Vol. 32, No. 3 • March 2019
ARTIFICIAL INTELLIGENCE VIRTUAL ROUNDTABLE
Walmart CIO to Speak at RCAS Event in April
ChiCago — Clay Johnson, EVP & Enterprise CIO at Walmart, will participate in an April 25 keynote chat at the Retail & Consumer Goods Analytics Summit (RCAS). He will join by Andy Walter, formerly of Procter & Gamble, who will facilitate an interview to discuss “How Walmart Is Designing the Intelligent Enterprise.” The discussion will include how, as CIO, Johnson is using the “internet of things,” intelligent automation and machine learning to transform the world’s largest retailer from the inside out. Attendees will hear how Walmart is enhancing the customer experience and empowering their associates with technology and data to not just react to the changes in retail but create the future of commerce. RCAS takes place April 24-26 at the Swissotel in Chicago. For more information, visit the RCAS website: events.ensembleiq.com/ SM rcas-2019.
F E AT URE
A Growing CPG Crisis PAGE 16
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EDITOR-IN-CHIEF Peter Breen (773) 992-4431, email@example.com EDITOR EMERITUS Bill Schober firstname.lastname@example.org EXECUTIVE EDITOR Tim Binder (773) 992-4437, email@example.com MANAGING EDITOR Charlie Menchaca (773) 992-4432, firstname.lastname@example.org DIRECTOR – PRODUCTION Ed Ward (773) 992-4418, email@example.com ART DIRECTOR/PRODUCTION MANAGER Sonja Lundquist (773) 992-4419, firstname.lastname@example.org
CONTRIBUTING EDITORS Patrycja Malinowska, Cyndi Loza, Jacqueline Barba
CONTRIBUTING WRITERS Dan Ochwat, Erika Flynn, Michael Applebaum, Ed Finkel, Chris Gelbach, Dawn Klingensmith, Neal Lorenzi, April Miller
SALES Albert Guffanti, VP, Group Brand Director (973) 607-1301, email@example.com Simone Knaap, Associate Brand Director (973) 607-1374, firstname.lastname@example.org Bill Little, Associate Brand Director (828) 237-3350, email@example.com Rich Zelvin, Associate Brand Director (773) 992-4425, firstname.lastname@example.org
CONTENTS 4 Editorial: Peter Breen 6 Solution Provider News
6 Image Recognition Technology
Going beyond mobile scanning of a bar code, Unilever’s Suave brand leaned on enhanced imagerecognition technology from Shopkick to drive more interest and donations around its recent Veteran’s Day campaign at Walmart.
7 AI for Promotional Pricing
Ocean Spray has implemented a pricing and promotional software model – powered by artificial intelligence – that provides the brand with multiple offers to test with consumers and optimizes offers to fit its various retailers.
Kari Mills, Regional Account Manager (773) 992-4420, email@example.com
So-Lo-Mo Central, Page 14
10 Walmart at NRF Big Show
Walmart is transforming its internal culture as it embraces analytics and AI to bring transparency and speed to problem solving for the company’s most critical initiatives.
14 So-Lo-Mo Central
A roundup of social, local and mobile marketing activity at retail from: • Coca-Cola’s Vitaminwater • Twitter • Instagram • Calvin Klein and Coty Inc. • Square Roots • What’sInStore • Perfect Corp. • Target • Starbucks and Alibaba
SPECIAL REPORTS Editorial and Executive Offices 8550 W. Bryn Mawr Ave., Suite 200, Chicago, IL 60631-3731 Phone: (773) 992-4450 Fax: (773) 992-4455
PATH TO PURCHASE INSTITUTE / MEMBER DEVELOPMENT & SERVICES President Terese Herbig, (773) 992-4438 Senior Director – Member Development Patrick Hare, (773) 992-4465 Director – Member and New Business Development Todd Turner, (571) 395-7846 VP – Member Services Jennifer Zannelli, (773) 992-4444 Manager, New Member Development Katrina Lopez, (813) 713-4301
12 Feature: Artificial Intelligence
In our edited virtual roundtable discussion, seven industry experts try to provide some clarity and guidance as consumer goods companies wrap their heads around the concept of AI.
16 Feature: Private Label
National CPG brands are facing a growing crisis as retailers are having increasing success with their own products. That’s forcing the brands to address their dwindling competitive advantages.
P2PI.ORG Editor-in-Chief, P2PI.org, Shopper Marketing and Consumer Goods Technology (CGT) Peter Breen, (973) 607-1300 Associate Director – Content Patrycja Malinowska, (773) 992-4435 Associate Editor – Content Cyndi Loza, (773) 992-4439 Associate Editor – Content Jacqueline Barba, (224) 632-8214
EVENTS & EDUCATION Director – Events Peggy Milbrandt, (773) 992-4412 Meeting & Events Associate Kelly Doering, (773) 992-4408 Director – Education & Faculty Administration Ronit Lawlor, (773) 992-4415
MARKETING Manager – Marketing & Events Stacey Bobby, (773) 992-4423 Manager – Marketing & Events Courtney Hofbauer, (224) 632-8215 Art Director Stephanie Beling, (773) 992-4442
AUDIENCE ENGAGEMENT Director of Audience Engagement Gail Reboletti Audience Engagement Manager Shelly Patton
PROJECT MANAGEMENT/PRODUCTION/ART Vice President, Production Derek Estey Creative Director Colette Magliaro Custom Content Director Darren Ursino
20 Shopping With Steve
EnsembleIQ’s Steve Frenda, a passionate retail watcher for more than four decades, gives us a look at Wegmans in Parsippany, New Jersey.
22 Activation Gallery: 7 Reusable Packaging
Some of the world’s biggest consumer packaged goods manufacturers will soon offer products in reusable containers to enable a zero-waste system through a partnership with TerraCycle.
8 Voice-Enabled Assistant
Specialty beverage retailer BevMo! is testing the voice-activated in-store shopping assistant introduced by The Mars Agency in early 2018.
8 IBM Watson and Avocados
28 Personnel Appointments 30 Trade Promotion Management Solutions Guide
34 Institute Strategist
Del Monte Foods built out its back-to-school program at Walmart by iterating with new collaborative partners and embracing remixed tactics.
Avocados From Mexico hosted an IBM Watsoninfused digital experience as part of a seasonal campaign that culminated in the brand’s fifth annual Super Bowl TV spot on Feb. 3.
ENSEMBLEIQ LEADERSHIP TEAM Executive Chairman Alan Glass Chief Executive Officer David Shanker Chief Human Resources Officer Ann Jadown Chief Financial Officer Dan McCarthy Chief Digital Officer Joel Hughes Chief Innovation Officer Tanner Van Dusen President, Path to Purchase Institute Terese Herbig President, NA Retail Group and Canada Jennifer Litterick Executive Vice President, Events & Conferences Ed Several SVP, Technology Brands John Kenlon Group Brand Director, Healthcare Donna Kerry
Shopper Marketing (ISSN 1040-8169) is published monthly by EnsembleIQ, 8550 W. Bryn Mawr Ave., Suite 200, Chicago, IL 60631-3731. Periodicals Postage Paid at Chicago, IL, and at additional mailing offices. POSTMASTER: Send address changes to Shopper Marketing, PO Box 3200 Northbrook IL 60065-3200. Entire contents copyright © 2019 by the Path to Purchase Institute. Canada Post International Publications Mail Product (Canadian Distribution) Sales Agreement No. 40025274. Return undeliverable Canadian addresses to:
Station A, P.O. Box 54, Windsor, ON N9A 6J5 or Email: firstname.lastname@example.org CHANGE OF ADDRESS and other circulation correspondence should be mailed to: Shopper Marketing, PO Box 3200 Northbrook IL 60065-3200, or email email@example.com for customer service. (Include your address label with all correspondence.) WHERE TO WRITE: Please direct all letters to the editor and other business/advertising correspondence to: Shopper Marketing, 8550 W. Bryn Mawr Ave., Suite 200, Chicago, IL 60631-3731.
REPRINTS, PERMISSIONS AND LICENSING: Contact Wright’s Media at ensembleiq@ wrightsmedia.com or (877) 652-5295. NOTICE: The Path to Purchase Institute occasionally uses the logos of various companies in its marketing materials. These include promotional brochures for events such as the Path to Purchase Expo, the Path to Purchase Summit, the Design of the Times Awards and others. The use of these logos does not imply sponsorship or endorsement by the companies identified by those logos, unless specifically noted as such.
SHOPPER MARKETING MARCH 2019
Coming to Terms With Retail Change
uring his opening keynote session at the NRF Big Show in January, as he described his company’s upcoming initiatives, Kroger chief executive officer Rodney McMullen said the supermarket giant’s Simple Truth private label “recently launched” on Amazon, then apologized and corrected the comment to “on Alibaba’s Tmall.” The retail world already knew that Kroger would be offering products from the healthy eating-focused Simple Truth line through the Tmall business-to-consumer platform of Alibaba, China’s leading online retailer. It probably wouldn’t have been ready for McMullen’s misstatement to be true – although it probably should be.
During the session, McMullen also noted that an “exciting and cool” aspect of the company’s private label portfolio is that “you can only get it at Kroger.” A more accurate way to phrase that, however, would be that you can only get it from Kroger since, in addition to Alibaba, Simple Truth is now available in a handful of Walgreens stores as part of a cross-merchandising pilot with the drugstore giant. Kroger has built Simple Truth into a $2 billion brand in just five years. Now that it’s going to be available beyond Kroger’s own 2,779 stores, who knows how much more market share this “retailer” “private label” will be able to
steal from the “national brands” of “consumer product manufacturers.” I put those four terms in quotes because, with all the changes taking place these days, I’m not quite sure how accurately they represent what’s going on anymore. (For more on where the concept of private label is heading, check out our feature story on page 16.) Exactly who qualifies as a retailer or a manufacturer certainly seemed like a legitimate question during the NRF show, where it was clear that the industry’s fear of an impending “Retail Apocalypse” for brick-and-mortar stores has subsided. Now, everyone just needs to figure out exactly how to turn all those traditional stores into the technology-fueled experiential destinations/product showcases/fulfillment hubs/community centers that will keep them in step with evolving shopper demand. Based on the buzziest of the technologies on display at the show, one key goal for the industry will be to follow Amazon Go into the realm of cashier-less stores. Or, if a fully automated store is too much to manage right now, there were more than a few exhibitors offering more contained paymentfree beverage coolers and product displays. Another objective will be to continue making physical retail as ubiquitous as possible by mobilizing the store via airport-friendly vending machines and kiosks. One noteworthy example was the Dollar Shave Club vending machine that has already rolled out to some airports and the Mall of America in Minnesota. The fact that DSC, long viewed as the prime example of market share-stealing digital native brands (at least until it was acquired by Unilever), now has a physical presence exemplifies the notion that “pure play is kind of done,” as was noted by Andrew Valkin, a partner at venture capital firm
General Catalyst, during a panel discussion. Omnichannel retailing is no longer optional. Enhancements for existing stores were plentiful as well, of course, with most seeking to make the experience more convenient by enabling shoppers, employees, or both groups. A critical element in this arena continues to be tools that unify the online/offline shopping experience. To that end, a number of featured technologies were designed to improve the process of buying online for in-store pickup or ordering in-store for home delivery. The changing nature of retail as a business was also readily evident, especially through announcements at the Microsoft booth. Pre-show news that Microsoft and Kroger were joining forces not just to drive the retailer’s own digital shelf initiative but for a wider-ranging “retail as a service” offering for the industry created a lot of buzz. On the show’s final day, Microsoft and Walgreens unveiled a partnership that will put “digital health corners” in stores, among other initiatives. (Shortly after, Albertsons announced plans to adopt Microsoft Azure as its cloud platform.) McMullen underscored even more of these changes in his talk, during which his answer to the obligatory “future of retail” question included Kroger’s plans to take on the advertising industry by using its digital shelves and other tools to “partner with CPGs to better spend” their marketing dollars. Fair to say, then, that retailers are redefining themselves. Consumer product manufacturers better be taking note – and following suit. For the record, you can already buy Simple Truth products on Amazon. They’re sold by a variety of third-party resellers, but they’re fulfilled by Amazon in some cases. SM Some are even eligible for Prime shipping. Peter Breen is editor-in-chief of the Path to Purchase Institute, Shopper Marketing and Consumer Goods Technology (CGT). He can be reached at 973-607-1300 or firstname.lastname@example.org.
