The Hub: Mind Over Shopper

A roundtable discussion featuring: Scott Finlow of PepsiCo, Dorlisa Flur of Family Dollar, Jim Figura of Colgate-Palmolive, Raymond Burke of Indiana University and Ben DiSanti of TPNWhat is the one thing that shoppers want most?Scott Finlow: On a conscious level, shoppers are looking for both individual and family solutions, and they are “redefining value” as they do that. They are not just looking for lower prices, but rather a broader occasion that suggests what you get over what you pay. They are looking for things like functionality and proportionate size that might fit an occasion, or even something that’s more engaging and more fun.On a subconscious level, there’s an anthropological need that shopping taps into — a hunter/gatherer or provider vibe. We try to understand that through a link between brand preference and choice across the shopper’s journey. That requires a better understanding of consumption occasions because that’s where the convergence of the consumer and the shopper is.Dorlisa Flur: The one thing the Family Dollar shopper wants most is a great value, which is an equation that includes both price and quality. Historically, we might have focused a little bit more on the price dimension, but our shopper has made it clear that it’s the combination of the two that matters most.She has long come to us for national brand consumables, and she’s real clear on the value proposition there. In the past 18 months, as we have begun to introduce our own private brands, we have been able to read her response on that, which has been very encouraging.The in-store experience is also becoming more important. Her expectations tend to be things like a clean store that she can get in and out of quickly, where our store team members greet her, thank her, are pleasant to her, and where she can very easily find what she is looking for, and identify the price on it.Jim Figura: I want to say that shoppers are mostly looking for an experience, but it depends on the environment they’re in. It really comes down to knowing that the retailer is offering the best value.A number of years ago I asked a panel of shoppers to scan their cash register receipts and circle what was important to them. Many of them circled the amount of money that was saved in the trip. It’s hard to come down on one thing, but shoppers want a lot for their money.Shoppers are also looking at better delivery of product benefits. In the US and Europe, research shows the number-one category for new products is household cleaning because shoppers are always looking for better solutions.Raymond Burke: Shoppers want the products they desire to be in stock and available at a fair price. We call this relevance. If shoppers don’t see or can’t find what they’re looking for, or they encounter other obstacles to purchase, like long lines at the checkout, this drives strong dissatisfaction.If retailers satisfy shoppers on this dimension — and most do — then they can focus on other aspects of the store environment that drive high levels of shopper satisfaction, like multisensory engagement, clear benefit communication, and excellent service.Ben DiSanti: Shoppers want it all. They want everything. They’ve been trained to look for it all, and, in some instances, they demand it. They have the ultimate in convenience with online shopping. Price/value is pretty much around every corner with the Dollar Stores and the Walmarts.Even when you get into the experiential realm, shoppers find an experiential retail outlet that’s just a few miles from home. No matter what type of retail they want, they can get it. Shoppers have been trained to expect that they will have it all.What is the most overlooked shopper insight?Finlow: PepsiCo has found that the trip mission is the most important predictor of shopper behavior in our categories. It’s a better predictor of behavior than who you are or where you are. For example, on a stock-up trip, about 50 percent of shoppers go down the beverage aisle. Of those, only about 50 percent shop the soft-drink category within the aisle. Of those, only about half actually pick up or buy a soft drink.If I were to contrast that with a quick trip: fewer people go down the aisle on a quick trip, but actually more of them stop, and more of them convert, on a category like soft drink.It’s really interesting to understand the texture of the different trip types, how people are walking the store, how they are actually engaging and then transacting in that context.Flur: Our core shopper makes less than $40,000 a year and tends to very much be someone living from paycheck to paycheck. We focus an awful lot on things like the paycheck cycle, and certain one-time events like getting her tax refund.The most overlooked insight is that we’re still a relatively low share of our shopper’s wallet. That means we have opportunities even when it feels like we’re in the most depressed of economic times and surely she doesn’t have a spare quarter.Anchoring back on the first question, we have found that if we can present her with a great value when she comes into our store, usually for a functionally-led shopping trip, we can still help her treat herself or her family.Figura: I’m surprised by what I call “zero-time” shopping aisles. In some aisles, people do not want to spend one more second than they have to.In the oral-care category, about 75 percent of shoppers already know what they’re going to buy and the other 25 percent usually buy what they bought before. This means that it is much harder to get shoppers to switch to your brand at the shelf. The solution is to simplify the selection, offer more relevant choices to the shopper and make sure the packaging very quickly communicates relevant information.Burke: Clutter may be the most under-researched and misunderstood aspect of the store environment. What the manufacturer sees as an attractive product selection and engaging merchandising, the retailer may see as product redundancy and visual noise.Eliminating clutter has the potential to improve retail transparency and purchase conversion rates. When stores are cluttered, it takes shoppers longer to find and buy the products they want and it increases their price sensitivity.Product organization, adjacencies and brand packaging can have a greater effect than