Most retailers believe that more is better because customers want choice.  However the work of researchers Sheena Iyengar and Kanika Agrawal suggest the exact opposite.  In an article for Strategy + Business magazine entitled, “A Better Choosing Experience” Iyengar and Agrawal detail their observation of consumers who are consistently overwhelmed by too much choice.  According to them, “there are neurological limits on humans’ ability to process information, and the task of having to choose is often experienced as suffering, not pleasure.”

“Choice overload,” as they call it, occurs when shoppers become frustrated with trying to compare and contrast a variety of products, particularly more than seven.  As a result, shoppers will either choose the thing with which they are most familiar or choose nothing at all.  In an analysis of 401(k) plan participation for one company, researchers found that when presented with only two fund choices, 75 percent of eligible employees participated.  The rate of participation dropped to 61 percent when plan offerings were increased to 59 choices.

Iyengar and Agrawal suggest four solutions to the problem of choice overload:

• Cut the number of options.
• Offer expert or personalized recommendations.
• Categorize product offerings
• Condition consumers by gradually introducing complex choices.

The article gives excellent examples of how retailers and manufacturers have employed one or all of these tools to help customers overcome choice overload and ultimately increase sales.  A worthy read with surprising insight into the shopper mind.

The list not only profiles top retail brands, but also examines retail and economic trends that are significantly impacting the way everyone is or will be doing business. 

#1 and #2 are “The Economy” and “Gas Prices.”  The combination of these two factors have negatively impacted retail prices and consumer behavior in a way that many believe will be felt long after the economy recovers.  They also gave rise to the reports number #5 trend, Bankruptcies in Retail.

Sparked by Circuit City and followed by every over-leveraged, consumer-facing business from banks to Sharper Image, the economic dust up wiped out a good bit of the retail landscape.  According to the report, “2008’s bankruptcies came out in two waves, the first of which hit in February and took out companies that sell things we want but don’t need.  A second flurry hit in July, taking out companies that sell necessities that are available cheaper elsewhere.”

The top ten trends and brands in this 24-page report also include Amazon, smaller format stores, digital delivery of products, Apple stores, the iPhone, Holiday 2008 and the future of the shopping mall.  It’s an interesting read that addresses all things we’ve gawked at and questioned and are now having to take a position on to move forward.

Top 100 Retail Movers and Shakers

The National Retail Federation, representing the interests of many large retailers, has already issued their official opinion with suggestions to make reform more palatable for retail employers.  John Mackey, CEO and co-founder of Whole Foods recently published an op-ed in the Wall Street Journal echoing the sentiment of NRF.  His opinion rocketed all over the Internet and incited fierce criticism from plan supporters with the most outspoken calling for a boycott of Whole Foods.

The impact of health-care reform on retailers as employers is one angle that many are weighing in on.  Mackey’s op-ed generated over 500 comments alone.

However, from another perspective reform may present an opportunity for retail — the 46 million newly insured consumers of health-care.  Retail clinics have been hit or miss in grocery and drug store channels.  Initial predictions expected the clinics to explode however, insurance barriers and high upfront cost of treatment made them often no easier to access than a regular doctor’s office. Should the necessary reform become a reality, the number of retail clinics and primary care chains is likely to increase rapidly.  Retail channels who invest in expanding their health and wellness category, supplemented by an in-store clinic could see significant gains.  Reports indicate that among the best performing areas in retail are drug and health-care stores. While no one is sure what reform will look like, it appears that some sort of change is on the horizon.  It would be wise for retailers, particularly in drug, grocery and mass channels, to prepare for the inevitable.

To understand the answer to that question, let’s first start with a definition of the CEO agenda.  Traditional elements such as maximizing shareholder value, improving return on invested capital and hiring the best talent will always top the CEO agenda.   The corner office is also historically interested in critical business processes like new product development, supply chain management, assortment management and inventory management.  These functions have common elements.  They have a consistent definition.  They have a common understanding of the underlying business process and associated performance management metrics.  The professionals in those areas know what their career ladder and success elements leading to promotion consist of.  Most importantly, there is a clearly understood and quantified link to the company’s financial statements.  Stated another way, CEO agenda business processes have a business architecture that is commonly understood.

Peter Hoyt at the In-Store Marketing Institute at the In-Store Marketing Summit  in the Spring (which was a fabulous conference) stated “he is concerned that our shopper marketing initiatives will become a fad.”  Why would he state that publicly?  We need look no further than the state of shopper marketing.  What is our common definition of Shopper Marketing?  What is our common definition of success metrics?  What is our common understanding of shopper marketing business processes.  What is our shared understanding of the career ladder for our practitioners?  What is the common end-goal of shopper marketing?  How do we draw a direct link between in-store marketing activities and the financial statements of the company?  What is our commonly understood business architecture?