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SOLUTION PROVIDER NEWS Gladson Rebrands to Syndigo
Gladson, a Chicago-based portfolio company of The Jordan Co. and Wicks Capital Partners, integrated its family of acquired companies under the brand name Syndigo. The rebrand reflects the company’s expanded role in the marketplace as an end-to-end provider of synchronized product content and syndication across one of the largest global networks of trading partners. Syndigo provides brands a platform to create, manage, verify and syndicate their product information to their customers, while also providing retailers and recipients the same platform to collect that information in a customized manner. The launch marks a significant stage in Gladson’s growth after the acquisitions of FSEnet, Webcollage, Nutritionix, Edgenet, and ItemMaster across the past 12 months. All companies are now integrated under the Syndigo brand. LG&P Acquires Synergy Events: Paramus, New Jersey-based LG&P, which designs and produces in-store fixtures and environments, acquired Synergy Events, which develops and executes retail events and experiences. The acquisition was prompted by the growing trend at retail to create a competitive advantage through enhanced shopper experiences. The organization, now known as Synergy, an LG&P Company, provides an integrated solution to the market. It leverages more than 25 years of experience at Neptune, New Jersey-based Synergy developing brand-building events with LG&P’s strategy, innovation, design and production capabilities. Catalina Debuts Attribution Solution: Catalina, St. Petersburg, Florida, has launched an attribution solution that provides CPG marketers with a granular, realtime view of national campaign performance in stores at the UPC level. The product, called Catalina Multi-Touch AttributR, offers insight into up-to-date results and provides marketers the ability to optimize campaigns inflight to maximize media spend. The Multi-Touch AttributR delivers campaign insights through an interactive self-service dashboard that tracks results across multiple advertising channels, creative executions and 390 million digital devices set against more than 30 buyer behaviors. Advertisers and brands can track the impact of advertising campaigns on item-level trial rates, repeat purchases and new buyers to the category or brand. Grocery Outlet Partners With RangeMe: San Francisco-based RangeMe has formed a partnership with extreme value retailer Grocery Outlet. With more than 300 locations in California, Idaho, Nevada, Oregon, Pennsylvania and Washington, Grocery Outlet connects with shoppers who seek deep discounts on unique, name brand products. As a partner with RangeMe, Grocery Outlet also connects with suppliers to provide those products consumers want, bringing the grocery experience full circle. Through RangeMe, Grocery Outlet is able to search through more than 150,000 product suppliers and their 600,000-plus products to find items that will wow customers and meet their needs. Send your solution provider news – new projects and programs with brands and retailers – to Charlie Menchaca at email@example.com.
SHOPPER MARKETING MARCH 2019
Unilever Leverages Image Technology
Suave partners with Shopkick for Veteran’s Day promotion at Walmart By Dan Ochwat
EnglEwood Cliffs, n.J. — Going beyond mobile scanning of a bar code on packaging to download campaign information and engage with a promotion, Unilever’s Suave brand leaned on enhanced image-recognition technology from Redwood City, California-based Shopkick to drive more interest and donations around its recent Veteran’s Day campaign at Walmart. The 2-D image technology inside Shopkick’s rewards mobile app gave Suave marketers the ability to place the logo of the Fisher House Foundation on limited-edition packaging, where shoppers could scan that logo and earn “kicks,” the Shopkick rewards point system. Then, with any purchase of a Suave pack, Unilever kicked in a $1 donation to the Fisher House, a nonprofit that assists military families. “Rather than drawing user attention to a bar code of numbers and lines, this innovative 2-D technology draws attention to the unique and differentiating product features that we actually want our customers to notice, whether that be a logo, useful product information and so on,” says Jessica VanBecelaere, associate shopper marketing manager, Unilever. The unique Fisher House logo reads “Helping Military Families,” and when Shopkick users scanned the logo for information, they learned about Unilever’s $1 million donation goal and how they could contribute to the cause by purchasing the limited-edition Suave products they grabbed off the shelf.
“Rather than drawing user attention to a bar code of numbers and lines, this innovative 2-D technology draws attention to the product features we want our customers to notice.” Jessica VanBecelaere, Unilever
Unilever and Shopkick have been partnering for a few years, including a 2017 effort that helped deliver 2 million meals to hungry children via the hunger-relief organization Feeding America. “We’ve run successful campaigns in a number of major retailers to drive product awareness for Unilever brands, including personal care products like Dove and Axe and popular food brands like Knorr, Ben & Jerry’s and Simply Popsicle,” says VanBecelaere. The Walmart Veteran’s Day promotion was the first by Unilever to utilize the 2-D technology. To promote the partnership between Suave and Fisher House, the brand
used Shopkick itself with an in-app ad unit that drove app users to Walmart to find products in the aisle to scan and buy. The brand also used the Shopkick platform to reach “an incremental audience of loyal Shopkickers that we may not have reached on our own,” VanBecelaere says. “We utilized Shopkick’s lookbook capabilities to highlight our limited-edition products wherever consumers may be, whether that be at home, in-store or on the go.” Adding to the money that was raised through the promotion, Unilever promised to donate 10% of the overall campaign budget to Fisher House. The organization gives families of military service members or veterans who are patients at a military or VA medical center a free place to stay nearby. Suave and Fisher House also spread awareness through an online video they created of three service members and their families being helped by Fisher House. Scans of receipts after purchases at Walmart represented the main key performance indicator of the campaign to track goals toward increased sales at Walmart and donations. The receipts measured purchases and determined the return on assets. The campaign ran between Oct. 14, 2018 and Nov. 18, SM 2018.
MARCH 2019 SHOPPER MARKETING
Ocean Spray Turns to AI for Promotional Pricing Working with Eversight, brands can test with consumers and optimize offers
This is an example of the Eversight dashboard that brands use to manage and monitor their promotions.
By Dan Ochwat
Middleborough, M ass. — Looking for a more efficient spend on trade and a new way to find deals, Ocean Spray has implemented a pricing and promotional software model – powered by artificial intelligence – that provides the brand with multiple offers to test with consumers and optimizes offers to fit its various retailers. Yash Sikand, vice president of insights, analytics and planning at Ocean Spray, says the company’s been following the traditional practice of looking at store-level data, conditions and price points, and doing heavy statistical modeling to get to an offer on a product that will score the largest depth of discount. “But it’s pretty restrictive and much more analytical and statistical, as opposed to trying to understand the consumer’s psyche,” he says. “Ocean Spray for over a decade has been running price points like two for $4, two for $5, for the 64-ounce juice, and pretty much that one size fits across all retailers.” The benefit of an AI system is its ability to generate and position different offers to different consumers. Perhaps one consumer is more prone to follow a big number like 40% off, compared to another who is more likely to engage with an offer for “buy four, get one free,” essentially the same deal but based on consumer preference. Craig Eaton, director of revenue management at Ocean Spray, says the old, heavy analytical model based promotional decisions on history. “[This is] driving the car looking through the dashboard rather than using the rearview mirror.” Ocean Spray instituted the change in October 2018, tapping the AI-powered pricing and promotion platform from Eversight, Palo Alto, California. Eaton says the company began with some training and understanding of the program, created a steering committee to reach out to their retailers, and then began testing. “What we did is look at what would be in a grocery space, what would be in a drug space, what would be in a value space, pick retailers there that had different characteristics in terms of how they would promote, maybe using the assortment as well as
geographic, so here you have a good sample of channels, retailers and promotional activity.” For the year ahead, the company is hoping to expand how it uses the platform beyond trade promotion and temporary price reductions, looking at e-commerce, personalizing offers before, during or after a launch, for example. David Moran, cofounder of Eversight, says the industry historically has looked at what promotions have worked in the past, picked the winners and run the winners more often. “The role of a promotion is to disrupt habit,” he says. “When you just recycle the same deals over and over again, no habit is being disrupted.”
The AI-powered system finds disruption by testing various offers with consumers online, knowing where they shop and proposing alternative offers to each. It’s not a panel, a survey or a test and control. Consumers act on the offers set for the same stores and conditions, and the AI and platform watches for which offers get the best response. That information gets brought to the retailer and sales teams then have an easy-to-understand conversation based on the data and graphics that are put together by Eversight, Eaton says. In addition to Ocean Spray, Eversight works with GenSM eral Mills and McCormick.
Top CPGs Join TerraCycle in Reusable Packaging Initiative By Jacqueline Barba
Some of the world’s biggest consumer packaged goods manufacturers including Procter & Gamble, PepsiCo, Nestle and Unilever will soon offer products in reusable containers to enable a zero-waste system that harks back to the days of the milkman. Introduced in January at the World Economic Forum and led by global recycling firm TerraCycle, the e-commerce platform is aimed at reducing waste but is more strategically set up to fit conveniently and affordably into consumer lifestyles. Dubbed “Loop” and slated to first launch in New York and Paris this spring, the platform will let consumers order products or refills of products such as deodorant, ice cream and shampoo that will arrive in durable, reusable or fully recyclable packaging. Here’s how it works: n Shoppers will go on LoopStores.com or a partner retailer’s website, fill up a basket and place an order for delivery. n Program partner UPS delivers the order in a branded shipping tote rather than a single-use cardboard box. n Consumers use their products and put the containers back in the same tote they came in (clean or dirty). n UPS picks up the tote from the doorstep for Loop scientists to clean and sterilize. n Loop refills the products and returns the totes to the consumer. Any recoverable products such as diapers, pads, razors or brush parts will be recovered to be reused or recycled. According to a news release from P&G announcing its own plans to employ reusable packaging and new “collect and recycle” circular solutions in partnership with Loop, the manufacturer was the first CPG to join the initiative as a way to further advance its “Ambition 2030” sustainability goals.
“P&G scientists and engineers developed innovative manufacturing, packaging and distribution solutions that will delight consumers and make sustainable living easy for participating consumers,” according to the release, which noted that Loop will offer 11 P&G brands in three different formats: Durable Packaging: For this format, Pantene, for example, is introducing a unique bottle for shampoos and conditioners made of lightweight, durable aluminum, while Crest “is driving sustainability in oral care through new Crest Platinum mouthwash, a unique formula that delivers fresh breath and stain prevention in a sustainable, refillable glass bottle.” Recycling Products Refills: OralB will test circular solutions for both electric rechargeable and manual toothbrushes. A new design for manual toothbrushes called Oral-B CLIC has a durable handle that lets consumers exchange only the brush head. Loop will recycle used brush heads for both types of brushes. Recycling Used Hygienic Products: Pampers and Always will test
the collection of used hygiene products from consumer homes using “groundbreaking proprietary technology” created by a joint venture between P&G and healthcare company Angelini Group called Fatar. “The technology turns used absorbent hygiene products into secondary raw materials for higher value applications,” according to the release. Other brand partners also include Nestle’s Haagen-Dazs, which will debut a double-walled, stainless steel reusable ice cream container that is expected to last about eight years. Unilever’s Dove, Degree, Axe, REN Clean Skincare, Hellmann’s, Love Beauty and Planet, Love Home and Planet, and Seventh Generation are also taking part. Loop requires consumers to put down a fully refundable deposit for each package in addition to the regular cost of the product. This creates a necessary shift in ownership, TerraCycle chief executive officer and founder Tom Szaky explained at the Forum. Traditionally, consumers own the product because they buy it. With Loop, however, the package remains the property of the manufacturer. SM
SHOPPER MARKETING MARCH 2019
BevMo! Tests Voice-Enabled, On-Shelf Shopping Assistant By Institute Staff
Specialty beverage retailer BevMo! is testing the voiceactivated in-store shopping assistant introduced by The Mars Agency in early 2018. The five-store pilot is running in five California locations through the end of March. The SmartAisle shopper platform interacts with shoppers to deliver product information and selection recommendations. The proprietary, patent-pending tool consists of an intuitive voice interface, an artificial intelligence engine and navigational LED shelf lights. The test will take place at BevMo! stores in Oakland, San Jose, Santa Clara, Mira Mesa and Carmel Mountain. “We’re excited to partner with The Mars Agency and test the SmartAisle platform,” says Tamara Pattison, the retailer’s chief marketing & information officer. “This simply enhances our commitment to using technology to offer better customer experiences and this kind of forward-thinking, in-store solution is totally in line with our strategy.” The SmartAisle system is embedded in a standalone merchandising display in store lobbies. The display stocks roughly 50 bottles of whiskey, an Amazon Echo smart speaker and custom signage that explains how to launch the experience. Once initiated, the system guides shoppers through a few simple questions about their whiskey preferences (type, taste profile, price, etc.), then filters the assortment down to three recommendations by reading out names and custom descriptions. Shelf lights pinpoint the locations of the recommended bottles. Alternatively, shoppers can ask about a specific bottle or brand and get recommendations with similar taste profiles. The experience is designed to last no longer than two minutes. To up the engagement factor and avoid repetition, the SmartAisle mixes in additional product information, whiskey facts and even some jokes. “Voice is poised to surpass mobile as the preferred digital shopping interface within the next five years,” says Ethan Goodman, senior vice president of innovation at The Mars Agency. “Voice commerce is expected to grow from $2 billion today to $40 billion by 2022. When it does, we’ll be ready to seize the opportunity.” The concept was first unveiled last February, when Mars partnered with an independent retailer in Manhattan to test an earlier version of the SmartAisle. In a two-month pilot, year-over-year sales of featured bottles increased
20%. The test also garnered positive feedback from shoppers about the experience. BevMo!’s 170 stores are located throughout California, Arizona and Washington. In addition to both alcoholic
and nonalcoholic beverages, the retailer merchandises complementary products such as specialty foods and snacks, cigars, glassware and related bar and wine accesSM sories.
