Nielsen study reveals four different shopping mindsets

As usual, RetailWire has another great discussion going on, this time about a recent Nielsen study which describes four different "mindsets" that consumers may experience while grocery shopping. As Tom Ryan, the discussion's leader notes, "knowing the differences can help brands and retailers better target customers by category." The four modes are:

• Auto-Pilot - Shoppers grab 'n go. Typical categories: margarine, mayonnaise, bottled water, nuts, coffee, popcorn, carbonated soft drinks, hot cereal, cheese and cold cuts.
• Buzz-Activated - Shoppers are open to buzz and engaging advertising. Categories: energy and sports drinks, chocolate, ready-to-drink tea and yogurt drinks.
• Variety-Activated - Shoppers seek new tastes, new formats. Categories: cookies, salad dressing, chewing gum, salty snacks, breakfast bars and cold cereal.
• Bargain-Activated - Shoppers compare prices and hunt for promotions. Categories: canned tuna, canned tomatoes, canned fruit and pasta sauce.

These mental contexts describe not only how the shoppers think, but also how they act, respond to different kinds of in-store promotions, how they navigate the store, and how they make purchases. While this kind of customer segmentation could certainly yield interesting data if used to categorize shoppers on every trip (e.g. with the help of a swiped loyalty card to link different shopping trips and baskets together), as many in the discussion noted, it's not necessarily the most useful way to divide up shopping habits. My favorite comment from the discussion came from Herb Sorensen, the Global Scientific Director for Shopper Insights at TNS Sorensen. Here's his take:

We found that when we let 75,000 shoppers in three different major supermarket chains sort themselves into groups, there ended up being three groups: quick trippers, fill-in shoppers, and stock up shoppers. No surprises there, and this was based only on a selection of behavioral characteristics (walking speed, length of trip, number of items purchased, etc. - hierarchical cluster analysis) and no attitude or demographic measures.

The valuable part of the finding was that six categories were purchased in quantity by all three groups; another half dozen were purchased mostly by the second two groups; and a final half dozen categories were purchased predominantly by the stock-up shoppers. This makes possible a rational scheme for merchandising a SELECTION of these 18-20 categories in an intuitive (for the shopper), instinctual manner.

So rather than sort by basket contents or mental context, Sorenson found that a natural segmentation came from the shopper's needs. Moreover, in this case that segmentation correlates very nicely with trip duration, which gives marketers even more to think about when trying to attract the attention of these various groups. Sorensen's final thought on the matter is telling: "Too many segmentation schemes are too complicated and too intellectual to allow practical execution on the sales floor." I think we may overlook that from time to time, as we become ever more engrossed in collecting and tabulating data. While deep wells of knowledge about individual shopping trips can be extremely useful, it's all for naught if no practical application can come from it.

Tags: shopper segmentation, retail media, retail advertising

Accenture study says room for improvement for service at retail

We've all been there -- casually browsing and minding our own business at a local store, when all of a sudden a salesrep appears from nowhere to begin "the conversation." Trying to assure the salesman that you're just looking around might get him to back off to a far corner of the store, but rest assured, the moment you pause, scratch your head or look up, he's going to pounce again, in the name of customer service.

Or maybe you've found yourself at the local electronics store purchasing a new TV, DVD player, or other high-tech gadget. You go to the counter ready to make your purchase, but the salesrep won't let you pay until you've gotten the full 10-minute spiel on upgraded cables, an extended warranty, and professional installation services.

Does it bother you? It sure as hell annoys me. And apparently I'm not alone. According to a recent study from Accenture, "During at least one of their last four visits, 89 percent of consumers with annual income below $50K became irritated by a retailer’s actions; 94 percent of consumers with annual income between $50K and $99K became irritated; and 95 percent with incomes of $100K or more became irritated." Ok, so for all intents and purposes, nearly everybody has been irritated by a retail experience in one of their last four outings to the store.

While cross-sell and up-sell opportunities still abound at retail, and many customers in Accenture's survey admitted they'd be willing to spend more than they had originally anticipated if the conditions were right (e.g. they were at one of their preferred retailers, they received preferential treatment for their loyalty, etc.), too many retailers botch the opportunity by offering the wrong level of service (either too much or too little), or the wrong sales pitch. Accenture recommends a four-part strategy to help improve matters, making sure that the Right person with the Right skills always be available to the consumer at the Right place, and at the Right time.

Want to know what they recommend? Then I suggest you download the PDF.

Tags: customer service, retail experience

R/GA to open retail agency

Last year, Saatchi & Saatchi introduced Saatchi X to help Wal-Mart and others master the art and science of in-store marketing. This year, to get a leg up on competition preparing to follow along, Interpublic Group's R/GA is joining in on the fun and creating their own retail division. From this article at CNN:

"We think there is a great opportunity for retailers to create innovative and informative experiences as the cost of the enabling technologies continues to fall," said Bob Greenberg, CEO and global chief creative officer of R/GA. "By carefully integrating digital display and interactive technologies retailers can enhance promotions and help customers have a better branded and more meaningful shopping experience. Over the years we've shown that in-store digital strategies are very cost effective and profitable."

John Jones, 40, previously technical creative director, has been appointed executive creative director of the offering. He is charged with building up R/GA's retail capabilities, including in-store digital product displays, games and digital signage, plus overseeing the development of new methods of customer interaction. He will report to Nick Law, chief creative officer, NA, to ensure that the in-store experience is also a branded environment.

