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5 Things You Need To Know About The Next Generation of Consumers

2012-06-26T07:36:00.003-05:00

Each summer we hire a large group of interns from all over the country and for three months the agency is buzzing with full-of-hope teens and 20-somethings. Last summer, in particular, they not only made me feel older and less cool than I already do, but they also facilitated an in-depth study to help our Insights Team get smarter about the next generation of consumers – Generation We or Generation Z, as it’s also called.

The study included observational research, one-on-one interviews, and analysis of secondary studies and databases such as Iconoculture, MRI and Mintel. Gen We is the generation born between the early to mid-’90s and 2010, and they’ll be entering the work force in the next few years. To put the differences between, say, my generation (Gen X) and Gen We in perspective, consider a few things:

* They don’t knock on doors like we do – they call or text to say “I’m outside. Let me in.”

* If they wave a hand in front of an old-school manual paper towel dispenser in a public restroom and a paper towel doesn’t magically emerge, they’ll assume it’s broken and walk away.

* If they’ve heard music played from a CD before, they probably don’t remember it. Much less a cassette or vinyl record.

* They’ve never had or seen film developed, and they’ve never seen an answering machine.

* If you asked them to make a call from a rotary dial phone, they wouldn’t know where to start.

Why should you care? Because there are 62 million of them and they already have nearly $143 billion in buying power. And they will have even more by the time you finish this article. In fact, we found this generation important enough to our business to form an additional practice group focused on marketing to them. So here are five things you, brand marketers, need to know to be successful with this generation.

1. They’re Not Brand Loyal

Unless you happen to be Apple, endearing your brand to Gen We for the long term won’t be easy. They left MySpace for Facebook. They abandoned Guitar Hero for Angry Birds. And they dropped “High School Musical” like a bad habit when “Glee” came along.

They’re more concerned with value and function than brand because they were molded by the largest global recession in recent memory. Where my generation wore Abercrombie & Fitch because of the brand, this generation will buy from a brand only if its products meet their economic and functional needs.

The point is: keeping a brand relevant to this audience is tough. To do so, you will have to evolve with them, demonstrate value to them, and market yourself in non-traditional ways.

2. They Expect Brands to Fit Their Mold. Not the Other Way Around.

A great example of this is characterized by how this generation responds to technology and information architecture. My generation was willing to learn to click the “start” button to shut down our computers (remember Windows 95?), even though it made no sense to do so. Not this generation.

They won’t blame themselves or stick around when products and brands don’t perform the way they want or expect them to – they will blame the brand and go elsewhere.

Just look at 10 mobile phones owned by Gen We’ers. You’ll see 10 completely different wallpaper schemes, 10 different collections and configurations of apps, 10 different ringtones, 10 different cases, and the list goes on.

Tailor your brands and products to them, or allow them to do so. They won’t be okay with doing it your way.

3. They Care About the World and What Your Brand is Doing For It

This generation grew up with Dora the Explorer and Diego, and is the first generation to experience “green” in the mainstream. They’re not going to be a group of tree-hugging hippies, but they do care about the world and want to associate themselves with individuals and brands that care as well.

Consider the 13 year old that started his own manly scented candle business – ManCans (featuring scents like Bacon, New Catcher’s Mitt, and Campfire). He makes his candles in soup cans and donates the soup to a local food bank. He’s received thousands of orders.

Or the 12 year old who wanted to do something about obesity and started a mobile dance studio in an old school bus. On afternoons after school, Amiya's Mobile Dance Academy travels to kids who couldn’t otherwise afford dance lessons and teaches them everything from ballet to hip-hop.

Consider how your brand treats the world, because Gen We will.

4. They Expect You to Entertain Them

Conditioned by things like ToonTown and Club Penguin, this group expects to be entertained – even by brands. They have much shorter attention spans than previous generations, and an uncanny knack for processing massive amounts of information.

For example, when I rode in my mom’s car as a child, I looked out the window. I might have even conversed with my mother. Not this generation. They watched cartoons on the SUV’s video system, played with their DS’s or played with Mom’s iPhone. And the more tech savvy of them probably played Toyota’s “Backseat Driver” app – which uses GPS to create a virtual driving route that mirrors the actual road and integrates real world landmarks into the game.

The point is, this group has always been entertained. And they will expect entertainment from you if you hope to connect with them.

5. They Actually Listen to Their Parents

And vice versa.

While my generation was characterized by movies like “The Breakfast Club” and “DJ Jazzy Jeff and The Fresh Prince Parents Just Don’t Understand,” this generation is close to their parents. They listen to their parents, even when it comes to brands.

Gen X parents and Gen We kids are watching the same TV channels, wearing the same clothing brands and playing the same video games — often together as a family. This group has been invited to have a voice in family decisions, and they’re willing to listen and even copycat their parents’ purchasing habits. So don’t ignore Mom and Dad.

It’s going to be fascinating to watch this group become adult members of the workforce over the next few years. As employees, they’re going to push us. They’re native to innovation and change, and their perception of what’s possible is likely a great deal less limiting than it was for our generations. As consumers, they’re going to force us to think differently in order to connect with them. But one thing is certain – the next decade will be every bit as interesting and challenging for marketers as the last.

Eight Ways to Spend Smarter!

2012-06-18T06:54:00.000-05:00

Reuters

When it comes to beefing up your finances, it’s not all about having a solid savings plan. You also must know how to spend money wisely.

If there was a silver lining to the Great Recession, it was that it forced consumers to be more cautious with their spending. The Bureau of Labor Statistics reports that in 2010, consumers slashed spending by more than 2% compared to 2009. Consumers cut back on entertainment by 7% and food and dining by 3.8%. Limiting discretionary spending is always a budget helper, but experts say it has to go reducing spending to make a significant impact.

“Being a better spender is easy if you follow two simple guidelines: what you pay for is often what you get, and the brand you buy, and buy from, matters,” says Denise Winston, a financial educator and founder of MoneyStartHere.com.

Several factors play into whether a purchase is worth the money. Some are subjective: how much will the purchase contribute to your enjoyment? How much will you use it? While others are more quantitative: do you have the money available to buy it now? Is the item of good, lasting quality?

Here are eight ways to help evaluate the big picture when making any purchase and make you a smarter spender:

Wait three days to make a purchase. Waiting to make a big purchase controls impulse, says Paul Markowich, a senior financial planner at Firstrust Financial Resources in Philadelphia. “Ask yourself after you removed yourself emotionally from the purchase whether or not you really need it.”

Shop around. Get at least three price estimates on every mid- to big ticket item, Winston advises. Use cell phone apps like ShopSavy search to shop for the best price and ask retailers to match the price of competitors.

Only use cash. “If you need to use credit to afford it, don't buy it,” Markowich says. “Plastic cards have made spending easier, but it has also disguised how much we really spend. Seeing the cash and holding it will change your spending patterns.”

If you have the cash to cover the purchase, but want the protection a credit card offers, then it is fine to swipe the card—but make a full payment as soon as the bill arrives.

Determine cost per use.

“When it comes down to deciding whether a purchase is worth the money, you need to think about how often you are going to use [it],” says Jessica Patel, personal finance editor for Bankrate.com.

For example, spending more on clothing basics is important so they last, since buying replacements of a low-quality item can be more expensive in the long run. “For men, one high-quality suit is always worth the money, preferably in black or grey so they can use it for multiple occasions and seasons.” But will you use that ski equipment enough to make renting it more expensive per trip? If not, forgo the purchase.

Buy from a trusted retailer. “If the price seems too good to be true it probably is, and could be a fake or scam,” Winston says. Stick to purchasing from reputable retailers, read product reviews, and check warranty policies. Know the return policy and watch out for restocking fees that could make returns a wash (culprits include cell phones and electronics).

Many retailers offer a 30-day low price guarantee so if you find a better price elsewhere after making a purchase bring back your receipt and hold the seller to it.

Do your brand homework. Know the manufacturer's reputation, warranty guidelines and always save your receipt, advises Winston. For example, Winston wears $300 Maui Jim sunglasses for extraordinary quality, good resale value, reputation and warranty. And she buys them from Sunglass Hut because they offer free shipping both ways, free adjustments, a 90-day return policy, and $20 off birthday coupons. When she accidentally broke the shades, Sunglass Hut shipped the glasses for repair for free and for $10, Winston got a perfectly restored pair of sunglasses.