Avocados From Mexico Sends IBM Watson to the Dogs By Peter Breen
Avocados From Mexico hosted an IBM Watson-infused digital experience as part of a seasonal campaign that culminated in the brand’s fifth annual Super Bowl TV spot on Feb. 3. Dubbed “Anything For Avos,” the effort centered on a dedicated digital platform containing more than 20 interactive content activations (including recipes) that underline the value of Avocados From Mexico. Activities included a partnership with news parody website The Onion to present “news” about technology that lets humans communicate with canines. Content was also shared across all major social media platforms including Snapchat, Instagram, Facebook, Twitter and Pinterest. “Our idea for this year’s Big Game campaign is that avocados are so desirable that people will go to great lengths for them and, as our fans have come to expect, we’re displaying this with our classic humor,” says Ivonne Kinser, head of digital for Avocados From Mexico. “This website will have many opportunities for people to engage with our brand and have fun with the idea of dogs being able to communicate.” Meanwhile, the “Match Dog Com” program seeks to help consumers interested in adopting dogs find ideal matches in their areas. The IBM Watson-powered platform makes the matches based on answers to questions regarding lifestyle preferences. Avocados From Mexico worked with dog trainers and IBM to establish the algorithms needed to identify ideal breeds as well as dogs available for
adoption from Adopt-A-Pet’s robust national database. In other digital components, Avocados From Mexico again joined with 2018 campaign partner Inmoji to let consumers turn selfies into clickable emojis and alter their pictures in various ways involving avocados through the Silicon Valley startup’s Picmoji feature. Elsewhere, the brand released a 15-second teaser of the Super Bowl spot, which stars Broadway/TV star Kristin Chenoweth helping to deliver the message that “Avocados From Mexico are Always Worth It.” The full spot aired during the second quarter of the game’s broadcast on CBSTV. Avocados From Mexico is a wholly owned subsidiary of the Mexican Hass Avocado Importers Association, which was formed to drive advertising, promotion, public relations and research for all related stakeholders. Under agreements, MHAIA and the Mexican Avocado Producers
& Packers have combined resources to fund and manage Avocados From Mexico, with the intent of providing a focused, highly effective and efficient marketing program SM in the U.S.
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SHOPPER MARKETING MARCH 2019
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Inventory Control Clips
Walmart VP of merchandising operations and business analytics Galagher Jeff presents in January at the NRF Big Show.
Walmart Becomes a Digital Enterprise Retailer transforms its internal culture as it embraces analytics and artificial intelligence
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and insights, cutting problem-solving time from days to minutes by diagnosing why sales are off in a particular market and suggesting a resolution or detecting anomalies to proactively identify problems before a customer even sees them. “Flight deck actually empowers us to say here’s what happened, here’s what drove those business results, and here’s what you can do about it,” Jeff said. Today, an algorithm can direct pricing decisions based on strategy, predict outcomes and automate execution. “We’re thinking about the broad impact to traffic, to share, for every item that we price. That requires an incredible amount of data, not just on the item, but on all the related items and the competitors’ items,” Jeff said. “We’ve never had the intelligence to do that before.” Machine learning also helps optimize assortment by store and season while balancing internal costs. “It’s not a solution on price, it’s not a solution on assortment, it’s a comprehensive solution for the customer,” Jeff said.
“We decided a couple years ago we had to transform how we worked. We had to surround the human with technology, capabilities and analytics to help them use our mass of data to make better decisions.”
Sign Clips and Holders
A cultural transformation is underway at Walmart as the retailer makes heavy investments in artificial intelligence and machine learning to keep up with changing customer preferences, assess new innovations and fight off emerging tech-enabled competitors. “It can make your mind explode,” said Galagher Jeff, Walmart vice president of merchandising operations and business analytics, of the increasingly intricate complexity of a business that is constantly growing and evolving. “I can’t handle that complexity, and I don’t think a person can, so we decided a couple years ago we had to transform how we worked. We had to surround the human with technology, capabilities and analytics to help them use our mass of data to make better decisions.” Analytics software company Mastercard’s Applied Predictive Technologies (APT) was an early partner. Walmart tested its algorithmic tool to help understand the noise in the environment and identify what elements are having the desired effect. The new capability required dramatically changing how the retailer works, starting with bringing a different skill set to the team and establishing new accountability with a focus on performance. Speaking at the National Retail Federation’s 2019 Big Show, Jeff said Walmart is pushing the cultural change: “Digital means trusting data, automating what you can so you can focus on the right things, being driven and agile and thinking like product owners in everything we do from merchandising to marketing to operations.”
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Merchandising Nothing has been more disrupted throughout this process at Walmart than the backbone of the organization: merchandising. Merchants were spending a bulk of their time on tactical work and putting out fires rather than proactively leading the business. When they did, they lacked the end-to-end perspective needed to be confident their decisions were the right ones. “We took too long to buy things, sell things and determine the price. We weren’t really accountable for driving the strategy,” Jeff said. “It wasn’t possible to make the right decisions the way we were doing the work.” The retailer’s new “digital merchant” path incorporates automation to free up time and ways to leverage AI and machine learning to surround a person with fast intelligence so they can make better decisions. Merchants are now armed with a “Flight Deck” portal that democratizes access to sales and performance data
Galagher Jeff, Walmart
The Future of Retail It’s these capabilities that have enabled the retailer to launch online grocery and nationally expand its grocery pickup service – which at its heart was meant to solve for customer convenience and experience, not just price and assortment. After many tests, Walmart found it could utilize stores as fulfillment centers very efficiently and now the retailer is leaning in to last-mile delivery solutions. “We can be the ones that do this at a lower cost than anyone else,” Jeff said, citing Walmart’s trials with Uber, Lyft, autonomous vehicles and employee delivery as tests the retailer is continuing to push as it evolves beyond just a product company. “We see the future of retail as a complex ecosystem that better meets the needs of the customers. We’re designing solutions to surround the customer with the right products and services and experiences to meet their needs for a very long time,” Jeff said. “We’re going to do more in health, we’re going to do more in services, we’re going to do more in advertising – businesses we haven’t really gotten into yet are empowered by this ecosystem because we know it matters and it’s what customers want. “We want to plant a lot of seeds and check those ideas SM and see what grows,” Jeff said.
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SHOPPER MARKETING MARCH 2019
BY DAW N K LI N G E N S M IT H
he supermarket of the future may never run out of your favorite beer – thanks to artificial
intelligence-enabled drones. In January, AB InBev announced it’s been trialing the use of autonomous drones and advanced computer vision in a Canadian store to see in real time what’s on shelves, improving product planning and preventing stock outages. It’s a splashy example of how AI is being used to solve business problems in the CPG industry. But as a use case, it’s far from typical. Headline makers like these contribute to confusion among CPG marketers about what AI is and is not. In Shopper Marketing magazine’s Trends 2019 survey, only 37% of respondents said their organizations are
Amid any confusion
currently using AI or machine learning (a type of AI). But industry experts we con-
and uncertainty as
vened for this virtual roundtable discussion
built an Alexa skill, you’ve dabbled in AI.
companies wrap their heads around the concept, experts say AI will
said they find that hard to believe. If you’ve Trade promotion optimization software with built-in predictive analytics uses AI. It could be that folks expect AI to be less like the current state of the art and more like a Steven Spielberg film. Even if adoption rates are greater than our survey suggests, AI in the CPG space
be the only way to
is still in its early stages. But as shoppers
meet the demands
omnichannel experience, the only way to
of consumers going forward.
expect a more personalized, frictionless, meet their demands is with the aid of AI, our seven experts agree. Here, they discuss how AI is already being used and what to expect in the near future.
FEATURE | ARTIFICIAL INTELLIGENCE 13
MARCH 2019 SHOPPER MARKETING
What’s the current state of AI use in the industry?
OUR VIRTUAL ROUNDTABLE
SANDEEP DADLANI: I would assume the basic forms of AI
are being used at every CPG company to detect patterns and probabilities in data. I would be shocked to find any large CPG companies that are not using machine learning today. It’s commonplace. ANDY WALTER: Where folks are starting to have success, they’re applying natural language processing to things like consumer engagement. One of the responsibilities I had while at Procter & Gamble (from 1990-2016) was consumer relations, and for the 6 million consumers every year who contact P&G, our model up until AI was to have a lot of people sitting somewhere answering phones and emails manually. Now, with AI techniques, you can do supervised machine learning and natural voice selection to automate a lot of these processes. STEVEN HORNYAK: We are at the visionary, early adopter stage, but AI as it relates to CPGs specifically is about to enter what we call the tornado, which occurs when enough people have used it and proved it works so everyone jumps on board.
TOM EDWARDS chief digital officer Epsilon Catapult
STEVEN HORNYAK CEO Symphony CPG|AI
MOLLY SCHONTHAL: We’re evolving from the “measuring and JULIET NOLAND group director of strategic planning TracyLocke
MOLLY SCHONTHAL VP of strategy and innovation Salsify
What are some of the CPG business challenges AI is currently addressing?
ing, it’s touching sales, it’s touching supply chain. Ultimately, CPG companies live and die by their sales and revenue. Trade promotion being the largest expense in sales, it’s one of the key focus areas. SCHONTHAL: A lot of CPGs are using AI to judge content effectiveness, scraping the web using data and information to determine at a much more rapid pace rather than having to wait for results from your analytics company of choice. We’ll see it in marketing automation – it’s already happening, meaning the same experience is rendering differently for me than it is for you – and in digital merchandising and dynamic pricing. DADLANI: When you use design thinking to find the right problem, AI becomes almost like a super power. At Mars, we use it to drive our growth strategy. An example is our successful launch in Australia of the Snickers Hungerithm, which scoured social websites for thousands of posts every week and adjusted prices of Snickers bars according to the anger levels on the internet. It resulted in fantastic category growth and sales growth, and is a great example of algorithms in action for a particular cause.
Brand storytelling is where we’ll see the most impact. Like Pinocchio … what would your brand look like if it
became a living, breathing thing?