the number of product facings or shelf position on the shopper’s likelihood of noticing a product. Of course, retailers need to be careful not to take all of the fun out of the shopping experience or it reduces impulse purchases.DiSanti: The one thing that everyone seems to bypass is the notion that you can train shoppers.Think about the carbonated beverage category, for example. Other than the loyalists, most shoppers are switchers who have been trained to look — or wait — for the sale. This isn’t natural behavior, but it now cuts across every category, every shopping environment and every shopper.The opportunity is to change shopper behavior by changing their perception of the category as a whole. If you put the right incentive within the retail environment, you can train them to look to the left when they are naturally looking to the right. Paco Underhill of Envirosell might challenge this idea, but I think it can be done.What concerns you most about changes in shopper behavior?Finlow: Digital technologies are starting to change the shopping experience in fundamental ways. Shoppers can be making informed decisions before they actually get to the store, so the role of the store in the shopping experience is changing.As the technology and devices proliferate and are more enabled, the communications become more dispersed. So, what you’ve got is this broad shift in control to the shopper. Paradoxically, marketers have a greater ability to pinpoint a shopper, but equally it means that the world is much more fragmented. So, it’s harder to gain their attention.Flur: Our challenge is to maintain balance within our three main shopper segments. During the last couple of years, our core shopper’s average income has increased slightly. So, the challenge is to continue to excite these slightly more affluent shoppers while not losing sight of our more budget-constrained shoppers.We also have Baby Boomers, whose needs are changing gradually over time, and Hispanic shoppers, who tend to be younger. So, we have to think about having bi-lingual signage and packaging for our Hispanic shoppers, while also having big fonts for Baby Boomers. We use the word “balance” a lot here.Figura: I’m concerned about the proliferation of products, which has fragmented shopping in so many categories. Product proliferation is at a point where shoppers don’t have a specific brand-focus anymore. That fragmentation creates a lot more switching than one would suspect.In the US and Europe, the portion of volume that’s being purchased on deal keeps going up. As a manufacturer, that means we have to stay really focused on giving the shopper value, while making sure that we are getting the kind of lift we need, and a good return-on-investment.Burke: Several published studies have noted an increase in consumer stress while they are shopping. Walt Disney once said that people spend money when they’re having fun. But the reverse is also true. When shoppers are feeling stressed, they may buy their planned purchases, but they are less likely to linger and make unplanned purchases. People tend to shop for a shorter period of time and end up with a smaller shopping basket.One of the ways that we can help reduce shopper stress is to do a better job of connecting what’s in the store with what consumers have in mind as they are shopping. We want to encourage love at first sight rather than death by analysis.The shopping experience can also be made more enjoyable by satisfying the incidental and contextual needs of the shoppers. If they’re hungry or thirsty, they should be able to get refreshments. An occasional surprise, like an interesting new product or pleasant interaction with an employee, can also help to address the problem of shopper stress.DiSanti: My concern is that some of the changes in shopper behavior may be more fleeting than most people realize. When the economy took its downturn, everybody said that people had changed their shopping behavior for good, and would forevermore be beholden to spending less and getting more.Well, the economy hasn’t even recovered completely, and already people are reverting to their previous habits.Marketing at retail is a chess game, and you had better be thinking three or four moves ahead because of the fleeting nature of the shopper.What is your favorite way to get at shopper insights?Finlow: The best way to understand shopper behavior is to develop our basic empathy for them. That involves spending time with them in their lives and on their shopper journey. It’s something that we constantly strive to do at PepsiCo, and we are building our organizational capability around it.We’re doing some pilot work with some of our big retail customers to build our shopper empathy with their shoppers. We want to understand how we can innovate to provide solutions to shopper problems. This really turns the innovation process on its head. We want to move the shopper upstream in our innovation process.Flur: I like to take an integrated approach to insights. I love talking to a shopper about why she is doing something and then watching what she does at the register. The ability to merge different approaches and get holistic understanding is where I feel we get the most insight.Our receipts offer her an opportunity to call in or go online and give us feedback. She has a customer number that links with that receipt, so we’re able to see what time of day she was in and what she bought. That enables us to look at customer satisfaction and link it with profiles of her basket.Figura: I love standing in the aisle watching people shop. When I see interesting behavior, that’s when I start to talk to people. My favorite example of this was a few years ago, when the head of merchandising for Target asked me why more people didn’t buy their food at Target.So, I went to a local Target store on a Sunday and asked people if they were shopping for food that day, and if they were, whether they were going to buy it at Target. If the answer was no, I asked them where they were going to shop and then visited those stores, which included Costco, ShopRite and Trader Joe’s.All of these other stores were cart-locked with shoppers. They had samples and it was like a circus. Target’s problem was that they didn’t have a circus; their food aisle was sterile by comparison. Target now