Buy used or slightly distressed. Buying an item used could save up to 70%. Check Craigslist, eBay and local thrift and restores. And don't overlook slightly damaged goods—just be sure to ask exactly what is wrong with a product. “A washer or dryer with a ding in the paint or dent on the side still works the same but can be had at a fraction of the price,” Winston says.

Clean house before each season. “Your forgotten treasures may satisfy your cravings and prevent you from purchasing something new,” Markowich explains. You may also be able to repurpose items and make them feel new again.

U.S. Mobile Ad Spending at $1.6B in 2011.

2012-06-07T06:17:00.003-05:00

The Interactive Advertising Bureau earlier this year estimated U.S. mobile ad spending at $1.6 billion in 2011. Looking beyond U.S. borders, the IAB issued a new report today estimating the global mobile advertising market at $5.3 billion, with a wide gap between developed and emerging regions.

Asia-Pacific, for example, represented 35.9% of worldwide mobile ad spend, North America, 31.4%, and Europe, 25.9%. That compares to Latin America, with just 3.5%, and the Middle East and Africa, at 3.2%. The study, conducted by the IAB’s Mobile Marketing Center of Excellence in the U.S., IAB Europe and research firm IHS Screen Digest, also broke out mobile advertising for each region by type: display, search and messaging.

Across the board, search accounted for the largest share of mobile ad spending, typically at least double the amount of display for a given area. In North America, spending was more balanced, with search contributing $811 million, display hit $572 million and text message advertising, $295 million for a total of $1.68 billion.

In Asia-Pacific, search was $1.38 billion, display, $491 million and messaging, just $41 million, totaling $1.9 billion. Similarly, the $900 million spent on search in Europe was almost three times more than display ($367 million), with messaging at $114 million. That adds up to $1.38 billion.

As a proportion of mobile ad spending, text messaging was biggest in Latin America, accounting for $83 million out of a total of $188 million on the continent. Of the balance, $74 million went to search, and $31 million to display.

For the Middle East and Africa, just $3 million was spent on text ads, $89 million on search and 32 million on display, totaling $124 million.

The IAB explained one of the reasons behind the study was to underscore the global nature of mobile advertising. “This is not just a local, or even European affair. As many mobile campaigns are played out in a global ecosystem, the market we have to size spans across borders,” stated Alain Heureux, president and CEO of IAB Europe.

Research presented by Kleiner Perkins partner and Internet guru Mary Meeker showed mobile usage still far outpaces mobile monetization. Mobile usage hit 10% of global Internet traffic in May, up from about 5% last year. While monetization is lagging that growth, Meeker predicts dollars will eventually catch up with eyeballs in mobile as they did on the desktop Web.

In terms of methodology, the IAB explained that IHS authored the research based on identification of mobile ad spend reported by IABs, harmonizing the data and employing statistical and econometric models to infer a global market size, split across advertising formats.The findings also reflect information from interviews with “key players across the mobile advertising ecosystem.”

May Job Growth Weakest in a Year!

2012-06-01T09:36:00.002-05:00

By Lucia Mutikani

WASHINGTON (Reuters) - Job growth in May was the weakest in a year and employers added far fewer jobs in the prior two months than previously reported, suggesting the economic recovery was faltering.

Employers created a paltry 69,000 jobs last month, the Labor Department said on Friday, the fewest since May last year. Economists polled by Reuters had expected nonfarm payrolls to increase 150,000.

In addition, employers added 49,000 fewer jobs than previously estimated in March and April. The unemployment rate rose to 8.2 percent from 8.1 percent as people flocked into the labor market.

While unseasonably warm weather that brought forward hiring into the winter months has been blamed for the step back in March and April, the latest report hinted at more fundamental weakness in the economy.

It could further shake confidence, coming on the back of a raft of soft regional factory surveys and a worsening of the debt crisis in Europe. Data on Friday also showed China's vast factory sector lost momentum in May.

Economists have blamed Europe's prolonged financial crisis and slowing Chinese growth for sluggish factory activity in May, which has evoked memories of the slackening of job growth in the summer of 2011 when the recovery nearly stalled.

However, a survey of households showed stronger employment gains. While the unemployment rate rose as new job seekers flooded into the labor force.

The weak payrolls report could cause the Federal Reserve to move closer to launching a third round of bond purchases to shore up the economy. It could also exert more pressure on President Barack Obama, who faces a tough re-election campaign in November.

The level of employment is still 5 million jobs below where it was in December 2007, when the economy fell into recession.

Analysts say the economy needs to create roughly 125,000 jobs a month just to keep the unemployment rate steady.

The labor force participation rate - the share of working-age Americans who either have a job or are looking for one - rose to 63.8 percent after dropping to a 30-year low in April.

Job gains were weak across the board last month, with the private sector adding only 82,000 positions. Government payrolls dropped by 13,000, dragged down by ongoing belt-tightening by local governments.

Construction employment fell 28,000 in May, the fourth straight decline, driven by an increase in residential construction.

Manufacturing, the recovery's star performer, added 12,000 jobs.

Given the high unemployment rate, average hourly earnings rose only two cents and the average workweek fell to 34.4 hours.

Do you really care?

2012-06-01T06:53:00.001-05:00

FDA Rejects New Name For High Fructose Corn Syrup

by Karlene Lukovitz, Yesterday, 4:57 PM

beverages, food, regulation

The Food and Drug Administration has rejected a petition by the Corn Refiners Association (CRA) to rename high fructose corn syrup (HFCS) “corn sugar.”

The FDA said it defines sugar as a “solid, dried and crystallized food,” not a solution or liquid food, and that the name corn sugar could confuse consumers or even pose a potential health danger, for those who are fructose-intolerant.

In a response statement, CRA president Audrae Erickson said that the FDA had rejected the petition on “narrow, technical grounds,” and asserted that the agency “did not address or question the overwhelming scientific evidence that high fructose corn syrup is a form of sugar and is nutritionally the same as other sugars.”

CRA contends that most Americans wrongly assume that HFCS has more calories or is processed/metabolized differently by the human body than regular table sugar, although its chemical makeup is nearly identical to table sugar’s.

Research on the issue of the two substances’ effects on the body has been conflicting. The American Medical Association has stated that more research is needed. The nonprofit consumer nutrition advocacy group Center for Science in the Public Interest has said that the evidence thus far indicates that HFCS is no worse for bodily health than sugar, but has also stressed that Americans consume far too much of both sweeteners.

While it was waiting for the FDA to make a decision on its name petition, CRA launched a multimillion-dollar marketing campaign addressing what it terms “myths” about HFCS; that campaign uses the term “corn sugar,” as well as high fructose corn syrup.

A federal lawsuit by The Sugar Association against CRA, maintaining that CRA’s marketing campaign is misleading, is still pending in a Los Angeles court. The Sugar Association asserted that the FDA’s rejection of the “corn sugar” name supports its contention that sugar and HFCS are distinct products.

How Wal-Mart aims to combine social, mobile, stores and the web

2012-05-31T07:13:00.000-05:00

Topics: IRCE 2012, Joel Anderson, m-commerce, mobile commerce, retail chains, social commerce, Top 500, Wal-Mart,Walmart.com

Joel Anderson

Shoppers have increasing expectations for products and services, and retailers will need to innovate to get—and keep—their customers’ attention. For Wal-Mart Stores Inc., that means blending new web, social and mobile tools that enable consumers to shop where, when and how they wish, says Joel Anderson, president and CEO of Walmart.com U.S.

Anderson will describe how Wal-Mart developed new technology to give shoppers more opportunities to interact with the mass merchant at the Internet Retailer Conference & Exhibition 2012 next week in Chicago in a session titled “Creating innovation through the next generation of retail.”

“The customer is now in control in the new generation of e-commerce,” Anderson says. “To win them over, any retailer needs to combine social, mobile, online and physical stores to give them anywhere, anytime access for the best customer experience.”

Innovation is what makes one company stand out from others—and in today’s retailing world, the combination of technology and customer behavior is where innovation begins. With more than 200 million visits to its stores every week, Wal-Mart is taking steps into the next generation of retail to ensure customers can shop according to their preference.

“The next generation of retail is changing the way customers shop with the advent of online, social and mobile combined with physical stores,” Anderson says. “Innovation is key to this next customer phase, and we’ve recently introduced several new programs such as Shopycat, a gifting app for Facebook; Get on the Shelf, which leverages crowd-sourcing to find new products; Pay with Cash for ‘unbanked’ customers; and several new mobile developments.”