Juliet Noland, TracyLocke
RAHUL TYAGI worldwide director of analytics ColgatePalmolive
ANDY WALTER CEO AJWAdvisory
Is it easy for companies to add AI capabilities to existing technologies, or does it require a full-scale adoption of new technologies? WALTER: The technology is more accessible than ever be-
cause of cloud-based models and the ability to basically overlay AI capabilities onto your legacy systems. With the right vendor, you can create an orchestration layer or an overlay where AI processes data to solve business problems, and it goes both ways so you then feed recommendations back into your systems for execution.
are tackling is how to democratize AI – how to bring the power of AI to business users so they can just enter their business problem into the computer along with the relevant data to get an AI-generated solution. There are many new technologies in this area, broadly called auto machine learning, that basically hide machine learning’s complexity and expose an easy-to-use interface to users.
HORNYAK: It’s touching finance, it’s touching brand market-
Where do you see it going in the next couple of years?
personalizing” phase – an example is the Neutrogena 3-D printed face mask technology; it scans your face and 3-D prints a mask that’s exactly right for you – to “facilitate and simplify,” using behavioral data that is sort of predicting what you might like to see. McDonald’s is using AI and behavioral data to change its digital menu based on who approaches along with other factors, like the weather, so you’re only shown menu choices that are relevant to you in the context of that moment. Next comes “calculating and capturing,” driven by the need for brands to capture consumers and regain control over where and when they show up, be it in an Amazon search bar, be it a smart kiosk, be it your fridge. TOM EDWARDS: One, AI will redefine how we as marketers derive insights to inform everything from creative and media, to how to drive client growth. Two, dynamic creative decision engines and the ability to layer and process large amounts of data allow for true personalization at scale. Three, SEO strategy will drastically change as Google and other search providers allow AI-based systems to serve personalized results. Four, multimodal experiences beyond mobile and desktop will emerge as the role of voice and AI-powered virtual assistants create new connection points. Five, as virtual assistants become proxies for consumers, CPGs will need to understand marketing through algorithms that are not driven by emotional connection. Six, the simultaneous advancement of phone hardware and AI creates a pathway for augmented reality at scale. Seven, we’ll increase ROI beyond today’s predictive analytics capabilities using deep learning AI-based systems. JULIET NOLAND: Brand storytelling, I believe, is where we’ll see the most impact. Like Pinocchio becoming a real boy – what would your brand look like if it became a living, breathing thing? – which is what AI is going to make it seem like. I think it will create a whole new area of advertising because your brand story comes up against a problem, and that is, when we think about how people are using Alexa or Google Home, they’re automating rote tasks like building a grocery list or ordering laundry detergent, but what’s happening is that AI is then becoming the new gatekeeper of these household decisions. It will be really interesting to see how brands are going to get into a machine’s consideration.
RAHUL TYAGI: One of the big challenges tech companies
SANDEEP DADLANI chief digital officer Mars Inc.
In which areas might AI have the greatest impact? TYAGI: Digital marketing and e-commerce are the areas
primed for a significant impact through AI and machine learning technologies because of the volume of data they generate. Digital marketing is basically any online interaction a consumer has with a brand, be it through search, comments posted to a blog or social media site, calls to the brand’s consumer affairs department, etc. When we combine all of this data with e-commerce transaction data, we have what is often referred to as big data. To make sense of and act on such huge and dynamic data in near real time, one needs the power of AI and ML. WALTER: AI will make a big difference in the media space, where spend is so big that even small improvements will have a significant impact. NOLAND: In terms of business functions, it will help with ordering and matching supply with consumer demand – making sure you’re stocking the right things at the right time, and creating a more dynamic shelf. EDWARDS: Three key words: proxy, prediction, pervasive. Research shows that Gen Z and Millennials are very open to having a virtual assistant serve as their proxy for frequent purchases. AI will accelerate the ability to create predictive models that can optimize spend for brands, and AI will fuel the need for pervasive design. This means designing for more than just desktop and mobile, to also include voice, SM vision and touch (such as spatial computing).
SHOPPER MARKETING MARCH 2019
Dan Ochwat, on the So-Lo-Mo beat since 2011, served as an editor of Shopper Marketing for nine years. Send comments and So-Lo-Mo news to firstname.lastname@example.org.
A roundup of social, local and mobile marketing activity at retail
Coca-Cola Co.’s Vitaminwater wants to know if consumers can stay off their phones for an entire year. It will award one strong soul $100,000 to do so, a subversive idea for a social campaign – but an excellent one at that. Vitaminwater asked consumers to submit in writing what their life would be like without mobile assistance for a year. Consumers wrote to the brand on Instagram or Twitter and had until Jan. 8. Vitaminwater then selected the most original post and was going to challenge that person to live 2019 mobile-free. The chosen consumer will have to pass a lie detector test to win the cash. If the consumer caves after half a year, he or she still takes home $10,000. Vitaminwater had users make posts using #NoPhoneForAYear and received some fun responses early. The brand also had a lot of fun posting jokes and content around the idea of what to do when not glued to a phone year-round. No phone
for a year.
For the second year, Twitter launched a #BrandBowl Twitter’s Brand Bowl. in connection with the Super Bowl. The activity is in recognition of the ads and brands that generate the most talk, retweets and reaction during the Super Bowl. The game was held Feb. 3, and Twitter acknowledged winners with the highest percentage of posts, the brand with the most Tweets-per-minute, the brand with the most retweets, the company that drove the highest percentage of conversation without running a national ad during the game, and they honored brands by vertical. This year, Planters and its Mr. Peanut sweeps won MVP honors for highest percentage of all brand-related tweets.
Instagram. Instagram spruced up how users use its direct messaging feature, allowing them to now add GIFs to messages. Users can click a GIF button in the bar shown when composing a message, and it takes the user to a host of videos powered by the GIPHY website. Users can also now send a direct message using voice (giving the thumbs a rest). A user holds the microphone button and talks out the message to be typed, or the user can open up the DM section, hold the phone to their ear, wait for a beep and talk into the phone just like leaving a voicemail.
In support of a new perfume called Women, Calvin Klein launched a powerful #IAmWomen social campaign with celebrities Saoirse Ronan and Lupita Nyong’o talking about women that inspire them, such as Sissy Spacek, Nina Simone, Eartha Kitt and Katherine Hepburn. A video on YouTube announcing the fragrance and featuring both actresses has more than 7 million views. Both actresses have an individual video, too. The videos were placed in feeds in Instagram and on a dedicated page at CalvinKlein.us. Beyond the stars of the spot, Calvin Klein fueled social buzz and posts around the hashtag by teaming with influencers such as Noor Tagouri and AnnaSophia Robb. It’s the first perfume in more than a decade for Calvin Klein, which teamed Calvin Klein’s with Coty Inc. Women.
SO-LO-MO CENTRAL 15
MARCH 2019 SHOPPER MARKETING
Square Roots, an urban farming company in Brooklyn, New York, is taking packaging of its produce (basil, sage, chives, mint, lettuce) and placing QR codes on it so consumers can scan to learn where it came from, how it was grown, and by whom. The transparency play hopes to appeal especially to consumers Transparent buying romaine lettuce, in light of the recent E. coli outbreak and recall. If with produce. not by scanning a QR code with a mobile phone camera, consumers can type in the lot number (an eight-digit code on the back of packages).
What’sInStore is the name of a new deal-scouting App scouts for deals. mobile app and website platform based out of London that focuses on giving users the ability to track items they want deals on and get offers delivered to their email or via the app as soon as they appear. Users can customize searches by location such as the nearest deals or how far they want to travel for a product, search by category, personalize searches by product, and filter searches by price and specific store. The personalized search is the key for retailers teaming up with the app, as it feeds the analytics reporting back to the store, such as who’s looking for discounts, types of promotions, where and so on.
Perfect Corp., New York, maker of the YouCam Makeup app that enables consumers to try on virtual makeup, ran an eight-page, native content advertisement in Cosmopolitan that let readers look through styles from Juicy Couture cosmetics. By scanning a QR code on the print page, readers could try on the cosmetics through the YouCam app. From a brand point of view, they can track views of the ads, levels of engagement of certain cosmetics and track any shares or social activity generated from the ad. Enabling a virtual makeup app.
For the first initiative to go live from the partnership between Starbucks and Alibaba, the coffee chain opened a virtual Starbucks store in China, enabling consumers to complete one-touch orders inside the Starbucks mobile app as well as Alibaba’s suite of apps and tools. Most notably, the virtual store leverages Alibaba’s Ele.me delivery service to have Starbucks drinks and food orders delivered to consumers in an hour or less. Starbucks is creating “Starbucks Delivery Kitchens” inside Hema supermarkets to tackle the delivery orders. The virtual store also offers digital and physical gift cards and branded merchandise. The two companies in August announced a deep, strategic partnership to bring consumers in China a more personalized, online and mobile Starbucks experience for shoppers. and Alibaba.
New via the Target app for the Christmas season, consumers could leverage augmented reality technology to virtually see how a Christmas tree would look or, better yet, fit in their houses. When shopping for artificial trees from Philips or Wondershop in the app, users could click on an AR icon to virtually see the tree in their space. They could look at pre-lit trees or unlit trees. The app also included six holiday rooms that users could enter and virtually walk through to shop the 360-degree rooms, viewing dozens of products scaled to the room. They could click on the Virtual products to buy right there.
SHOPPER MARKETING MARCH 2019
P R I VAT E LABEL
A Growing CPG Crisis BY MICHAE L APPLE BAUM
Retailers’ increasing success with own-brand products is forcing national brands to address their dwindling competitive advantages
hroughout the history of private label products, most consumer product marketers could claim to be winning the battle for shoppers’ hearts, minds and wallets. But those days are over. The growth of private label sales in the U.S. now significantly outpaces national brand products, and the influence of iconic brands, particularly among Millennials, is waning. Retailers like Aldi and Trader Joe’s have raised the bar on private label quality and continue to remake the category’s image. Meanwhile, chains including Kroger, Wegmans, Costco, Walmart and Target are expanding their private label franchises with compelling new products and aggressive marketing and promotional strategies that allow these so-called store brands to go toe-to-toe with national competitors. “Retailers are forced to differentiate themselves as new multichannel threats and have developed and are using private label, not as a tool to round out the consumer’s choices, but as a loyalty play,” says Werner Graf, global head of CPG industry at Mindtree, Warren, N.J. “In essence, many retailers are now CPG companies. That’s a fundamental shift. What is a CPG company to do when its customer becomes a competitor?” Several forces are driving the growth of private label, including online shopping and the ripple effects of Amazon. Retailers are increasingly using ecommerce to reach beyond their traditional shopper bases and sell store brands. Kroger and Walgreens, for example, now sell their own brands to consumers in China via Alibaba. (Kroger is also expanding distribution of its private brands, including Simple Truth, through a pilot program at Walgreens stores in the U.S.)
Albertsons’ Signature Reserve, Kroger’s Simple Truth and Sam’s Club’s Member’s Mark are three private labels that are going toe-to-toe with national brands.
In addition, private labels such as Costco’s Kirkland Signature and Sam’s Club’s Member’s Mark – both of which account for more than 25% of total chain sales – are available on e-commerce sites via third-party sellers. Says Graf: “Consumers have more choices in products and the means of acquisition, and they have unprecedented ability to know what price they should pay.” Private label has come a long way from its previous copycat phases and generic roots. It is increasingly viewed as a bona fide way to drive traffic in a crowded retail environment with few remaining clear distinctions between the major chains. More than half (53%) of today’s shoppers visit a particular retailer specifically to buy its store brands, according to research from Daymon. Furthermore, 85% of shoppers trust private brands as much as national brands and 81% buy them on every, or almost every, shopping trip. “The success of Aldi, Lidl and Trader Joe’s has given retailers confidence that private label can stand on its own, without the need for legitimacy created by the national brand,” says Aimee Becker, senior vice president of brand development at Daymon, Stamford, Conn. While private label penetration rates in the U.S. may never reach the 35% to 45% level of the most developed international markets, she says, they could hit 25% to 30% – up as much as 10 points from current levels – within the next five years. THE MARKETER’S RESPONSE When pressed, at least publicly, marketers insist they are taking steps to address the growing private label threat. “We understand for most retailers it’s an important part of their strategy, both from an equity standpoint and a margin revenue standpoint,” Dave Taylor, president and CEO of Procter & Gamble, told analysts during the company’s fourth quarter earnings call last July. “We’ve shown over time the ability to win in that environment, where the leading brand and the retailer brand can mutually be successful.” Industr y experts paint a different picture. Marketers often u ndere st i m ate the staying power of private label brands, they argue, in part because their past successes always appeared to hinge on softness in the economy. Moreover, m any of today’s marketers refuse to accept the idea that store brands can be held in as high esteem by consumers as a Tropicana or Tide, which suggests a certain level of denial of the problem or a lack of appreciation for the recent transformation within the private label business.
