurants or supermarkets. Some food items are passed their “use by date.” However, this doesn’t seem to put off smart shoppers who are happy to buy two-day old bread or passed dated cans of soup if the price is right.
It’s the same principal as shopping at Salvage Grocers. In our How America Shops® PULSE of Shopping Life in June 2, 2008, 21 percent of people told us they had shopped at a salvage grocer, and 39 percent said they would consider shopping at one if it was handy.
You’d think with super-centers, warehouse clubs, dollar stores and all the discounting that goes on at grocery stores that no one would need another, cheaper outlet for groceries. But they do. You have to marvel at how quickly new concepts like auctions and salvage grocers have arisen to meet that need.
Wine at the Pharmacy Counter: Good Health? Retail Recovery?
Wine at the drug store is not new news. Depending on state laws, drug stores may offer liquor, beer and wine departments. So not surprising to find wine in a CVS/pharmacy in Southern California. What was surprising, however, was where it was merchandised.
There was a freestanding display of red wine directly in front of the pharmacy counter. There was no signing to indicate that red wine might be good for your heart – or anything else. It was just there. But the implications were clear. Now that’s certainly a creative way to not only remind people how to take care of their health, but how to encourage them to buy at all. Another example of how “What’s for dinner tonight?” may leading the way to economic recovery.
See you from The EDGE.
Wendy Liebmann is founder and principal of WSL Strategic Retail. For more information, visit www.WSLStrategicRetail.com.
Dropping In On Shoppers