Unbanked shoppers are those without bank accounts or credit cards.

Internet Retailer editors asked Anderson to speak based on his extensive experience in e-commerce. Anderson is responsible for all strategic development, merchandising and operations of Wal-Mart Stores Inc.’s U.S.-based web site. From 2007 to 2011, Anderson was senior vice president for Wal-Mart’s Northern Plains Division. His 20 years of e-commerce and retail experience includes serving as president of the direct business for tabletop and giftware brand Lenox. He also held executive positions at Toys ‘R’ Us Inc., including senior vice president, marketing for Babies ‘R’ Us, and started the company’s online businesses. His prior employers include Target Corp. and Airborne Express.

And the Winners are:

2012-05-25T06:25:00.000-05:00

Tech and telecoms brands again lead this year’s BrandZ rankings of the most valuable global brands.

The BrandZ rankings, commissioned by WPP and conducted by Millward Brown Optimor, show Apple leading the top 100 list (with $182.9 billion in global brand value) for the second consecutive year, followed by IBM ($115.9 billion), Google ($107.8 billion), McDonald’s ($95.2 billion), Microsoft ($76.7 billion), Coca-Cola ($74.3 billion), Marlboro ($73.6 billion), AT&T ($68.9 billion), Verizon ($49.1 billion, jumping up four places versus 2011) and China Mobile ($47 billion).

IBM’s 15% value growth enabled it to surpass Google for the #2 spot this year. Facebook, with a 74% jump in brand value this year alone, showed the fastest rise in the value rankings (it’s now at #19, with a $33.2 billion value, versus #35 last year).

Highlights of those in the top 100 in some of the categories:

*Apparel: Nike (#44), H&M (#58), Zara (#66)

*Cars: BMW (#23), Toyota (#28), Mercedes-Benz (#46), Honda (#65), Nissan (#81), Volkswagen (#96)

*Consumbles and personal care: In addition to Coke, these include Gillette (#33), Pampers (baby care, #35), Budweiser (#48), Colgate (#51), L'Oreal (#57), Pepsi (#67) and Red Bull (#80)

*Fast food: In addition to McDonald’s, Starbucks (#42), Subway (#52), KFC (#91)

*Financial: ICBC (#13), Wells Fargo (#14), Visa (#15), China Construction Bank (#24), MasterCard (#29), American Express (#30), HSBC (#31), Agricultural Bank of China (#38), RBC (#40), TD (#54), Commonwealth Bank (#60), Bank of China (#61), ICICI Bank (#63), US Bank (#72), Standard Chartered (#79), Citibank (#82), Scotiabank (#82), Chase (#92), Santander (#95)

*Retail: Walmart (#17) – which knocked Amazon (#18) into the second retail spot -- Tesco (#36), Home Depot (#62), Target (#76), ALDI (#87), IKEA (#89), Carrefour (#98)

The analysts highlighted the following trends:

* Technology prevails: Seven of the top 10 brands are technology or telecoms brands. However, the power of smart, simple-to-use technology to improve products can also be seen in other categories, including cars, financial services, luxury and retail. Successful brands also are using smart technology to enhance customer experience. For example, Burberry (up 21%, to $4 billion) created a virtual world to enable younger brand followers to view fashion shows.

* A mobile future: As one of the few items consumers don't want to give up or cut back on, mobile has been somewhat shielded during the recession. The U.S.’s largest mobile service provider, Verizon, increased its brand value by 15% in the last year.

*The rise of Africa: This year's ranking marks the arrival of the first African brand in the top 100: South African mobile company MTN (#88, at $9.2 billion). In addition, African consumers are driving growth for brands around the world, including Guinness (40% of its sales come from Africa), Airtel (with a 16% jump in revenue from the continent in Q3), and Orange, which had rapid growth in Africa in 2011. Wal-Mart’s investment in Africa’s Massmart is no coincidence.

*Retail becomes omni-channel: Retailers are focused both on the customer experience and the need to be present everywhere on the path to purchase.

*Women in the boardroom contribute major value: 77% of the brands appearing in the top 100 have women in the boardroom. The average value of brands with women on their boards is $27 billion -- double that of companies without female directors. Brands with female board members also show average five-year growth of 66%, compared to average growth of only 6% for other top-100 companies.

*Strong brands provide better shareholder value: Average ROI for all companies in the S&P 500 was just 2.3% over the past seven years. In contrast, the BrandZ top 100 yielded a 36.3% ROI.

How Today’s Cost-Conscious Grocery Shoppers Win

2012-05-17T15:06:00.003-05:00

POSTED BY BOB INNES ⋅ 05/17/2012 ⋅ LEAVE A COMMENT

While grocers and CPG manufacturers are still figuring out how to navigate the post-recession economy, consumers are also trying to find the best ways to maximize their monthly spend.

A new research report sponsored by MaxPoint Interactive reveals the changing behavior among cost-conscious grocery shoppers as they move through the path to purchase in today’s post-recession economy.

“Reaching Today’s Cost-Conscious Consumer” reveals that the average monthly spend on groceries has steadily increased among the general population from pre- to post-recession. While spending continues to climb, nearly three in four respondents have made changes to their grocery shopping habits within the last year, becoming more cost-conscious before and during their trips.

Some of the ways cost-conscious grocery shoppers in the U.S. have changed their behavior include the following:

- Shopping Closer to Home and Shopping Multiple Grocery Stores

More than 40 percent of moms and those age 25-54 indicate that in the past year they have started shopping multiple grocery stores to get the best prices and deals.

- Leveraging Coupons and Sales More

Close to half of all respondents and 50.4 percent of Moms said they clip coupons and scan their loyalty cards regularly for savings. On average, 26 percent of respondents use some form of digital coupons. Moms are most likely to use digital coupons, with nearly a third using digital methods to find coupons. Three in four respondents said they are more likely to try a new product at the grocery store if they have a coupon for it.

- Preparing Lists Before Shopping

Sixty-two percent of respondents regularly make lists before going grocery shopping and more than half make their list using general product categories, rather than specific brands. Three in five decide which brand to purchase while they are in the store based on price, coupons and special promotions.

- Using More Resources Such as Digital Channels to Prepare for Shopping Trips

More than 90 percent of shoppers regularly research products online before purchasing them in-store. Moms and those age 25-54 are more likely than adults 18 and over to use the Internet to prepare for grocery shopping trips.

- Heading to Recipe-Specific Destination Sites to Prepare for Shopping

Moms are also the most likely group of respondents to use digital methods to find recipes when preparing for a trip to the grocery store.

“Due to the economy, consumers are shifting their shopping behaviors to get more for their money,” said Dianne Kremer, senior analyst at BIGinsight. “As consumers feel a pinch from rising gas and food prices, they are becoming more creative with how they spend their grocery budgets – shopping closer to home, going to multiple stores to get the best deals and looking online for coupons and offers.”

Other key findings:

- Average monthly spend on groceries has steadily increased among the general population from pre- to post-recession from $250.94 in August 2007 to $277 in August 2011. Among moms, it has steadily increased from $311.95 to $341.14 during the same timeframe.

- Two in five respondents indicate they are purchasing more store brand or generic items now than compared with this time last year; 53.4 percent are purchasing the same amount.

- Three in 10 respondents have cut back on purchasing bakery items, candy, dessert items and magazines/books/DVDs over the past year. One in four have cut back on prime cuts of meat and seafood.

“Digital is reshaping the grocery shopping experience in the post-recession economy, as consumers turn to new channels to help plan their shopping trips,” said Gretchen Joyce, MaxPoint Interactive COO. “By understanding what motivates today’s consumer, brands can tailor their shopper marketing strategies to ensure they are gaining mindshare and winning at the shelf-level.”

MaxPoint Interactive’s retail advertising platform helps to drive in-store traffic for retailers and brands.

Customer Control?

2012-05-12T07:51:00.003-05:00

Customers in Charge: A Special SN Edition

Mark Hamstra

Apr. 30, 2012 12:08pm

In the modern retail environment, shoppers are calling all the shots.

Consumers have the ability to draw on a variety of resources when deciding how to fill their pantries, from online offers to considerations like customer service, convenience, price and product selection — and these shoppers have an increasing array of choices about where to spend their grocery budget, from drug stores and dollar stores to warehouse clubs.