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18 FEATURE | PRIVATE LABEL
“ The acceleration of the private label threat has taken a number of CPG manufacturers by surprise.” Werner Graf Mindtree
SHOPPER MARKETING MARCH 2019
“Most large CPG companies still have a 1980s view of private label. They are not aware of how much the industry has changed or how much it is driving and impacting retailer activity,” says Jim Wisner, a former Jewel-Osco executive who runs a marketing consultancy in Libertyville, Illinois. For some marketers, he acknowledges, it boils down to ego. “A lot of marketers overestimate the importance of their own brands and underestimate the importance of the retailer’s brands to the retailer. Others don’t understand the private label threat well enough to take it as seriously as they should.” Graf has a somewhat more nuanced view. “The acceleration of the private label threat has perhaps taken a number of CPG manufacturers by surprise,” he says. “Even when private label was conflated with generic brands back in the 1980s, most brand manufacturers were aware and watchful of the threat. But it was a different animal then. The products were not branded per se, unless you consider generic a brand. The packaging was typically no-frills and the quality noticeably inferior. CPG companies could cap the risk in their minds since brand loyalty wasn’t directly threatened.” ‘JOINED AT THE HIP’ Private label has always had certain inherent advantages over brands from manufacturers. The products consistently generate higher margins in the food and beverage industry, for example. In the coffee category, private label manufacturers can satisfy consumer demand for sustainable ingredient sourcing and other eco-friendly initiatives, “but not at a premium
Costco’s Kirkland Signature private label products – like warehouse club competitor Member’s Mark does at Sam’s Club – account for more than 25% of the chain’s total sales.
price to the national brand,” says Clay Dockery, U.S. division vice president of corporate brands at Massimo Zanetti, an Italian beverage company and one of the largest private label coffee producers in North America. The mutually beneficial relationship between private brand suppliers and retailers goes beyond pricing power. Dockery sums it up in two words: customer intimacy. “Our companies are joined at the hip in our desire for success,” he says. “We’re able to leverage greater insight into retailers’ go-to-market strategies and tend to have more open conversations about their long-term direction. We’re constantly working together to figure out how we can sell more of the products. I don’t think brand marketers can duplicate that.” In addition, the relationship is becoming less transactional and more strategic. “More retailers are reducing the frequency of bids, where in the past every two years you’d see who had the best price and you’d make a decision about changing suppliers solely on the basis of price,” says Dockery. “Retailers have gone from a price advantage, margin-built strategy to a recognition that if their own brands are special enough – and the consumer can only get the product at their location – then they will have a big edge with shoppers.” Private label’s strength is now materializing in accelerating sales growth. In the early to mid 2010s, its share of the CPG market remained flat at around 18%. In 2017, however, Nielsen noted “a complete reversal in the growth trajectory compared to branded manufacturer items.” By the fourth quarter of that year, store brands were posting dollar growth of more than three times the rate of branded products. Brian Sharoff, president of the Private Label Manufacturers Association, says that a number of factors can explain the recent surge. “Innovation comes in many forms: better ingredients, better packaging, better product concepts or more responsiveness to consumer needs,” he says. Speed to market also tends to favor the retailer. “Retailers have developed specialty items and other innovative products more quickly than national brands,” notes Sharoff. “Part of the reason may be that national brands are too dedicated to the mass market to create niche products. Another reason may be that retailers, especially at the store level, are closer to the consumer and therefore able to translate shopper needs into products more effectively.” ONE OF MANY THREATS To be sure, private label is one of many competitive threats facing today’s CPG manufacturers. Stories abound concerning the rise of challenger brands and directto-consumer brands in categories from razors (Harry’s, Dollar Shave Club) to eyewear (Warby Parker) to ice cream (Halo Top). Experts argue that each of these insurgent threats, including private label, demands a greater commitment from CPG marketers to innovation and a clearer communications strategy to remind consumers – especially younger generations – of what is special about their brands. “Challenger brands and private label brands have a lot of the same appeal,” says Timothy Campbell, senior analyst at Kantar Consulting. “Private brands provide value and a lower price with the perception of similar quality. Challenger brands may be priced higher, but they offer a tangible benefit to justify the premium. Big brands are stuck in the unenviable middle. They’re not telling their story
FEATURE | PRIVATE LABEL 19
MARCH 2019 SHOPPER MARKETING
in a compelling enough way about why shoppers should be willing to choose them.” Experts including Campbell believe that marketers are not doing enough to leverage their strengths in consumer research to create more emotional connections with trusted name brands. Some argue that CPG companies have too long rested on their laurels, failing to leverage or extend their brand promise and allowing private brands to step into the void. Kirkland Signature Hazelnut spread, for example, “sells very well,” according to Campbell, and sits right next to Nutella on Costco shelves. “Nutella has a unique formulation and cult-like status, but in this environment, marketers cannot expect to be able to protect those advantages forever.” Price remains the primary driver of private label purchases, but shoppers no longer believe they have to sacrifice quality in making that choice. A recent Kantar survey showed that only 25% of shoppers in the private label food/grocery and health-and-beauty categories agreed with the statement: “I assume most private label products are lower quality than national brands, but I am willing to make that trade-off to pay a lower price.” Conversely, 66% of shoppers agreed with the statement: “If I like or trust a retailer, I generally assume their private label products will be good.” Brands don’t always have to fight the private label trend. Todd Hale, a CPG industry consultant who observed the growth of private label over three decades while at Nielsen, suggests that brands can piggyback on the appeal of store brands by offering retailers new ideas for category-driven promotions, as well as by identifying opportunities for programs outside their core categories. “If a brand has a distinct characteristic or unique appeal to shoppers, then the marketer should be able to build a program with private brands that won’t cannibalize one side or the other’s sales,” he says. Graf, an advocate for greater collaboration between brands and retailers, agrees. “Anything that makes a brand more valuable to the retailer is a good thing: consistency, predictability, ability to drive margin, transparency, ease of working relationships,” he says. “Roughly 86% of goods are still sold through stores. Brands should help retailers know why the relationship will drive traffic and prove it through data and analytics.” Some marketers, however, may find themselves stuck in a cycle of trying to combat private label by commanding more shelf or floor space. “You can’t just throw more trade funds at the problem,” says Wisner. “There’s nothing wrong with keeping up the frequency of activation, but it’s not a long-term strategy. Eventually, a company will run out of gas, and in the meantime it diverts valuable funds from shoring up the core brand promise.” MACRO STRATEGIES TO GROW, DIVERSIFY At a macro level, CPG companies are looking to develop new sources of organic growth as part of their response to many threats, including private label. In recent years, global food companies such as General Mills, Kellogg and Campbell Soup have invested in venture funds and incubator programs to develop a range of new capabilities in everything from supply chain and logistics to direct-to-consumer models and e-commerce. Companies are also using these vehicles to expand beyond their core businesses through alternative research and development. Tyson Foods, for example, is using its $150 million New Ventures investment fund to back companies like San Francisco-based Memphis Meats, a startup that has been experimenting with stem cells to produce livestock-free lab-based meat. Some small to mid-size CPG manufacturers have diversified into the private label business, creating a hybrid model like that of Massimo Zanetti, whose beverage portfolio also includes consumer brands such as Hills Bros. and Chock full o’ Nuts. This is far less common among larger companies (one noteworthy exception is Kimberly-Clark, which produces diapers for Costco’s Kirkland Signature line), experts say, in part because they’ll then no longer be able to claim manufacturing superiority over private brand producers. Plus, such a move
Publix’s GreenWise, Albertsons’ Signature Reserve and Kroger’s Simple Truth exemplify the new era of private label and are only three of the many retailer-owned brands that consumer product companies are having to contend with.
can create a cultural shock inside the organization. “Large multinational CPG firms are too hardwired with old ways of doing things to be able to do private label well,” says Wisner. “It’s a whole different set of relationships with the customer. There are different timelines, economics. Until you begin to internalize those things, you end up trying to run private brand like a national brand and you can’t respond to your customers effectively. Look at an organization like Treehouse. It’s got something like 80 plants, 24,000 SKUs – no one has to deal with that level of complexity in the branded world.” Still, the temptation may be too good to pass up. Kroger’s Simple Truth line became a $2 billion enterprise in just a five years. And there are many other untapped opportunities. Private brands have dominated fluid milk for years, a trend that Dockery expects to extend throughout dairy and eventually into the center store. Coffee too, he says, is underdeveloped. “About 21% of unit volume in center store is private brands, but coffee is only about 15%. We have a ways to go to get to the level we’re targeting, but we’re making methodical progress toward our goal.” Even categories and channels that traditionally have not had much private label presence, such as drug and beauty, are jumping on board. Says Dockery, “There are multiple SM ways to get to growth. It’s a terrific business.”
“ Large multinational CPG firms are too hardwired with old ways of doing things to be able to do private label well.” Jim Wisner Marketing consultant
SHOPPER MARKETING MARCH 2019
SHOPPING WITH STEVE
Wegmans in Parsippany, N.J.
FRENDA: One of the first things I noticed when entering Wegmans is the sense of theater on the perimeter. There are high ceilings, and the feeling of shopping in a town square persists. One of the most heralded stops is The Burger Bar, which has sandwich offerings under $10. FRENDA: Moving through the perimeter of the store, I was struck by the spectacular presentation in each of the departments – whether you are in the Seafood Market (complete with live lobsters), the Bakery (with spectacular images of creativity) or the Prepared Foods/Meal Kits department. The latter seemingly can provide terrific meals for a month without a repeat. FRENDA: Here is Wegmans’ wine “cellar,” including an attractive display of seasonal favorites to tempt me. I noticed the incredible array of craft beers. In addition, there were really cool showcases of craft vodkas and bourbons that I have never seen before. Were they private brand varietals that Wegmans is known for?
FRENDA: Whether it’s for snacking or preparation of your favorite Italian dish, the Cheese Bar offers a spectacular array of tempting treats. I had to laugh when mulling the purchase of a 90-pound wheel of cheese to perhaps be a piece of “furniture” in my home. (At $18.99 a pound, I was discouraged when I realized it would cost me $1,700.) The department’s theme: “Wegmans: For the Love of Cheese.”
FRENDA: In the 1980s, Wegmans ramped up its commitment to private brand products. As you walk the store, one can observe that the Wegmans line of products dominates the retail scene. Here is a cross-category view of “Italian Classics.” Other showcase assortments include “Food You Feel Good About” and “Wegmans Organics” – all of which have unique sections.
MARCH 2019 SHOPPER MARKETING
FRENDA: No discussion about Wegmans would be complete without talking about the company’s roots. It was founded in 1916, named The Rochester Fruit and Vegetable Company, by the Wegman brothers. Therefore it’s not surprising that one of the showcase departments is the perishables presentation of fruits and vegetables. There is a commitment to natural, healthy and organic products throughout the store.
Steve Says: Thinking of Wegmans’ history, it truly was the first supermarket chain to emphasize experience. Today, its model is emulated by many operators. Wegmans currently has 98 stores across six Northeastern and Mid-Atlantic states. Its stores raise the bar on the shopping experience with the best quality, a
FRENDA: Focusing on the store-withina-store approach, I don’t know if I have ever seen a department in a supermarket that was so developed in terms of natural, good-for-you and organic items around vitamins, supplements and other selections under this category, including probiotics.
spectacular abundance of choice, restaurant-quality prepared foods, beautiFRENDA: This is not good news for traditional CPG brands: the only display I could find in the store that featured brands of major manufacturers was this candy gondola featuring Valentine’s Day products. To illustrate how profound the Wegmans commitment is to its own brand, there were 14 endcap displays in the center store, and all 14 were populated with Wegmans’ private brand products.
ful stores and displays, and a nearly telepathic level of customer service. Wegmans has annually finished high on the list of desirable companies to work for – ranking No. 2 on Fortune’s 2018 list. The company has approximately 48,000 employees.