The firm certainly isn't a stranger to in-store work, having done all sorts of non-traditional marketing projects both at the store-level and elsewhere out-of-home, but this is the first time that they've articulated a more generalized approach to the market. Of all the interactive marketing, kiosk and digital signage projects that I've seen or heard about coming from them, I think my favorite has to be their promotion with Nike that allowed people in New York's Times Square to use their cellphones to build their own custom Nike shoe, and see the results on one of the Square's huge outdoor electric billboards.

So now that Publicis Groupe and Interpublic Group both have retail agencies in their portfolios, how long will it be before we see similar groups emerge under Omnicom and WPP? Sure, they both have a handful of companies that specialize in retail media measurement, research, and other critical but often less-than-sexy endeavors, but neither has a bona fide retail advertising agency... yet.

Technorati Tags: retail, media,R/GA,digital, signage,advertising

P&G looks to tiny tiendas for big growth

While Wal-Mart is P&G's single largest customer, as a percentage, they derive a much larger amount of revenue by selling into thousands of small, high-frequency stores frequently found throughout developing countries. While the stores may be tiny, collectively they add up to big business, as the WSJ recently illustrated. "Sales of P&G products in developing markets currently total $20 billion, up from $8 billion five years ago. In recent years, emerging markets have contributed about 40% of the company's "organic" sales growth, which excludes gains from acquisitions.... Last year P&G derived 26% of sales in these regions."

With that kind of growth it's no surprise that P&G is actively pursuing more business in these high-frequency stores. And while they've primarily competed on price and brand-power alone till recently, the company is now adding a new approach to the mix: providing merchandising advice. Since most of these stores are tiny -- many are run out of a small room on someone's home -- space is at a premium, and stores carry at most two or three brands for most product categories. This can be challenging for a company like P&G, who might make several different brands all by themselves, or might be trying to sell a full line card into a store that already carries as much product as their space allows.

To combat this, P&G is introducing new integrated displays that come fully stocked with a complete range of products, and they're working aggressively to "own" the space behind the cashier's counter. As the article notes, "P&G calls space nearest the cashier the 'hot zone,' and considers it the most valuable real estate in these small stores. Since more than 60% of customers already know what they're going to buy, P&G figures, little time is spent browsing. But P&G researchers found that shoppers tend to gaze at the cashier's area for a precious five seconds as they wait for the owner to hand them a product or get their change -- a prime opportunity to influence future purchases."

The company is also taking a page from Frito-Lay and having local distributors re-stock shelves, which cuts down on labor required by the store owner, but also ensures that the P&G products are shown in the best possible conditions. Likewise, they've ditched efforts to have their own sales force handle sales to each store (there are over 220,000 in Mexico alone), in favor of having local entrepreneurs handle that part of the business.

Tags: merchandising, POP displays, marketing at retail

A theatrical approach to experience design...

... is exactly what this PDF from ExperienceDesign advocates, and after flipping through 20 pages of informative and entertaining, I think this is a great way to re-frame the debate over how to improve customer experiences at retail. While probably not new to anybody who has spent a long time in the industry (I haven't), the tips in this introductory piece are thoughtful and insightful.

The root of the argument is that many parts of a retailer's environment are analogous to stage theatrics, from sales floor (stage) to personnel (actors) to customer base (audience), and by taking some cues from the theater world -- where the entire point of the gig is to entertain and have the audience begging for more by the end of the show -- retailers might just be able to give their customers a more satisfying experience.

The tips are divided into three broad categories (or acts, if you're trying to keep up with the theatrical lingo), each with four main points (scenes):

• Act I, Scene 1. Storyboarding: Boom-wowowow-BOOM!: Your first impression should be fantastic, but your last one needs to be spectacular.
• Act I, Scene 2. The making of: Show off hidden values so that customers get a fuller understanding and appreciation of the products/services you're providing.
  
• Act I, Scene 3. Prequels and sequels: Extend customer contacts outside the store and after the last in-store contact to build a lasting relationship.
  
• Act I, Scene. 4. Depth: finding beauty, authenticity and meaning: Cater to your customers' values, not just their wallets.
  

• Act II, Scene 1. Stage building: Use store architecture to further convey the core brand message.
  
• Act II, Scene 2. Backstage and exits: Likewise, always draw attention towards the meaningful parts of the environment.
  
• Act II, Scene 3. Let there be light: Lighting can make good things look better and bad things look worse. Use it liberally but wisely.
  
• Act II, Scene 4. Costume: Your staff's uniform, whether formal or informal, communicates your brand position as well, so make sure you know what it's saying.
  

• Act III, Scene 1. Rehearse: If your store is beautiful but your staff is untrained, unenthusiastic, or just plain inept, people will notice and avoid you like the plague.
  
• Act III, Scene 2. Get the lines right: Are there wrote lines that your staff delivers 100 times a day? Could they maybe be a little better/more informative/more fun than they are right now?
• Act III, Scene 3. Let stars be stars: Everyone on your team has some character, so let it stand out. As a corollary to this, be honest, not fake.
  
• Act III, Scene 4. Timing is everything: Knowing when to deliver the punch line, whether it be a complement, critique, or simply presenting the evening's bill, can be just as important as knowing what to say.

Tags: store design, experience, experiential marketing