To cut through all that clutter, more and more supermarkets are seeking to forge more personalized connections with their shoppers via social media and other means to offer them solutions that meet their specific needs.

Pleasanton, Calif.-based Safeway, for example, is rolling out Just for U, a web-based program that generates customized pricing and offers based on past purchase behavior and tied to the company’s loyalty card.

Matt Nitzberg, executive vice president, communications and media, Dunnhumby USA, a joint venture partly owned by Kroger Co. that handles that chain’s targeted marketing efforts, said in an interview with SN that an increased focus on targeted communications has emerged for several reasons. Among them are the fact that more and more data to support targeting has become available; there are more marketing vehicles out there to make use of that data; there is more pressure on marketers to make efficient use of their budgets; and finally, there is increased expectation on the part of consumers that they will receive tailored communications.

“All of those factors come together,” Nitzberg said. “The data availability is an enabler, the marketing capabilities that are growing are enablers, the budget and effectiveness pressures on marketers is a catalyst, and so is the set of rising expectations among consumers.”

Marketers that fail to become skilled at delivering “relevant, respectful” communications are at risk of being “cut off by consumers,” he said.

“It used to be that marketers could pretty much define the marketing mix that landed on consumers,” he said. “Now consumers are really the chief marketing officers, because more and more, they control the marketing mix that lands on them. We do it with TV, we do it with mail, and increasingly, we are able to do it online.”

Communication with the consumer in this modern environment, Nitzberg said, begins with the question, “What would the customer want to hear from us?” Read the rest of the story by clicking the link below:

via Customers in Charge A Special SN Edition | Retail & Financial content from Supermarket News.

Six Essential Pet Care Principles for Retailers

2012-05-07T07:01:00.001-05:00

It's all about instilling shopper loyalty by doing an outstanding job with the key departments that can make a difference in where they choose to shop. Among these, Pet Care stands out as one in which loyalty translates directly into higher total store purchases. According to Nielsen research¹, pet owners classified as "high loyals" spend an average of $2519 at their chosen store; that's 170 percent more than the overall shopper base.

Despite Pet Care's influence on total store sales and profits, many operators treat the department as they would any other center store category — and that’s a mistake. Here are six principles behind creating a winning pet care department that many retailers are overlooking:

1. Pet Care needs to be a true shopper destination in your store. That begins with a dedicated Pet department, clearly positioned in the store by overhead signage visible from afar, with inviting — preferably dramatic — entryways such as a dedicated PetCare end cap.

2. The Pet department will yield more sales when it's easy to shop. Shoppers are in a hurry. Lay out the department based on their most popular trip missions. Think like a pet owner. Satisfy the "What's on my list?" needs first but tie in items that complement the mission. Make it easy to find what they need.

3. Pet is a powerful trip driver. Pet owners will make a special trip if they are in danger of running out of pet food or litter. Use pet as a visible, easy to see lever in promotions to ratchet up trip frequency. They can buy pet just about anywhere, make sure they choose your store when they are making out their shopping lists.

4. Although pet purchases tend to be planned, the nature and size of the pet transaction is highly influenced in-store. Sixty-one percent of planned purchases are influenced by in-store activity. Expand their baskets by creating opportunities for impulse purchases of high-margin items such as pet treats and toys.

5. Out-of-aisle merchandising for pet can be just as creative (i.e., effective) as in produce and other perishable departments. Bordering the pet aisle, innovative fixturing such as bulk bins, spin racks and merchandising islands can interrupt the shopper's route around the perimeter to make an incremental sale and remind them to enter the aisle for stock-up purchases.

6. Emotion drives pet category engagement ... and spending. Play to the emotional dimension of Pet. More involved pet owners make 8 percent more trips and spend 33 percent more. Warm photo imagery of pets and their families, can make the connection in-store. Community programs such as pet adoption days and pet care clinics can help you cement that emotional attachment to your store brand.

Technology Helps Kroger Keep Fast-Checkout Promise

2012-05-02T07:13:00.002-05:00

"I’m committed to getting my customers through the lines quicker,” says a Kroger cashier in a commercial posted on YouTube. Other cashiers chime in: “At Kroger you get shorter lines and faster checkouts. Who likes standing in line? We promise you will spend less time in line. Faster checkout at Kroger .

It is an article of faith in the food retailing industry that one of the key drivers of customer satisfaction is a positive checkout experience, which generally translates into spending as little time as possible in line. While all retailers aspire to this ideal, how can Kroger actually promise shoppers they will spend less time in line?

To deliver on that promise, the Cincinnati-based company, the nation’s largest traditional food retailer, has invested in various kinds of POS technology aimed at improving the checkout experience. Though Kroger would not comment for this article, its activities at the checkout have left a considerable paper and digital trail, reflecting the retailer’s focus on the shopper experience, one of the four key elements (with price, products and people) that make up its vaunted “customer first” philosophy.

At a base level, Kroger’s front-end checkout technology is a retail-hardened system from IBM: ACE software running on SurePOS 700 terminals with the 4690 operating system, according to IHL Consulting Group, Franklin, Tenn., which tracks retailers’ IT investments. (IBM recently sold its POS business to Toshiba TEC.)

Customers in Charge: A Special SN Edition

With this sturdy front-end foundation, Kroger has taken to experimenting, particularly on the self-checkout side. For example, the retailer has attracted a lot of attention with a self-checkout “tunnel” system, which has been tested in a store in Hebron, Ky., since 2010. The tunnel, which contains a dozen cameras that read bar codes from any direction, moves products about three times as fast as a conventional checkout, and can scan a cart of groceries in under a minute, the company said.

In some other northern Kentucky stores, Kroger is trying out self-scanning handheld devices that consumers can use to scan and bag their purchases as they traverse the store. Kroger’ acknowledged that its strategy is to master a personal shopping platform under its control to get a leg up on the emerging world of smartphone apps.

Tracking Shoppers

But Kroger’s biggest IT play has been to improve the speed of its conventional lanes, backing up its “faster checkout” pledge. The most noticeable example of that is what Kroger calls the QueVision system, which tracks the number of shoppers in the store and at checkouts, and signals the need to open up additional checkouts to accommodate them. According to a recent article in the Dallas Morning News, Kroger’s QueVision system was installed in all Kroger stores at the end of last year.

The QueVision queue management system is described on the website of Irisys (irisys.co.uk), the U.K.-based company (with U.S. offices in Atlanta) that markets the technology. Though Irisys declined to comment on its involvement with Kroger, its website includes Kroger among its retail customers, along with U.K. grocers Tesco and Morrisons.

Irisys’s queue management system includes a “people counter” above each entrance/exit that tabulates the number of people entering and leaving the store by using heat-sensitive infrared sensors. The system also features infrared sensors above the checkout lanes that can detect the number of “units” of shoppers — a unit could include a mom and two kids — in line, and their average wait time.

The system then crunches the data gleaned from the sensors to predict the number of lanes that should be open in 15 minutes, and in 30 minutes, to maintain the retailer’s customer service standard at the checkout. (This could mean opening or closing lanes.)

According to a case study posted by Visual8, Mississauga, Ontario, on its website (www.visual8.com), Kroger has set a “1+2” checkout criteria, by which there should be at most two parties waiting to be served at a lane (in addition to the one currently being served).

Supermarkets Expand Relationships on Facebook

The direction for lane openings can be displayed on a handheld terminal or on a monitor; in Kroger’s case, it’s shown on a monitor posted near the checkout area. Kroger’s screen displays three balls showing the number of lanes open, the number needed to be opened now and the number that should be opened in 30 minutes.

The queue management system also populates a manager’s dashboard with reports on traffic and service compliance levels. It can be used to supplement labor scheduling software that forecasts labor requirements, and to support the Reflexis task management application.

“It’s quite sophisticated on the advance notice it can give for a schedule the checkout team can use,” said a Morrisons’ executive interviewed on a YouTube video. Tesco employs the system to support its “one-in-front” promise, which is that if there is ever more than one person in line the retailer “would do its best” to open up another checkout. Tesco said its “internal measures” indicate waiting time has been reduced by the system.

via Technology Helps Kroger Keep Fast-Checkout Promise | Technology content from Supermarket News.

Self-Checkout - What Should Drive the Retailer Decision?