has a very aggressive promotion program plus their own brand. They took the learning and used it well.Burke: Each tool is unique and each can provide some great insights. It’s usually best to use a variety of tools and look for a convergence of findings.First, I talk with shoppers. You can learn a lot by just chatting with a few people, and the best retailers do this on a regular basis. If you only rely on structured surveys, you risk missing out on some of the creative ideas and suggestions that customers will happily share.Sometimes what people say and what they actually do are two different things, so I also observe shopper behavior. We have developed video tracking software that codes patterns of shopper navigation, category engagement and product interaction. You might see shoppers open a product’s package, for example, which indicates that they’re not getting sufficient information from the exterior packaging.Once we’ve generated some new ideas for improving the customer experience, we might test them in a virtual shopping simulation. I’ve been using computer graphic simulations since 1988 and the technology continues to progress in leaps and bounds. We’ve recently incorporated eye tracking into our simulation studies.DiSanti: We have a database of more than 100 trends that we gather from different resources. We look at those trends and apply them to different shopper segments via what we call Trend Tensions, Trend Bending and Trend Blending.With Trend Tensions, we identify those trends that create conflict for the shopper. Many shoppers want convenience, but they also want to save money, for example. Our shopper-marketing solution resides in mitigating this tension.Trend Blending looks at how two different trends combine over time and mesh together to form a new trend. We’ve identified a blended trend we call “practical waffling,” which relates to shoppers continually shifting budgets to splurge sensibly in one area while buckling down in another.Trend Bending looks at how trends morph over time. Concern about the environment in general became more about concern for protecting one’s family in the home, for example.What is the perfect shopping experience like for you?Finlow: For me, the perfect experience is a Saturday morning or afternoon, when my fiancé and I jump on our Vespa and ride down to the Chelsea Markets.They’ve got this great butcher shop, a really great fish shop, a great wine shop, an Italian specialty store, and a bread shop called Amy’s Bread. The experience is very multi-sensorial.You smell things, you taste things, and you experience things. There’s a localness and a freshness to that experience.I imagine that it’s like shopping in Paris in the ’60s or something. It’s what a great shopping experience both is and can be.Flur: Online, my favorite shopping experience is Hanna Andersson. I can sit down with my daughter, who is 10, mark their catalog with what she wants in the season, and buy everything in about 15 minutes. They tell you how to coordinate outfits. They show you availability of sizes. They send nice emails when they take all of their markdowns.Offline, my favorite is a ladies’ boutique shop in Charlotte called Paul Simon for Women. My personal shopper knows the lines I prefer and sends me a note when they are in. She pulls the styles she thinks I’ll like ahead of time into a dressing room and I’m able to go in and out and buy a season in about 30 minutes. It’s kind of like the online experience, but with a person, rather than a mouse.Figura: Out of all the retailers, Costco is the one that I keep going back to as having the right choices in the categories where you need them. I don’t feel overwhelmed in Costco. It has great variety without having a huge selection, so it’s manageable.The other thing that amazes me is how fast they check people out. I don’t know how they do it because it’s a disorganized corral you go into. At the Costco in Brookfield, Connecticut, they handle an average of 400 shoppers a day at each checkout.Burke: I recently waited in line for more than an hour to shop in Ollivander’s Wand Shop at Universal Orlando’s Wizarding World of Harry Potter. The wait was a drag, but selecting a wand was a magical experience. The product was the star, augmented by a dramatic presentation and special effects. I spent $30 on a wand that may have cost less than a dollar to make, but it was a keepsake from my journey to Hogwarts.As I sipped my butter beer, listened to Hedwig’s Theme, and watched the students from Beauxbatons Academy of Magic and Durmstrang Institute perform, I knew that this retailer clearly understood the value of a brand.DiSanti: My favorite shopping occasion would be going into an electronics store and checking out all the new gadgets. How very male of me!In general, I would classify my modality as: get in and get out. But if I’m going into an electronics store, I want to experience everything within that store. I’m like a kid in a candy shop.Electronic Arts had a pop-up store on Michigan Avenue in Chicago, which was extremely intriguing because it was all about what was new and different.Most pop-up stores are extremely interactive and that’s what gets me going. It’s not just about looking or observing, it’s actually about going in there and trying things out.Scott Finlow is vice president of shopper and channel insights for PepsiCo NA Beverages, leading the development of shopper-insights learning and strategies to drive beverage portfolio growth.Dorlisa Flur is executive vice president and chief merchandising officer at Family Dollar Stores, with responsibility for hardlines and softlines, planning and allocation, global sourcing, private brands, and marketing.Jim Figura is global vice president of consumer research and insights for Colgate-Palmolive. Prior to Colgate, Jim held positions in market research at Richardson Vicks and General Foods.Raymond Burke is the E.W. Kelley Professor of Business Administration at Indiana University’s Kelley School of Business, and a research partner of the school’s Center for Education and Research in Retailing.Ben DiSanti is svp, planning and perspectives for TPN, where he translates insights into creative ideas for Gatorade, 7-Eleven, Hershey, and others.

The Hub: Mind Over Shopper

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