FRENDA: As you move into the center of the store, the sense of the theater does not go away. I was struck by this eye-catching section of dinnerware, kitchen linens and wine glasses. The presentation was colorful and functional. FRENDA: If you look closely at these sparkling water items, you will see they fall under the “Food You Feel Good About” umbrella. Examining even further, you get a sense for the commitment to private brand that Wegmans has. In addition to basic flavors such as lime and watermelon, additional varieties include coconut lime, cherry pomegranate and blackberry tangerine.
Steve Frenda, executive advisor for EnsembleIQ and the Path to Purchase Institute, has been a passionate retail watcher for more than four decades. Having worked as a retailer, for a brand manufacturer and in the infotech world, he is an authority on the entire path to purchase and its changing face. Contact Steve at firstname.lastname@example.org.
SHOPPER MARKETING MARCH 2019
ACTIVATION GALLERY Cosmetics/Beauty L’Oreal USA is promoting its L’Oreal Paris Paradise Enchanted makeup collection at Walmart with an aisle violator that invites shoppers to lift a mock compact case to smell-test the peachscented eye shadow and blush.
Select Target locations feature digital screens in the beauty department that allow shoppers to virtually try on cosmetics. Powered by Perfect Corp.’s YouCam Makeup, the service is also available on the retailer’s mobile and desktop websites. Participating products range from foundation to lipstick from brands including Coty Inc.’s CoverGirl and L’Oreal’s flagship brand.
Coty Inc.’s CoverGirl deployed bright pink signage in Walmart’s beauty aisle to announce that the brand does not test on animals. Shelf signs and violators outfitting the brand’s in-line display proclaim CoverGirl as “the biggest makeup brand to be certified by Cruelty Free International” and depict the organization’s “leaping bunny” logo.
L’Oreal’s NYX Professional Makeup stands out in Walmart’s beauty department with an increased presence both in terms of visibility and assortment. In stores where it is available, the brand commands large merchandising areas presenting a variety of eye-catching, curated merchandising units that vary by location and are updated seasonally – including an extensive in-line display, an illuminated endcap display and an illuminated gondola.
ACTIVATION GALLERY | COSMETICS/BEAUTY 23
MARCH 2019 SHOPPER MARKETING
CVS/pharmacy’s new BeautyIRL storewithin-a-store format draws inspiration from cosmetic retail giants Ulta and Sephora with its “express beauty bar” powered by on-demand beauty service Glamsquad, which offers services such as dry hairstyling, lash application and face masks. It also offers ear piercings and an expanded accessories assortment, taking a page from mallbased teen retailer Claire’s.
CVS/pharmacy’s BeautyIRL concept nearly doubles the size of the retailer’s typical beauty department, and it leverages brands historically not found within drugstore aisles. Merchandising space is devoted to more than 30 indie beauty brands including Storybook Cosmetics and Luxury Lab’s Doll Face as well as a #NowTrending wall showcasing socially relevant brands including The Creme Shop and KF Beauty’s Wunder2.
Target last year launched an in-store experience for men in the beauty department. More than 600 products are featured in this men’s destination from brands including Harry’s. The section also includes men’s accessories such as hats.
24 ACTIVATION GALLERY | COSMETICS/BEAUTY
SHOPPER MARKETING MARCH 2019
The Sephora Virtual Artist, available on tablets in-store or on the retailer’s mobile app, lets shoppers try, shop and share lipstick shades, eyeshadows and false lashes.
Sephora showcases “Clean” skincare and wellness brands as well as “beauty’s rising stars” on the Sephora Skincare Favorites wall. The kiosk lets shoppers search for product based on their skincare needs.
Sephora’s makeup artists perform free 45-minute makeovers in the store’s Beauty Studio, but a $50 purchase is required. Clients make appointments online or in-store, and the artists determine which brands/products are suitable for the makeover.
Path to Purchase Institute members can view many more cosmetic/beauty photos in the image vault at P2PI.org.
More images at P2PI.org
The kiosk in Sephora’s “Find Your Fragrance” section allows shoppers to browse “over 7,000” fragrances. “Lift to sniff” diffusers let shoppers smell four specific fragrance families.
Unraveling the Complexity of Today’s Commerce Through Collaboration Today’s “always-on” shoppers are changing how you do business. Join industry leaders as we uncover solutions and unite the community to meet the challenges of today’s commerce. The Path to Purchase Summit is an invitation-only event for retailer and consumer goods professionals. To request your invitation, please contact us at email@example.com.
May 15-17, 2019 • Fort Lauderdale, FL firstname.lastname@example.org
An official event of:
26 ACTIVATION GALLERY | COSMETICS/BEAUTY
SHOPPER MARKETING MARCH 2019
L’Oreal USA’s House 99, a men’s grooming brand in partnership with soccer legend David Beckham, receives prime positioning on an endcap in the skincare section at Ulta Beauty.
Ulta Beauty is leveraging the power of exclusivity and the power of a reality TV family. In November 2018, Ulta became the first and only brick-and-mortar retailer to carry product from Kylie Jenner’s Kylie Cosmetics as well as Kim Kardashian West’s KKW Fragrance line. Meanwhile, Khloe Kardashian and longtime friend Malika Haqq recently partnered with Estee Lauders Cos.’ Becca Cosmetics for a “BFF collection,” which gave Ulta an exclusive launch window in-store and online before the product rolled out globally in January.
Dyson secured an endcap at Ulta Beauty to show off the brand’s Airwrap hair styler, allowing shoppers to handle the styler and its various attachments.
The Benefit Cosmetics vendor shop at Ulta Beauty features a Benefit BrowBar that offers various eyebrow services.
MARCH 2019 SHOPPER MARKETING
Glossier, self-described as not simply a beauty brand but a people-powered beauty ecosystem, opened its first flagship store in New York City’s SoHo district. The main second-story level is focused on experimentation and discovery. Highly textured surfaces and pale pink illumination help provide a sensory brand experience, while chairs and couches encourage shoppers to linger and socialize as a community. An area known as the “wet room” holds double slate sinks and resembles a vanity counter, making it easy for shoppers to trial the “skin first” brand’s cleanser and related products as if in the comfort of their own homes. An experiential room filled with giant mirrors and oversized bottles of the brand’s most successful product, Boy Brow eyebrow gel, is dedicated to inspiring shoppers to create content for social sharing. Purchases are made via handheld devices carried by employees clad in off-white jumpsuits, and the orders are picked up at a manned window, where a trolley system delivers filled bags.
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28 ACTIVATION GALLERY | COSMETICS/BEAUTY
SHOPPER MARKETING MARCH 2019
Walgreens and Birchbox in December 2018 kicked off promotional efforts supporting their new partnership, which is bringing Birchbox retail experiences to select stores. Birchbox is a monthly beauty subscription service. As of December, six stores housed interactive BYOB (Build Your Own Birchbox) stations where shoppers can select five samples to take home in an exclusively designed box – Walgreens locations in Bloomington, Minnesota; Los Angeles and Chicago; and three Duane Reade locations in New York. Five additional Walgreens locations were to feature the stations early in 2019: El Segundo, California; Miami Beach, Florida; North Miami, Florida; Glenview, Illinois; and Dallas.
PERSONNEL APPOINTMENTS BRAND MARKETERS
B&G Foods, Parsippany, New Jersey
CEO Robert Cantwell plans to retire April 5 after 35 years with the company. He will be succeeded by Ken Romanzi, the company’s executive vice president and chief operating officer. Romanzi joined B&G in December 2017 after holding senior roles at WhiteWave Foods, Ocean Spray, Hasbro and Ultimate Juice Co.
Kind, New York
Health and wellness veteran Mike Barkley succeeded John Leahy as president and chief operating officer of Kind Healthy Snacks. Barkley leads the company alongside Kind founder and CEO Daniel Lubetzky as the company sets its sights on innovation and category disruption. Leahy, who joined the company in 2010, will assume a strategic adviser role in retirement. Barkley is tasked with growing Kind’s portfolio, purpose and potential.
Serta Simmons Bedding, Atlanta
Melanie Huet was named Serta Simmons chief marketing officer, reporting to CEO Michael Traub. Huet brings several years of marketing experience in consumer packaged goods, most recently as vice president of marketing, beverages and snack nuts at Kraft-
Heinz, where she was responsible for a $4 billion portfolio including brands like Planters, Capri Sun, Kool-Aid and Maxwell House. Huet also held brand management leadership roles with Kimberly-Clark and Unilever.
SodaStream International, Airport City, Israel Megan Hennigan, former Campbell Soup Co. team leader, shopper marketing, was named Sodastream USA director of shopper marketing. Hennigan also previously held roles at Heinz and News America Marketing.
Kroger’s chief digital officer, Yael Cosset, will succeed retiring Christopher Hjelm, executive vice president and chief information officer, effective May 1. As senior vice president and CIO, Cosset will assume responsibility for the Kroger Technology function in addition to his current Kroger Digital portfolio – underscoring the strategic integration of digital and technology initiatives to deliver customers anything, anytime, anywhere.
Chief human resources officer Stephanie Lundquist was named president of food and
beverage. She oversees the full spectrum of merchandising and operations for food and beverage, including strategy development and implementation. Lundquist and her team will focus on accelerating progress, strengthening crossfunctional alignment and driving operational excellence throughout the enterprise. Lundquist joined Target in 2005 and brings enterprise leadership and operations experience to her new role. She will remain a direct report to CEO Brian Cornell and part of the company’s leadership team.
SOLUTION PROVIDERS HMS Design, Fairfield, Connecticut
Design veteran Joe DiMeo was named creative director. He is responsible for overall creative leadership across the firm’s client CPG brands, management and professional development of the creative team, creative operations, high level client service and business development efforts. DiMeo has been recognized for his work for brands like Mars and Milk-Bone.
Prs In Vivo, Teaneck, New Jersey
Chief revenue officer Alex Hunt was named CEO. He succeeds Scott Young, who was elevated to a senior vice president position within BVA Group. Young assumed a leadership role in the BVA Nudge Unit, the group’s behavioral consultancy, leading that entity’s UK office.
Please send information regarding personnel appointments to managing editor Charlie Menchaca at email@example.com
The launch that will empower the entire consumer goods industry.
Learn more at p2pi.org/Rise
SHOPPER MARKETING MARCH 2019
Tech Solutions Guide
A recent industry survey found that only 11% of consumer goods companies are using “highly advanced” trade promotion optimization tools. Given the available technology, what are the obstacles to broader adoption?
TRADE PROMOTION MANAGEMENT
BRUSSÉ: Various research has shown that the level of investment in artificial intelligence and other advanced technologies among consumer goods companies is low and lagging behind other industries. There has been low awareness and little interest in investing to ensure that solutions in their primary processes are supported by AI and advanced analytics and can unlock all their data sources to deliver the necessary business cases. The main obstacle is leadership that is unaware and not focused on taking tools on board to achieve the aspirational capabilities delivered by unlocking huge volumes of data. As long as leadership lacks this vision, the company will always be looking in the rearview mirror instead of through the windscreen. Once this obstacle is out of the way and there is top-suite commitment to invest and implement, all other obstacles — the technical challenges, the scale of change management — then become little more than entertaining obstacles. This goes hand-in-hand with the understanding that the uptake of nextgeneration tech is not a straight line to success. It’s a journey to becoming fit for the future, and this demands leadership from consumer goods companies and leadership from vendors, today.
GU I DE
In this edition of the Technology Solutions Guide series, Consumer Goods Technology presents a comparison chart of solution providers on the forefront of trade promotion management and optimization. To kick things off, a sponsored roundtable of experts provides thought leadership on navigating the challenges and opportunities involved in rethinking traditional trade promotion to meet the dramatically changing demands and behaviors of both shoppers and retailers.