2012-04-26T07:11:00.000-05:00

Self-Checkout - What Should Drive the Retailer Decision?

The self-checkout continues to be the subject of fierce debate within the retail community. The controversy is propelled by the multiple dimensions of the issue to retailers, manufacturers and shoppers.

Studies conducted by Dechert-Hampe show that self-checkouts are now found in two-thirds of all supermarkets in the U.S. and represent a fourth of all checkout lanes. An estimated 25 to 33 percent of all supermarket transactions now are via self-checkout. They can also be found in an increasing number of other store formats including drug stores, c-stores, mass merchants, hardware and office supply.

The self-checkout has arrived and while there are still issues to be addressed with the technology, the basic concept has gained wide acceptance. Furthermore, in-store interviews confirm that a large segment of shoppers have embraced self checkout technology based on its convenience and speed. Many shoppers prefer it, finding it particularly useful for small baskets.

The impetus for self-checkouts was originally driven by the retailer operations groups who saw the opportunity to employ technology to cut costs and improve efficiency of the checkout. However, many retailers report that actual labor savings were "soft" and ROI disappointing.

In addition, operational issues such as weight checks and shrinkage continue to be a concern for many retailers. ABC and USA Today recently ran stories on the "crime wave" at the self-checkout. This has caused a minor panic and spawned more interest in technology for loss prevention.

Unfortunately, merchandising solutions for the self-checkout have lagged behind the technology. Studies show that consumers are less likely to shop for impulse items at the self-checkout. Coupled with poor merchandising approaches, this has resulted in a significant blow to the impulse sales at checkout.

Albertsons and Big Y have both announced that, after due consideration, they are abandoning the self-checkout. They attribute this action primarily to the failure of the self checkout technology to provide the exceptional customer service they seek and the resulting impact on the customer relationship.

On the other hand, Walmart has announced they are expanding self-checkouts in pursuit of greater savings and lower prices. Stop & Shop has also announced plans for expansion of their SCAN IT! checkout system in both the handheld format and the mobile application.

Retailers have started to recognize the need to offer a variety of transaction choices to the shopper consistent with their preferences. Ultimately, they will have to compete in the marketplace based not only on their products and prices, but also on the transactional choices they offer. It is a complex decision, with a major impact on both financial results and the nature of the customer relationship.

Home Depot Making Changes at Checkout

2012-04-20T12:49:00.001-05:00

PHOTO BY GABRIELA HASBUN

“We don’t want anyone to have to wait in line,” says Matt Carey, Home Depot’s CIO. After all, the $70 billion big-box retailer doesn’t ship plywood. Or cement. An island in a sea of e-commerce, Home Depot remains largely an in-store experience. That’s why it wants to provide a good one, especially at the register.

To keep egress speedy, the company has been aggressively outfitting its 2,253 stores with a quartet of checkout options. “If you don’t give customers choices,” says the National Retail Federation’s Richard Mader, one of two retail technology analysts Fast Company asked to weigh in, “they’ll go someplace that does.” Here’s how Home Depot aims to retain.

1. PLASTIC ON THE FLY

Every Home Depot associate is armed with a “First phone,” a combo phone/walkie-talkie/scanner. Should the situation call for it–such as with remote garden centers, Christmas-tree lots, or during busy weekends–the unit can be outfitted with a card reader and receipt printer so it can accept credit and debit payments. Roughly 34,000 First devices will be in circulation.

MADER: “Both retailer and consumer feedback on mobile [checkout] has been outstanding. You’ll always need some checkout terminals in case of Wi-Fi outages, but retailers are quickly moving in this direction.”

2. SCAN NOW, PAY LATER

Not every First phone will be equipped for mobile checkout, but that doesn’t mean they can’t still contribute. When lines are long, associates can scan all the items in shoppers’ carts and hand them a card containing their purchase. All that remains is giving the card to a cashier and settling up.

MADER: “This is an old technique, but an effective middle ground between traditional checkouts and mobile ones–and a good way to quickly process people using cash.”

GREG BUZEK, IHL GROUP: “It’s a good system to have when the store is busy, especially since any associate will be able to tally up a cart.”

3. LEAVE YOUR WALLET IN THE CLOUD

In January, Home Depot became the first partner for PayPal’s foray into the brick-and-mortar world. Payment terminals at registers now offer a PayPal Wallet button, which enables consumers to pay with any funding source that’s linked to their PayPal account (see sidebar).

MADER: “Two to three years ago, nobody talked about mobile payments. Now Google and PayPal are leading the charge. The fees collected by credit-card companies amounted to $40 billion last year. That created a market for cheaper alternatives. Retailers want to minimize those fees.”

4. SEE YOURSELF OUT

Home Depot was one of the first major retailers to introduce self-checkout, back in 2003. Until 2010, neither hardware nor software had been updated since. “We got new units that process change much faster, and software that’s more intuitive,” says Carey. “The combination has made self-checkout as much as 30% faster.”

BUZEK: “Self-checkout is no longer sexy, but deployment of units continues to grow at 10% a year. They get bad press for allegedly taking jobs, but Home Depot reassigns displaced cashiers to work in aisles, where they can help customers–and upsell products.”

via Home Depot Innovates Customer Checkouts | Fast Company.

Summer Gas Prices Forecast Below $4 Per Regular Gallon

2012-04-17T08:19:00.000-05:00

REPORTING, RESEARCH, RETAIL

NEW YORK — The news keeps getting better for motorists, and hopefully in turn convenience stores. On the heels of an AAA report that gas prices may have hit the top-end of the spectrum, the Energy Information Administration (EIA) said the pain at the pump could soon be less painful, with average prices staying below $4.

In its “Short-term Energy Outlook,” the EIA forecast regular-grade gasoline retail prices to average $3.95 gallon nationally this summer, which it defines as the period from April through September. If realized, that would mark a 6.3-percent increase from the year prior summer season when gasoline sold at retail outlets averaged $3.71 gallon nationally.

The EIA expects prices to hit a peak of $4.01 in May, as CSNews Online previously reported.

For the full year 2012, the EIA is forecasting a $3.81 gallon national average for regular-grade retail gasoline while averaging $3.73 gallon in 2013. That is 20 cents above the 2011 average of $3.53 per gallon.

The outlook for diesel, however, is a bit higher. According to the EIA, retail diesel fuel prices, which averaged $3.94 gallon last summer, are projected to average $4.21 gallon nationally this summer. The monthly price average is forecast to peak at $4.25 gallon in the middle of the summer driving season.

“Daily and weekly national average prices can differ significantly from monthly and seasonal averages, and there are also significant differences across regions, with monthly average prices in some areas exceeding the national average price by 25 cents per gallon or more,” stated the EIA.

The Washington, D.C.-headquartered statistical government body noted that “gasoline and diesel prices are driven primarily by changes in both crude oil prices and wholesale margins,” with taxes and retail distribution costs generally stable.

“The retail price projections reflect higher prices for the average refiner acquisition cost of crude oil,” stated the EIA, anticipating a $10 increase in that cost from last summer with an $114 barrel average for this summer, which equates to $2.71 gallon.

via Summer Gas Prices Forecast Below $4 Per Regular Gallon – Petroleum – Convenience Store News.

Who Forms Your Opinions?

2012-03-29T12:21:00.001-05:00

Most of you out there reading this will answer "I do." The question then becomes how is that opinion formed and what is it based upon? Simply put, all personal opinions are based on only two factors--your own experiences and information. For the sake of this post I want to tackle the latter.

It seems more often than not, information provided to you and I as consumers comes first in the form of political opinions which permeates into just about every aspect of our lives. From our employment, the economy, the environment, education, even leisure activities, we are all told what is supposed to be important about each of those to each of us.

No matter your political persuasion, most people actively seek support of their opinions. At the core of that support is information. But do you actively seek independent and factual verification or do you trust the media pundits on both sides and other sources to "tell" you what you should think? If you answered yes. It probably would be best to move on the next topic.

As a young man entering college, I learned by majoring in Journalism what facts are. I also learned that I must first search for facts, not opinions, not here say. Facts can best be judged by the definition. Dictionary.com has a number of entries. The common thread in them all is "real and actual." Just because the government says the figures released show an increase or decrease is not factual. Journalism as baby boomers knew it is, sadly, no longer.

