Taking Care of Retailers In A Manufacturer Focused Research World

 

By Ruben Alcaraz

Fred Meijer once said to me “take care of the customer and the customer will take care of you.”  Very wise words, but also very insightful for every partnership!  Retail is a breathing and living organism where all aspects are intimately tied to and affect each other, much like traffic on the freeway where a fender bender can have a ripple effect that can last hours.

Gone are the days where consumer opinion and behavior could only be gained from surveys, focus groups or syndicated panels.  With the growth of mobile phones and other tracking methods, our world is now engulfed in ‘big data,’ which is a movement that is also affecting and pushing retailers to look inward to gain further insights into their own business and customers.  Looking inward also brings a change in perspective and action, which mean being very selective about who gets to see what is behind the curtain or in the works.  I spent close to 4 years working with Meijer (Midwest retailer) leading the consumer insights team.  During that period, I was exposed to many exciting and amazing studies, consumer trends and partnerships.  Partnership, that is the area that I would like to write about today; in particular how my perspective was shaped by a conversation with a very reputable market research firm where the CEO confessed to me “we don’t understand what retail needs are.”  This may not be the case with everyone, but I found that comment to be very enlightening and eye opening.  In fact, ever since, whenever I met another research firm while at Meijer, I asked myself “do they understand our needs?

Over my retail career I noticed something really interesting.  The methodologies and approaches to projects were almost a replica of what I saw earlier as a CPG manufacturer… even though the setting and needs were different.  Let me elaborate, there are unique elements in retail that when overlooked or ignored can render the methodology or study entirely moot.  So for the purpose of this blog I will concentrate on a few of them:

• Timing
  • Consumer research studies that go on for weeks are like history books offering a perspective on a unique set of events that could not be recreated again (store sales, competitor sales, weather patterns, etc.).  The weekly sales and competitive nature of each store makes the environment an extremely short-lived and reactive one.
  • A methodology that offers instant  or close to instant responses and can provide results within a day would be most appropriate.

•  Language
  • Someone at the store is a “shopper” while someone making a purchase at the store is a “customer” and not necessarily referred to as a “consumer.”
    • The process by which a shopper becomes a customer is called “conversion.”
  • The term “buyer” or “category buyer” should be stricken from the research lingo… a buyer in retail is the “merchant.”

•  Agendas
  • This is probably the most important to know… CPG manufacturers talk to the merchants who control the category and the space; however, Merchants do not typically set personnel & restocking schedules which is up to Store Directors.
  • Manufacturers look to grow volume and contribution (% sales w/in retailer) to the retailer and its brand’s market share.
    • The issue is that National Brands can be usually found in competitive banners too; so, recommendations can be viewed as biased.  Particularly the “more displays are needed” ones.
  • Merchants look for category profitability with minimal cannibalization.
    • They have to defend or justify the space the category has.
    • Minimize cannibalization to have partners in all brands.
    • Maximize contribution to total store sales.
  • Store Directors look for store traffic and profitability.
    • It’s important to remember that they can achieve goals by selling more profitable items or optimizing labor costs needed to restock shelves (packing capacity is key).  Pallets are a good solution, but these can affect traffic flow and be counterproductive to other categories.
    • What the competitor across the street or on the web is doing that week is very important and affects sales on a weekly basis.  Think about that… do you ever buy a book without first checking Amazon.com?
  • Shoppers have other plans
    • The longer they are at a particular store, the more they spend so a 30 minute survey is hardly ever part of anyone’s schedule.

There are many other areas to consider and I would need a book to address all of these but I hope that considering the above while working on methodology or delivering insights are helpful.  I began with a Fred Meijer quote because I believe that for MR to growth its retail partnership (similar to CPG manufacturing) is the understanding of its intricacies. the project only gets more complicated once it is sold to a retailer.