Terry Ziegler General Manager, Retail TPx Blacksmith Applications
Ed Johnson Principal Deloitte Consulting LLP
Suzy Silliman Managing Director Management Science Associates
Rajeev Prabhakar Client Services Director, Americas UpClear
Jaco Brussé Chief Executive Officer visualfabriq
JOHNSON: First, while the technology is available to apply AI and machine learning to business problems, these technologies have yet to be productized as packaged technologies aimed at trade promotion. The consumer packaged goods companies on the leading edge of this adoption have developed models outside of traditional TPM tools to build this competitive advantage.
MARCH 2019 SHOPPER MARKETING
Second, “push button” optimization without business inputs and/or customer realities isn’t practical. While these tools do exist, they must be guided by sales and customer feedback to properly account for category and retailer nuance in the recommendations. Embarking on a science- or AI-led program without that business involvement is destined to be a science project in the truest sense and won’t go beyond the infamous “conference room pilot.” PRABHAKAR: The fundamental issue affecting wider adoption of “highly advanced” TPO is not a lack of appropriate technology nor a lack of desire to leverage advanced capabilities. Instead, it is due to the lack of quality data that would enable companies to trust the results from AI. Overcoming these obstacles requires establishing a roadmap where you identify the steps needed to get quality data to support AI-driven insights. This includes creating a solid foundation in TPM and identifying owners and processes to ensure that data quality is maintained. Reaching this goal requires organizational initiatives such as crossfunctional collaboration on setting correct baselines and lift coefficients, ensuring access to historic channel data, and ensuring that results are revisited and refined over time. Without clean data, companies can’t make the leap to TPO, and “highly advanced” TPO is a non-starter. SILLIMAN: TPO solutions are only one of many tools that are used to promote products. It can be difficult to identify which tools and how much of each variety of promotion, pricing, advertising, social media comments, packaging, flavors and planograms impact a product’s sales. When you divide up these efforts across multiple budgets and functional areas including international, sales, marketing and strategy, it can be difficult to get alignment on promotions. ZIEGLER: Technology is not a strategy, it’s an enabler. The greatest obstacle to integrating the advanced analytics and predictable optimized planning capabilities of a TPO solution is not having a data cleansing and harmonization strategy. Nine times out of 10, a company will stop a TPO implementation if they’re not confident in the quality of the data, the accuracy of the baselines, or the reliability of the predic-
tions. That’s why it’s critical for solution providers to automate the cleansing and harmonization of consumption, shipment and spending data so that the information feeding the analysis is accurate. Once this challenge is addressed, change management is the next obstacle. The success of any technology project that asks users to think about their daily work differently is making the complex simple. If a TPO solution seems more difficult to use than the current process, no amount of intelligence or promised improvement will result in user adoption.
What are consumer goods companies doing to move beyond isolated trade promotion planning and take a more integrated, strategic view of their commercial investments? How are TPM vendors helping?
ZIEGLER: More companies are shifting toward a revenue growth management approach to handling their overall commercial investments. This moves the thinking about trade promotion from a necessary expense to an element of the organization’s growth strategy. It also makes more important the need to predict the outcome of a promotion or promotional plan; optimize an event and promotional mix for revenue, profit or volume as it aligns to corporate objectives; and measure the impact of complementary and competitive activity on promotional outcomes. This is where companies are turning to TPM vendors to provide more than the transactional execution of promotion. They’re looking for TPx solutions that can provide full-circle management and optimization with seamless data integration as the foundation of their revenue growth management operations. That allows companies to build programs that include data governance, pricing strategy, customer planning and analysis, investment monitoring and guardrails, and accurate forecasting and measurement. SILLIMAN: CPG manufacturers are expanding to engage consumers in nontraditional ways, capturing them digitally, moving to direct-to-consumer incentives, e-mail couponing and loyalty programs, and to managing and promoting a portfolio of products. Solution providers can help with the need to integrate the supply chain to address the lift that new de-
mand is generating and to create awareness and ensure product availability. PRABHAKAR: Consumer goods companies are looking at non-trade activities — ranging from participating in retailer digital platforms to determining what the real ROI is on slotting — in order to understand the complete picture of their investments with retailers. TPM vendors are making it clear that it’s not just TP but RG: revenue growth, and the levers in play can be incorporated and analyzed the same way as modern trade tactics like feature and display. JOHNSON: From an organizational perspective, we are seeing the functional silos collapse. In a digital world, when ads can be easily tracked and pricing can be unique to the individual, the notion of brand marketing, trade marketing, and promotions are all blurred. In response to these shifts, we are seeing an increase in focus on driver-based forecasting to understand the true drivers of demand, informing conversations about how to best stimulate demand through different mixes of commercials investments. We are also seeing a more agile approach to making those investment decisions, both at the HQ level as well as with customers. Certain TPM vendors are in a position to capitalize on this, through flexibility in the planning hierarchies (customer and product dimensions) that allow for analytically driven base volume planning inputs, and through the development of advanced scenario tools that give users the ability to create multiple investment scenarios within and across accounts, channels, and brands. BRUSSÉ: Once the leadership of a consumer goods company makes a deliberate decision to become fit for the future, they take a more integrated view of revenue management across the business. The business takes the lead, and IT starts to facilitate and support. As a vendor founded by CPG professionals, we know the business and we help by engaging with all different stakeholders to paint the picture of a successful future. We help by encouraging companies to think big, start small, and scale up fast. We recommend that they implement quickly according to a proven blueprint, within the requirements and on budget. Our particular model is to offer SaaS solutions that provide access to the latest available tech without requiring new implementations.
SHOPPER MARKETING MARCH 2019
Tech Solutions Guide
If we fast-forward 10 years, does trade promotion still exist? What does it look like?
PRABHAKAR: While direct to consumer and personalization will continue to change the balance between traditional sales budgets in trade vs. marketing budgets, the fact is that demand creation investments will continue if retailers still provide a venue to influence shoppers. Take Amazon, an online retailer that is expanding its brick-and-mortar presence because it provides that additional avenue. If there is a physical location, then it can be leveraged to steer a shopper one way or another, even if the trigger was initially based on her online activity. SILLIMAN: Trade promotion spend will be much more aligned with new product introduction and portfolio rather than with brand management. Direct-to-consumer marketing will increase in the promotion space. As the consumer journey changes, TPO will also need to adapt to subscription, online, curbside pick-up and delivery shopping. New products will still need the placement incentives at retail, or in the endless aisle, or other hybrid displays between virtual and physical, to build awareness, demand and availability for new products. As well, we expect to see growth in: incentives at point of pickup, incentives for limited availability and shelf-life products (better for you, healthful snacking), and incentives based on continued product loyalty. BRUSSÉ: There will always be initiatives around brands and products, even 10 years down the line. However, it is likely that the magnitude and mechanisms to create value might be different. The rise of different channels and an explosion of data will drive transparency. Initiatives will go beyond trade promotion and become more integrated. The challenges for consumer goods companies will involve gaining a more holistic view of planning and the impact of decisions. We believe that trade promotion will still exist in a different form, and there will be other dynamics of holistic planning that come into play. Companies will need a single version of the truth, which requires integrated commercial business planning. We are now in the process of moving from a transactional to a predictive mode. In the coming years, that data momentum is going toward prescriptive, and consumer goods companies will need solutions and tools to support vast, transparent,
2019 C O M PA N Y/ W E B S I T E
Acumen Commercial Insights
Accenture Cloud Trade Promotion Management
AFS Technologies* www.afsi.com
KEY CONSUMER GOODS CLIENTS
• ABInBev Europe • Unilever
• Heineken Acumen Invest
• Pernod Ricard • Coca-Cola Co.
TRADE PROMOTION MANAGEMENT SOLUTIONS CHART
Flamingo TPM System
• American Pop Corn Co. • Idahoan Foods • Once Upon A Farm
AFS Trade Promotion Management Retail
• Signature Brands • Sunny Delight Beverages • Weetabix • Clorox
• Conagra Brands • General Mills
CPGToolBox Trade Planner Lightning Experience
• Fruit of the Loom • Mattel • Popchips
The Offer Innovation Suite
Exceedra Integrated Business Planning Solution
Flintfox Trade Revenue Management
IBM Promotion Management
Did not provide
• Coca-Cola Co. • Hershey Co. • Mars Inc. • ACH Food • Bayer • Reynolds Consumer Products • Chobani • Daisy Brand • New Belgium Brewing Co.
U N I Q U E F E AT U R E S/ B E N E F I T S
Our front-office solutions enable CPG companies to make better-informed decisions at speed, connecting brands through to consumers by leveraging the power of the Salesforce platform with Accenture’s industry experience. Acumen Invest is designed for the end user, providing insights from our consulting practice to deliver intuitive capabilities. Every implementation is backed up with robust change management programs to ensure sustainability and adoption. Adesso partners with small and medium-sized North American CPGs to improve their trade promotion effectiveness through systems and services, including unique approaches for training and analysis, with a total community approach. A closed-loop system that helps plan, allocate, execute, settle and analyze trade spend with a robust set of intuitive, easy-to-use capabilities. The solution drives trade dollar visibility across sales, finance, accounting, supply chain and marketing professionals, providing insight into retailer trends. FORGE provides a central location for planning, forecasting, tracking, and reporting that integrates with demand planning to ensure proper production. A Salesforce partnership provides lightning-fast promotion planning in any currency/language, a superior UX to analyze global promotions easier, access to AI via Einstein, and rapid implementations that are affordable. Deloitte’s cloud-based platform combines robust data management and predictive analytics with first-class IP on commercial decision-making across pricing, trade effectiveness/optimization, marketing mix and profitability. The Offer Innovation Suite is an AI-powered platform that automatically senses when promotions have gone stale, recommends promotions optimized for specific trade and marketing strategies, and continuously monitors market dynamics to maximize ROI. The solution enables clients to simplify sales, finance and demand planning processes and gain clearer visibility on trade spend ROI across trade promotion management/optimization, customer business planning, joint business planning, demand planning, and S&OP. Flintfox offers trade and revenue management solutions to help businesses better manage list and trade promotion pricing, customer and vendor rebates.
Did not provide
Contract Assistant is an AI-driven solution that automates contract/deal sheet creation and deduction reconciliation. It works with existing trade promotion and order-to-cash applications to drive productivity and close revenue leakage.
Did not provide
IBM provides an integrated trade promotion management platform that helps users quickly build promotions while reducing complexity and automating processes to maximize benefits to retailers. The solutions help ensure accountability for vendor negotiations, forecasting, planning, managing, optimizing and measuring effectiveness.
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C O M PA N Y/ W E B S I T E
Kantar Consulting www.kantar consulting.com
Trade Promotion Management & Optimization by Kantar Consulting
Management Science Associates G360Rebates
KEY CONSUMER GOODS CLIENTS
U N I Q U E F E AT U R E S/ B E N E F I T S
Did not provide
An industry-dedicated, complete TPx suite with a breadth of offerings around promoting and executing. Twenty-plus-year record in the consumer goods industry for clients in more than 50 countries around the globe.
• Harold Levinson Associates • Jack Link’s
Did not provide
With Mindtree’s TradeSmart and PromoPro, CPG companies can integrate all the right demand signals into a single repository, apply advanced analytics and evaluate what did or did not work for both manufacturer and retailer across all channels.
Did not provide
Nielsen’s RMO suite makes granular data and models accessible to manufacturers and retailers through an easy-to-use, modular platform that includes post-event analysis for quick planning, thereby avoiding complicated legacy PEA (postevent analysis).
Revenue www.nielsen.com/us/en/ Management solutions/capabilities/ and Optimization sales-effectiveness.html
SAP Trade Management
Trade Promotion, Promotion Forecast, Sales Planner
SYSPRO Trade Promotion Management
TABS Promo Insights
• Conagra • Hershey • Henkel
Did not provide
• Blissworld • Les Boulangers Assoc. • Perrone & Sons • Beiersdorf Canada • Keurig • Matrixx Initiatives
T-Pro Optimum Trade Promotion Optimization Solution
BluePlanner Revenue Management Solution
• Snyder’s-Lance • Welch’s
• Ferrero • Vita Coco
• Barilla GTMS
• Kimberly-Clark • Sony
Trade Promotion Master
Built on SKU- and store-level payment-quality data representing more than $5 billion annually, the G360Rebates solution is fully configurable, maximizing ROI for manufacturers and distributors as well as incentives for convenience retailers.