How many of us actually spend the time and effort to research the information provided to us in our daily lives? How many of us place sizable credibility in what we hear and see in the media, on the Internet? Be very careful. If you take the time to "discover the facts," you are more than likely to form an entirely different opinion. It also requires being "open" to reviewing all the information.

And that's the point. In this day of so much information at our disposal than ever before, those of you that understand and review factual information will better understand why the opinions you form reflect accuracy instead of pure emotion.

Well Bob, that's all fine and good. In this space, I provide factual information strategically designed to help you make smarter decisions about Consumer Packaged Goods. I'd love to hear how I am doing? Please let me know in the comments section or send me an e-mail. I welcome all points of view with an emphasis on facts. Thanks for reading today.

Keys to CPG Success

2012-03-19T10:02:00.002-05:00

MARKETING, RETAIL OPERATIONS MANAGEMENT.

CPGs: Key Strategic Factors

Currently, U.S. consumers are nearly evenly split between those who are feeling more optimistic about the economy and their own financial prospects, and those who expect continued deterioration.

While consumers should be more willing to open their wallets if the economy’s gradual improvement continues, the key point for CPG makers/marketers at present is that even better off and more optimistic consumers continue to be frugal and conservative, in the sense of wanting to “live well for less,” according to a new report from SymphonyIRI’s Times & Trends, which analyzes 2012 CPG challenges and opportunities based on 2011 CPG trends/data.

Given this scenario, “CPG marketers need to actively respond with products and strategies that really emphasize their understanding of consumers’ most pressing needs and wants in order to drive purchase behavior and loyalty,” sums up SymphonyIRI Times & Trends editor Susan Viamari.

SymphonyIRI’s research points to the following factors/trends being most critical in CPG strategies in 2012:

Shoppers will continue to define value based largely on price. SymphonyIRI’s MarketPulse consumer survey shows more than half of shoppers still choosing the stores that they shop based on lowest prices, and three-quarters saying that price weighs heavily in purchasing/brand decisions. While input costs in many categories are moderating, cost pressures remain in some categories. CPG manufacturers and retailers have run out of ways to cut operational costs, and also “sense the shopper’s ability to pay more,” and will therefore continue to try to be more aggressive about passing costs along to consumers in the form of price increases.

Private-label will continue to account for unit sales in the 22% to 23% range and dollar sales in the 18% to 20% percent range. Retailers will increase assortments and retain the tiered PL pricing/quality offerings that have been proving successful for them.

CPG manufacturers will intensify their focus on innovation as their primary private-label-mitigation strategy. Example: Single-serve coffee offerings from leader Keurig (K-Cups) and others are responsible in no small part for the coffee/tea sector’s 14% share of 2012’s most successful beverage launches (versus a historical average of just 8% for the coffee/tea segment).

Drug-channel retailers will accelerate their focus on evolving store formats to expand food/beverage offerings.

Responding to shoppers’ increasing use of digital coupons, increasing tendency to research prices/offerings online and develop shopping lists prior to their shopping trips, and increasing use of mobile devices to research and receive offers during their shopping, CPG manufacturers and retailers will continue to seek to leverage digital/social media more effectively.

To effectively compete in 2012, SymphonyIRI advises CPG manufacturers and retailers to focus on three core action areas:

Identify opportunities and risks: Manufacturers should reevaluate sourcing and input sources, and be on the lookout for opportunities to lower manufacturing costs through innovative sourcing, packaging and product-sizing strategies. Retailers should closely track the evolving competitive set within their channels and by retailer, and adjust their product-mix and inventory-management strategies as necessary.

Evaluate pricing and promotional strategies: Manufacturers should continually reassess and adjust pricing to maintain an optimal price gap between private-label and national-brand offerings. Retailers should work with key manufacturers to develop cross-promotional opportunities for high-growth categories/brands and key, staple products.

Enhance product assortments: Manufacturers should explore product-development opportunities based both on existing and emerging product trends. Retailers should align assortment strategies with consumers’ changing trip-mission and product usage trends.

via MediaPost Publications CPGs: Key Strategic Factors For 2012 03/19/2012.

Analysis: Wal-Mart’s price push tests manufacturers’ prowess

2012-03-07T07:25:00.003-06:00

you're reading

By Martinne Geller and Jessica Wohl

NEW YORK/CHICAGO (Reuters) – Consumer staples companies have a problem. It costs more to make everything from soup to soap to soda, but when they raise prices they turn off consumers and strain their relationships with Wal-Mart Stores Inc, their biggest customer.

For some companies, like Clorox Co and Kraft Foods Inc, the problem can be comparatively easy to handle. They either have brands that consumers like, and therefore Wal-Mart needs, or they are big enough to have significant negotiating power.

But Wal-Mart is now pushing its grocery suppliers harder to offer consistently low prices, instead of timed promotions or “rollbacks.” That means food companies are unlikely to be able to pass through more price increases and will be forced to pull other levers, such as cost-cuts to protect margins or product innovation to drive sales.

And with many consumer goods stocks trading at a premium to the broader market , analysts say the risk is on the downside. In particular, they see pressure on companies with second- or third-tier brands, such as ConAgra Foods Inc, whose Hunt’s ketchup competes with Heinz.

Shares of makers of packaged food that raised prices too much, like General Mills Inc, whose products range from Cheerios cereal to Progresso soups, also may face pressure.

Consumer staples companies that make up two Standard & Poor’s indexes — the S&P 1500 Packaged Foods & Meats Index and the S&P 1500 Household & Personal Products Industry Group Index — trade at nearly 16 times expected earnings, while companies in the S&P 500 index trade at 12.8 times expected earnings.

“I think we reached the wall in terms of raising price. Consumers can’t take any more,” said Edward Jones analyst Jack Russo, citing recent Nielsen data showing correlations between price increases and declines in sales volume.

“A lot of these companies are going to have to get back to basics and not raise prices much, and if they want to grow sales they’re going to have to do it through innovation, or being razor-sharp on pricing.”

For example, General Mills’ sales volume fell 11.3 percent in the 12 weeks ended February 18 after the cereal maker raised its average selling price by 11.5 percent with a combination of price hikes and a mix of higher-priced goods, Russo said, citing Nielsen.

One silver lining is that cost pressures are abating, as prices of many commodities, among them corn and wheat, have eased in recent months. Among packaged food stocks, Edward Jones recommends General Mills, Kellogg Co and McCormick & Co. It has a “Hold” rating on Hormel Foods, ConAgra, Hershey Co, Campbell Soup and Kraft Foods Inc.

FROM “ROLLBACKS” TO “EVERY DAY LOW PRICES”

For Walmart, the biggest grocery seller in the United States, lowering prices on a long-term basis can help it convince shoppers that it is the best place to go for everyday items.

With gasoline prices climbing and many shoppers living from paycheck to paycheck, Walmart wants to win a larger share of shoppers’ limited spending , after having lost some customers to dollar stores during the last recession.

“We want to work with vendors on that to see if we can take a price lower and leave it there permanently,” Wal-Mart Chief Financial Officer Charles Holley told reporters last month. “The price image for a customer is very important.”

via Analysis: Wal-Mart’s price push tests manufacturers’ prowess – 1450 WHTC Holland’s Hometown Station.

How Smart is this Shopping Cart?

2012-03-01T07:08:00.006-06:00

you're reading...

By George Anderson
February 29, 2012

I have to admit that I’m usually tickled pink when I get to a store and find a cart that isn’t filled with soaked flyers and has wheels that don’t wobble. That’s good enough for me. But for some time, inventors of various sorts have seem preoccupied with the idea of coming up with a smart cart to improve the shopping experience and, typically, create a new stream of advertising revenue.

While smart shopping cart ventures have failed to establish a significant presence at retail up to this point, Microsoft, Whole Foods and Chaotic Moon, a third-party developer, have begun testing a prototype called the “Smarter Cart” that has the internet buzzing.

According to reports, the new cart is motorized and comes with a Windows 8 tablet attached to the handlebars. Using Microsoft’s Kinect, it will follow a shopper, identified with a loyalty card, around the store. Items are automatically scanned as the shopper places them in the cart. The cart then handles the checkout at the end of the shopping trip.

The cart can also check off items from a shopping list as it goes. A video on the GeekWire site shows the cart alerting the shopper that a pasta with gluten was added when a gluten-free item was on the list.

Did Apple forget a 'P'?

2012-02-23T08:02:00.002-06:00

you're reading...

brand

The ‘P’ Ron Johnson Forgot

By Nikki Baird, Managing Partner

Through a special arrangement, presented here for discussion is a summary of an article from Retail Paradox, Retail Systems Research’s weekly analysis on emerging issues facing retailers.

In revealing his “fair and square pricing” program to the world, Apple’s former retail chief Ron Johnson presented J.C. Penney’s (JCP) future in the context of six P’s: Price, Promotion, Personality, Product, Presentation and Place. The company is an American icon of retailing and I agree with Mr. Johnson that this is a core value worthy of using for the company’s future. But he forgot one P in his presentation — People.

To his credit, Mr. Johnson gave out lots of kudos to his team, noting several times that the same merchants who had driven JCP’s past, broken strategy had stepped up to create the new one. The same branding team that had driven the notorious 590 promotions in 2011 also came up with all the imagery that consumers started seeing on Jan. 1.

But what about store people? When you have 590 promotions, it’s pretty hard for stores to keep up. Our own research has shown that retailers have begun to realize exactly how much trouble massive numbers of price changes create in stores — keeping track of what’s on promotion and what’s not, putting promotions up and taking them down, moving markdown merchandise around in order to make room for the new stuff coming in.

But on top of that, over the last decade and more, JCP has moved away from a service-based strategy and moved more towards one that relies only on cashiers and price taggers. I look at the sophistication of JCP’s current staff, and I wonder if, like the merchandising and marketing staff, they are really up to the challenge of the new strategy. I wonder, in fact, if JCP’s current staffing model is capable of executing on JCP’s new store strategy.

Also, one of Apple’s biggest retail differentiators has been its staffing model. While Mr. Johnson talked some about how Apple’s store design has been based around 50 percent floor space for products and 50 percent for owners (services), he didn’t talk about the people. I’m making a pretty safe bet when I guess that they have the highest labor per square foot costs in the industry (I don’t know the number at all) — but retailers often argue that it’s easy for Apple to bear that cost when they also have the highest sales per square foot in the industry as well. The funny thing about retailers’ response is they never question whether the two are related.

via RetailWire Discussion: RSR Research: The ‘P’ Ron Johnson Forgot.

Massive Layoffs Possible

2012-02-20T07:21:00.001-06:00

| February 17, 2012

CHICAGO — Owners of 7-Eleven stores in Illinois are warning of massive layoffs unless the Illinois Lottery protects them from competition from the online sales that are expected to start this year. The franchise owners said that online lottery sales could force them to lay off 7,000 employees statewide, according to a WBBM Newsradio report.

Joe Rossi, the head of 7-Eleven Franchise Owners Association of Chicagoland (FOAC), estimated that lottery sales bring in 30% of the business at 7-Elevens, because lottery buyers buy an average of $5 in goods on top of their tickets.

Rossi said at a press conference at a Chicago 7-Eleven store that he is not trying to block internet lottery sales, just suggesting the lottery find a way to protect 7-Eleven lottery business and jobs.

Hei is recommending that the state lottery require players to fill up a Lottery credit card at 7-Elevens–leaving the store owners with their present 5% cut of the business–rather than allowing players to gamble without limit on their credit cards on line at home.

The move to online lottery play is set to begin in April, the report said. The U.S. Department of Justice in December issued a legal opinion on the matter that paved the way for online sales to begin.

Lottery officials estimate the state will take in $150 million more annually once sales go online, and will attract hundreds of thousands of new players, said the report. Officials have promised that the site for online sales will be secure and limited to Illinois adults.

Illinois convenience stores and gas stations want to remain the “gatekeepers” to Illinois lottery tickets, added a report by the State Journal-Register. Leaders from the Illinois Petroleum Marketers Association/Illinois Association of Convenience Stores (IPMA/IACS) support legislation by State Representative. Jim Watson (R) that would require individuals to purchase a debit card in-store before accessing the Internet lottery.

Bill Fleischli, executive vice president of IPMA/IACS, said member stores are concerned that an online lottery will lead to a loss of revenue and a loss of jobs.

“They say that with the Internet lottery, you will see a reduction in foot traffic and a reduction in ancillary sales, and because of the income loss, it may mean a loss of tax revenues and there will be a significant loss of business revenue,” Fleischli told the newspaper. “If that happens, you would see a reduction in the workforce.”

Out of the 4,500 convenience stores in the state, Fleischli estimated that 4,000 of them sell lottery tickets. Losing a job or two at each of them could result in the loss of 4,000 to 8,000 jobs across the state, he said.

Fleischli said they reached this estimate by assuming that the online lottery sales would cause lower revenue sales, forcing to stores cut one of their lottery salespersons.

But not every retail store owner agrees with assertion that online lottery sales will harm their bottom line. Last month, Grady Chronister of Chronister Oil, which owns Qik-n-EZ stores in Springfield, said lottery sales are “a very, very small commission for us.”

Lottery sales are “an integral part of our industry, but not necessarily the main reason we are in business,” he told the Journal-Register. “I don’t necessarily agree with that whole thing that people come to our stores just to buy lottery tickets.”

Curt Adams, president of Illinois Ayers Oil Co., who said he was extremely disappointed to hear that lottery tickets will be sold online. “The bottom line is, the less sales inside our store, the less sales tax revenue for local and state governments, not to mention less income tax,” he told the paper.

Adams said the profits his company receives from lottery ticket sales can vary, but that ticket sales make up 8% to 10% of his revenue. Adams added that his stores see more customers if the reward for a particular lottery is high.

Lottery ticket retailers earn a 5% commission on the tickets they sell. They can make additional money by cashing winning tickets up to $600 in their stores and for selling winning tickets of $1,000 or more.

Lottery customers also tend to spend more in the store, concluded a 1997 study compiled by the National Association of Convenience Stores (NACS). A frequent lottery customer would spend $7.07 during a store visit on average, while a nonlottery customer only spends $3.47 per visit on average, said the report cited by the Journal-Register

So far, only Lotto and Mega Millions will be available online. Customers who wish to play Powerball or an instant win game have to go into a store. There is legislation to put Powerball online too; Senate Bill 3497, sponsored by Sen. Jeff Schoenberg, is sitting in committee, said the report.

Fleischli said his organization does not oppose an online lottery outright, but they want the process slowed down so that a solution can be devised that would benefit retail stores. NACS opposes the online lottery and is calling for Congress to ban it, the report said. The group asserts that the online lottery, like Internet gambling, is illegal under federal law.

Fleischli said he is scheduled to meet with Illinois superintendent of the lottery Michael Jones on Tuesday.

January Retail Sales Rise

2012-02-14T09:40:00.000-06:00

U.S. retail sales rise solid 0.4% in January

February 14, 2012 | By Katherine Field Boccaccio

WASHINGTON — A report released Tuesday by the Commerce Department showed that consumer spending on retail goods rebounded in January after a flat holiday season.

Retail sales rose at a seasonally adjusted 0.4% last month, as consumers upped spending at department and general merchandise stores, as well as bought more electronics, home and garden supplies and sporting goods. Excluding autos, building materials and fuel sales, retail spending leaped 0.7%.

Retail sales have risen about 21% since recessionary lows. Latest results put sales almost 6% above their pre-recession highs. However, results in January still missed views, as a median forecast of economists surveyed by Bloomberg predicted a 0.8% rise for the month.

Nine of 13 major categories showed gains in January, led by a 2% increase at general merchandise stores, including department stores – the largest gain in five years.

via U.S. retail sales rise solid 0.4% in January | RetailingToday.com.

The Future Of Home Shopping!

2012-02-12T09:03:00.001-06:00

By Bernice Hurst, Contributing Editor, RetailWire

February 9, 2012

The future, with all its wonders, continues inching closer. Many a year has passed since shopping channels launched, but the ability to make purchases directly through our television sets has been long in coming.

In early February, however, Marks & Spencer became the first retailer to create an app for Samsung's internet-connected Smart television. A report in The Grocer said the app "offers information on food, fashion, lifestyle and technology trends, as well as recipes, wine and beauty tips." While consumers cannot buy M&S products through TV sets, Guy Kinnell, Samsung's UK marketing director, said in a statement that the app offers "a snapshot of how consumers will be able to shop in the future."