• Heineken • Reckitt Benckiser • Unilever
Promax Advanced; Promax Optimize Did not provide Integrated Trade Services
* Information compiled by Consumer Goods Technology
Provides increased visibility into all trade-related processes, including real-time expense data for accurate cost forecasting and promotion planning. Sales reps can act as general managers, ensuring that promotional activities are well planned and soundly executed. Simulation capabilities to predict event impact along with a robust account planning solution; quick insights into consumer response across numerous variables; account specific plans that include a calendar view along with a predictive profit and loss statement. SYSPRO Trade Promotions enables quick identification of suitable items for promotion, such as new rebranded and seasonal items, slow movers or products nearing expiration dates. TABS Promo Insights is a web-based analytics tool that allows users to extract meaningful information from their promotional data. It enables users to determine, with confidence, whether or not their promotional spending is yielding a worthwhile return on investment. CPG companies drive optimal trade investment results using autonomously harmonized data to calculate accurate baselines and lift coefficients that power post-event analytics and predictive, optimized planning capabilities in T-Pro’s centralized intelligence hub. The flexibility and speed of deployment of UpClear’s SaaS model have made it the revenue management tool of choice for CPG companies of all sizes across more than 20 countries globally. GTMS provides the enterprise with full visibility into all aspects of annual customer volume and promotion planning cycles: top-down budget and calendar, bottom-Up forecast and execute, accurate settle and pay — all supported by complete analysis to drive profitable growth. An AI-enhanced solution that improves planning and revenue for CPG, providing true end-toend predictive trade promotion management combining zero-touch planning, optimization and evaluation from a single point of entry. Wipro Promax enables businesses to get accurate, actionable insights and predictive planning capabilities for desired business outcomes by combining industry expertise and data science with modular software and complementary services, based on customer maturity.
prescriptive data that shapes the development of brands and products. From a tech point of view, we are very close to enabling that. The challenge for the consumer goods industry is to get itself into shape through the availability and quality of its data, implementing the necessary change management to support the transformation of organizational structure with new role definitions, and bringing different skills and talent on board. JOHNSON: 10 years? Let’s start with three, maybe. Deloitte’s “Digital Divide” survey found that more than half of grocery purchases are now digitally influenced. With this influence across the pathto-purchase —including click-and-collect, where traditional features and displays are irrelevant — it is conceivable that trade promotion may not exist in certain categories in the near future. Demand may be stimulated by much more personalized and targeted offers, pushed via business rules that target specific consumer groups or consumer occasions. Every day, non-promoted pricing may become the priority, as syncing prices between online and brick-and-mortar may become more important and digital consumer promotions become the norm for driving trial and/or incrementality. That doesn’t mean that commercial planning systems won’t be required, but it does mean they will need to flex to faster planning cycles and more granular offers. We are seeing investment in these sorts of platforms and exchanges to power this next generation of TPM. ZIEGLER: Absolutely. Despite changes in buying habits and channels, there is still no greater buyer motivation than price. As a result, trade promotion will still exist; however, the practice of trade promotion will change. Today, many companies still take a “hope” approach, where they’re slashing price in the hope of getting the results they need. This is where technology will drive the balance between the art and science of trade promotion to create better outcomes. Additionally, we’ll see technology bridge the gap between manufacturers and retailers for better mutually beneficial collaboration. As both parties have access to the historical and the predictive intelligence around promotional and category performance, the opportunity to work together is greater than ever. This won’t result in the end of trade promotion, but rather in the reinvestment of trade promotion dollars in more successful campaigns and other consumer marketing activity.
SHOPPER MARKETING MARCH 2019
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Del Monte Helps Walmart Be a Destination Manufacturer collaborates with various others to offer healthy snacking options for back-to-school season By Patrycja Malinowska
Del Monte Foods built out its back-toschool program at Walmart by iterating with new collaborative partners and embracing remixed tactics. “Everything began with the shopper insight that the customer is looking for a variety of healthy, satisfying options, and the goal was to establish Walmart as the destination for healthy snacking,” says Del Monte’s Carol Vella, formerly a senior shopper marketing manager. For the 2018 fall back-to-school season, what started as a solo program the year prior had expanded to incorporate LALA U.S.’s yogurt smoothies, Wonderful Co.’s pistachios, Musco Family Olive Co.’s olives, Kellogg Co.’s Stretch Island fruit snacks and Fujifilm. Their joint effort targeted the on-the-go Millennial mom by highlighting a variety of convenient and healthy snacking options. The creative messaging was “Hit the Snack Spot,” and executional tactics included shelf signs across five categories, digital display ads, a Walmart.com showcase, Ibotta integration as well as “WOW” sampling. For the sampling program, the partners worked with Retail Sports Marketing for a custom execution at the front of stores (near apparel racks) that started in August and offered a combination of whole- and half-sampling. Employees wore aprons branded with the “Snack Spot” message and distributed Snack Spot branded bags, while Fujifilm provided Instax cameras for a modern Polaroid shot in front of a selfie station. “Partnership enables a cross-category presence, increased impressions without increasing investment, and reaching new shoppers via association,” Vella says. “In this case, it also allowed the campaign to deliver on shopper desire for variety.” The program was an evolution of the post-holiday, return-to-school mini-partnership in January 2018, when Del Monte had brought on Kellogg’s and LALA as its first collaborators. Execution encompassed basic endcaps in 1,800 stores, sampling, display media, Ibotta integration and sponsored Breaktime Media content, though the partners were flexible to each other’s needs and not every tactic was executed together.
The campaign garnered strong buyer support and delivered strong results, Vella says, driving incremental sales at a 33% per store, per week increase for Del Monte. The partners had also pitched an ambitious “WOW” endcap that would include a floor cling, shelf strips and header. The ultimate goal was to have this split endcap that would serve as a Snack Spot visual and cross-merchandise a variety of items, Vella says, but Walmart wasn’t yet convinced to get on board with that final piece. Nevertheless, Del Monte’s collaborative approach helped build successful campaigns by adding scale, cost efficiency and more visibility with buyers for increased awareness and results like incremental display.
Adding collaborators also helped Del Monte pivot away from Walmart’s nowdefunct endcap TV Smart Network. For the prior 2017 fall back-to-school season, the manufacturer had executed a solo program showcasing its newly launched Fruit & Chia cups. That program provided a 300% lift during the two weeks it ran and some residual lift as well, relying heavily on the Smart Network. Shelf signage, in-store sampling and
national TV spots also supported. Vella offers this learning/guidance based on the work: n For partnerships, create clear goal alignment (who the customer is, strategy, media tactics, expectations for timely responses), check store lists for sufficient overlap, maintain clarity about who is paying the agency fee, and stay flexible regarding tactics. n For in-store execution, consider using stickers on cases slated for display placement to help direct store employees, consider test/control stores to test different scenarios and ask really early SM on for display placement.
Editorial Index Companies named in the editorial columns of this issue are listed below. AJW-Advisory . . . . . . . . . . . . . . . . . 13 Albertsons Cos . . . . . . . . . . . . . . . . 16 Alibaba . . . . . . . . . . . . . . . . . . . . . . . . 15 Avocadoes From Mexico . . . . . . . . 8 Benefit Cosmetics . . . . . . . . . . . . . 26 BevMo! . . . . . . . . . . . . . . . . . . . . . . . . . 8 Birchbox . . . . . . . . . . . . . . . . . . . . . . 28 Breaktime Media . . . . . . . . . . . . . . 34 Calvin Klein . . . . . . . . . . . . . . . . . . . . 14 Catalina . . . . . . . . . . . . . . . . . . . . . . . . 6 Coca Cola Co ., The . . . . . . . . . . . . . 14 Colgate-Palmolive . . . . . . . . . . . . . 13 Costco . . . . . . . . . . . . . . . . . . . . . . . . 18
Coty . . . . . . . . . . . . . . . . . . . . . . . .14, 22 Creme Shop, The . . . . . . . . . . . . . . 23 CVS/pharmacy . . . . . . . . . . . . . . . . . 23 Daymon . . . . . . . . . . . . . . . . . . . . . . . 16 Del Monte Foods . . . . . . . . . . . . . . 34 Dyson . . . . . . . . . . . . . . . . . . . . . . . . 26 Epsilon Catapult . . . . . . . . . . . . . . . 13 Estee Lauder Cos . . . . . . . . . . . . . . 26 Eversight . . . . . . . . . . . . . . . . . . . . . . . 7 Fujifilm . . . . . . . . . . . . . . . . . . . . . . . . 34 Gladson . . . . . . . . . . . . . . . . . . . . . . . . 6 Glossier . . . . . . . . . . . . . . . . . . . . . . . 27 Grocery Outlet . . . . . . . . . . . . . . . . . . 6
IBM . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Ibotta . . . . . . . . . . . . . . . . . . . . . . . . . 34 Inmoji . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Instagram . . . . . . . . . . . . . . . . . . . . . 14 Kantar Consulting . . . . . . . . . . . . . 18 Kellogg Co . . . . . . . . . . . . . . . . . . . . 34 KF Beauty . . . . . . . . . . . . . . . . . . . . . 23 KKW Fragrance . . . . . . . . . . . . . . . . 26 Kroger . . . . . . . . . . . . . . . . . . . . . . . . 16 Kylie Cosmetics . . . . . . . . . . . . . . . . 26 LALA U .S . . . . . . . . . . . . . . . . . . . . . . . 34 LG&P . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 L’Oreal . . . . . . . . . . . . . . . . . 22, 26, 68
Luxury Lab . . . . . . . . . . . . . . . . . . . . 23 Mars Agency, The . . . . . . . . . . . . . . . 8 Mars Inc . . . . . . . . . . . . . . . . . . . . . . . 13 Massimo Zanetti . . . . . . . . . . . . . . . 18 Mastercard . . . . . . . . . . . . . . . . . . . . 10 Musco Family Olive Co . . . . . . . . . 34 Nestle . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Ocean Spray . . . . . . . . . . . . . . . . . . . . 7 PepsiCo/Frito-Lay . . . . . . . . . . . . . . . 7 Perfect Corp . . . . . . . . . . . . . . . .15, 22 Private Label Manufacturers’ Association . . . . . . . . . . . . . . . . . . 18 Procter & Gamble . . . . . . . . . . . . 7, 16
RangeMe . . . . . . . . . . . . . . . . . . . . . . . 6 Retail Sports Marketing . . . . . . . . 34 Salsify . . . . . . . . . . . . . . . . . . . . . . . . . 13 Sam’s Club . . . . . . . . . . . . . . . . . . . . 16 Sephora . . . . . . . . . . . . . . . . . . . . . . . 24 Shopkick . . . . . . . . . . . . . . . . . . . . . . . 6 Square Roots . . . . . . . . . . . . . . . . . . 15 Suave . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Starbucks . . . . . . . . . . . . . . . . . . . . . 15 Storybook Cosmetics . . . . . . . . . . 23 Symphony CPG/AI . . . . . . . . . . . . . 13 Syndigo . . . . . . . . . . . . . . . . . . . . . . . . 6 Synergy . . . . . . . . . . . . . . . . . . . . . . . . 6
Target . . . . . . . . . . . . . . . . . . 15, 22, 23 TerraCycle . . . . . . . . . . . . . . . . . . . . . . 7 TracyLocke . . . . . . . . . . . . . . . . . . . . 13 Twitter . . . . . . . . . . . . . . . . . . . . . . . . 14 Ulta Beauty . . . . . . . . . . . . . . . . . . . 26 Unilever . . . . . . . . . . . . . . . . . . . . . 6, 7 Walgreens . . . . . . . . . . . . . . . . . . . . . 28 Walmart . . . . . . . . . . . . . . 6, 10, 22, 34 Wegmans . . . . . . . . . . . . . . . . . . . . . 20 What’sInStore . . . . . . . . . . . . . . . . . 15 Wonderful Co ., The . . . . . . . . . . . . 34
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