The interactive TV company, Ensequence, claims that interactive television (iTV) increases ratings and revenue, "directly impacting clients' bottom line" as viewers "want to interact with content and control their entertainment experience on every device capable of delivering video — including the television screen." Ensequence says its "interactive television connects content to audience, bringing web-like functionality ... directly to televisions." This means "advertising is transformed from a passive branding exercise to an active direct response medium." Working with the U.S. cable industry, "one of the largest interactive platforms available — Enhanced TV Binary Interchange Format (EBIF)" had allegedly "reached critical mass" with some 25 million households "EBIF ready" in 2010 and a target of 40 million by the end of 2011.

Whether Ensequence achieved their target remains to be seen. But broad skepticism comes from the Internet Advertising Bureau (IAB) whose survey of 200 members showed "a staggering amount of uncertainty when it comes to internet-connected TVs," according to Adjust Your Set (which developed the M&S app). An IAB spokesman is quoted as saying they are "waiting for the customer to leap first."

As for the hardware, Geoffrey Goetz of gigaom.com raved about Samsung's entry to the interactive television market in 2010, writing "the era of set-top boxes is about to come to an abrupt end."

Which was better...The game or commercials..Comment here!

2012-02-06T08:04:00.000-06:00

The game gets my vote!

Posted by Bob Innes ⋅ 02/06/2012 ⋅

Filed Under football, sports, super bowl

Breaking News:
Game Better Than Super Bowl Spots
by Thom Forbes, 64 minutes ago

In this 30th year of watching the Super Bowl with as much of a professional interest in sales pitches as I have a personal interest in forward passes, all I can say is that I hope the New York Giants keep making it to the game. There may have been a chuckle here and a mild guffaw there (a sensuously naked M&M of either sex will do that to me every time), but the spots collectively left me, and most game-day critics, wondering what all the advance hoopla was about.

Many advertisers took a cue from Chrysler’s buzz-garnering leak of its Eminem spot last year and took the wraps off their spots early, as Yahoo Finance’s Morgan Korn reports. Now we’ve even got stories rating which Super Bowl spots garnered the most attention before they actually aired. Alas, it was all much ado about mediocrity.

If you believe that fiery halftime talk actually wins ballgames, you might have loved Clint Eastwood’s impassioned “we’re gonna kick butt again” on behalf of Chrysler. “This country can’t be knocked out with one punch; we get right back up again and when we do the world is going to hear the roar of our engines,” he intones.

Betty White’s a hoot, but the ditzy-grey hair joke is running a bit thin, don’t you think? As for Coke’s polar bears, exactly what button is that pushing? Nostalgia for commercials that, in their day, were a little bit different? And why do folks like Pepsi keep rousing the likes of Elton John and Flavor Flav? And what century was it again when Jerry Seinfeld and Jay Leno (for the forthcoming Acura NSX sports car) were hot? Probably the same one that Madonna was the Lady Gaga of her day and during which Ferris Bueller took a day off. That’s not to say that all of these folks don’t have fuel left in the tank; just that I constantly found myself longing for the nail-biter of a game to resume.

“Enough was too much,” Stuart Elliott concludes in the New York Times. “Too many commercials fell back on tactics that were too familiar from a plethora of Super Bowl spots: anthropomorphic animals, second-class celebrities, slapstick violence and riding the coattails of popular culture. Risk-taking, rule-breaking ideas were as hard to find among the more than 50 commercials as good taste in a GoDaddy ad.”

USA Today, the official keeper of the Ad Meter, reports that last night’s commercials “went to the dogs,” but it means that in a good way. The top three finishers in its poll of consumers, as of this morning, were Doritos (dog bribes cat owner); Volkswagen (dog gets fit) and Skechers (dog in sneakers wins race).

That No. 1 spot, by the way, was consumer-generated and initially done on a $20 budget. Jonathan Friedman, a freelance graphic designer and musician, won $1 million when his idea garnered the most votes in Doritos’ “Crash the Super Bowl” contest, Bruce Horovitz reports. Friedman personally owns a Chihuahua named Philippe; the Great Dane featured in his spot, Huff, was borrowed from a friend.

“The whole creative idea came to Friedman while he was lying in bed, and he thought it would be humorous if the animal-human roles were reversed,” Horovitz reports. “The dog was untrained, and it took a few attempts to get him to dig in the dirt. At first, Friedman buried dog biscuits, but when that didn’t work, he had to pour chicken soup on the ground in order to get Huff digging.”

Remember the days when the best ads came from a room full of highly paid creatives engaged in “brainstorming sessions,” à la BBDO’s Alex Osborn? Probably not; even I don’t.

The Wall Street Journal’s Susanne Vranica, who also polled advertising executives about their favorite spots, reports that, after 36,000 votes cast in its poll, the public has anointed the Seinfeld/Leno spot for Acura as the best on the lot. One viewer praised as “funny” a General Motors spot showing its Silverado pick-up surviving the apocalypse while a Ford truck did not. Ford complained, Vranica reports, but GM refused to yank the spot.

Meanwhile, Eastwood’s two-minute homage to American grit particularly pleased Landor New York managing director Allen Adamson. “Powerful and one of the best Super Bowl ads ever,” he says.

For the record, Dannon’s spot for Oikos Greek with actor John Stamos was No. 1 for “largest Impact Media Value percentage increase over the last two weeks,” according to General Sentiment, which tracked Twitter feeds, according to Reuters. It was reportedly up 1,170.4%. Overall, Samsung’s Galaxy Note had the “greatest impact Media Value gains by pure dollars per day” — $18,654,398. JetBlue shared the largest amount of Twitter followers with the NFL and its teams (330,794).

The most sexist ad, by informal consent, seems to be a Teleflora spot starring model Adriana Lima “promising men in a sultry voice that if they give Valentine’s Day flowers they will receive,” as Vranica writes. But that’s probably because the perennial GoDaddy spots are just so annoyingly predictably annoying at this point.

Ad Age’s gallery of spots can be viewed here. All in all: Bah, humbug. Go, Giants!

What’s $3.5m among friends…hundreds of millions of them?

2012-02-04T09:58:00.002-06:00

you're reading...

Posted by Bob Innes ⋅ 02/04/2012 ⋅

Plano, TX 02.04.12 If you’re an advertiser that has that kind of budget to spend in a football game, how do you insure your money is spent effectively? Most of the usual answers: funny, clever, creative; superstar endorsements; increase in sales; increase in press coverage; no really? Most would choose increase in sales or all of the above Right?

The question really is how an advertiser judges the effectiveness. And all of the above choices are many of the ways the advertiser judges the effectiveness. But this is about you the consumer and specifically my audience….the smarter consumer.

So instead of extolling the virtues of what I think and boring all of you with pro marketing mumbo jumbo, I’ve created a simple poll that allows you to customize your opinion. All I am asking for is your response. The super bowl is the most watched sporting event, a time to spend with friends…pure enjoyment.. Please spend a few seconds to let me know what you think.

Now I know I'm asking a lot here. To vote please visit Super Bowl Poll

The link will take you to my other companion to this blog. Hey I hope you enjoy both blogs. The reason there are two is simple..blogspot and wordpress offer different functionality that can't be combined into one site. The wordpress polling feature is far superior to blogspot.

Now you Know!

Bud, Bud Light Headline A-B’s Super Bowl Lineup

2012-02-02T18:07:00.000-06:00

Anheuser-Busch will debut four-and-a-half minutes of new creative during the Super Bowl on Sunday, marking the company’s 24th consecutive season as the exclusive malt beverage category advertiser for the Super Bowl.

Bud Light and Budweiser will headline A-B’s lineup with two ads each. Bud Light, the official beer sponsor of the NFL, will continue its “Here We Go” campaign, highlighted by a “secret spot” at the end of the second quarter. Budweiser will continue its “Grab Some Buds” campaign with two 60-second ads, one of which will feature the Budweiser Clydesdales.

The company’s newest brand, Bud Light Platinum, will make its national advertising debut with two 30-second ads on Super Sunday. The inclusion of the brand represents a major investment and supports the national rollout of the new beer, which began on Jan. 30.–Tanya Irwin

via MediaPost Publications Bud, Bud Light Headline A-B’s Super Bowl Lineup 02/02/2012.

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Which was better...The game or commercials..Comment here!

The game gets my vote!

What’s $3.5m among friends…hundreds of millions of them?

Bud, Bud Light Headline A-B’s Super Bowl Lineup