Words are important.  Definitions are critical.

President Bill Clinton once infamously remarked “that depends on what your definition of ‘is’ is”.  In order to have any common ground, we must know what our definition of Shopper Marketing is!  Reveries Magazine conducted a study that identified “Lack of a commonly understood Shopper Marketing definition within your company” as a major issue.  Deloitte Consulting’s seminal study on Shopper Marketing in 2007 and 2008 highlighted the issue.  They identified six different Shopper Marketing definitions.  They then identified a seventh as their creation stating Shopper Marketing is “all marketing stimuli, developed based on a deep understanding of shopper behavior, designed to build brand equity, engage the shopper (i.e., a consumer in ‘shopping mode’), and lead him/her to make a purchase.”  My cursory review of other sources uncovered a number of others including:

Chris Hoyt, President of Hoyt & Company, defines it as “leveraging shopper insights to create retailer-centric executions that delight shoppers and benefit both brands and retailers.”

Dave Gerba’s definition is “shopper marketing can be in-store marketing, loyalty marketing, or even customer relationship management — basically anything that eschews broadcasting ads to the masses in favor of systems that narrowcast relevant, targeted ideas and messages to the individuals who will value them most, thereby improving the overall shopping ‘experience’”.

Lisa Klauser, VP of Consumer and Customer Solutions at Unilever defines it as “Translating shopper insights into actionable programs or solutions with our retail customers that are going to drive business”.

How can shopper marketing be a CEO agenda item if the professionals in the discipline don’t have a common understanding?

Who is accountable for what business outcomes?

Stephen Covey said “Accountability breeds response-ability.”  We know the outcome marketers strive for is return on marketing investment (ROMI).  Anne Chambers, founder of Capre Group notes “ROMI provides a vehicle for articulating clear definable returns in the marketing discipline.  This financial measurement rigor has sustained the CEO’s investment in marketing as it is directly linked to company growth.”  The question becomes how do you get there?  What comprises the processes and capabilities the Shopper Marketing group is accountable for?  What are the associated sub-processes, tasks and outcomes?  How are the outcomes linked to marketing return on investment?  Covey’s point is that without process accountability, how can senior management know who to turn to in order to improve the process?  Without process definition, how can senior management know what exactly needs to be improved?  Without outcome definition, how can senior management know if the accountable group improved the right process and achieved the desired outcome? 

In order to understand who in the organization is accountable for particular shopper marketing business goals, we have to start with the end in mind.  What is the overarching goal that will be the glue to pull the shopper marketing discipline into a cohesive goal?  The end goal must be to “create an environment to bring retailers and manufacturers together using the shopper as the focal lens”.  If that is an end goal, then strategies, processes and metrics should be defined (or redefined) with that in mind.  It also can connote a process differentiation to the CEO.  If the CMO tells the CEO that the single business process that integrates retailer and manufacturer demand and insight is the shopper marketing business process, we will have successfully positioned the discipline in the CEO’s mind. 

We must also understand where process ownership lies.  Where does shopper marketing end and category management begin?  Where does brand management end and shopper marketing begin?  How does the research function interact and integrate with shopper marketing?  We already know one bad practice.  Chris Hoyt identified that when shopper marketing is integrated with sales the “[g}ap widens between marketing and sales.  This happens because the shopper-marketing function is perceived to be tactical (because it reports to sales).  As a result, marketing tends to default all shopper-related decisions to the Shopper Marketing Department and divorces itself from the process – at the very time that both marketing and sales should be drawing closer”.  He concludes that the sales group is the wrong place for shopper-marketing.  A core requirement of our shopper marketing profession must be a set of best practices that outlines cross-functional process ownership and organizational alignment.

Establishing the right foundation

David Allan Coe said “It is not the beauty of a building you should look at; it’s the construction of the foundation that will stand the test of time.”  How do we establish the right shopper marketing foundation?  We must establish the shopper marketing business architecture.  The Business Architecture Working Group identified these critical business architecture elements:

                Business strategy view:  Captures the tactical and strategic goals that drive an organization (or unit) forward.  These tactical and strategic goals are mapped to metrics that provide ongoing evaluation of how the organization or unit is achieving its goals.  The metrics in turn must be mapped to the financial statements of the company.

                Business capabilities view:  Describes the primary business activities and pieces of an organization that perform those functions.

                Business process view:  Defines the set of strategic, core and support processes that transcend functional and organization boundaries.  The processes also describe which people, resources and controls are involved in the process.

                Business knowledge view:  Establishes shared semantics (e.g. definitions) within an organization and relationship between those semantics.  These semantics form the vocabulary that the organization relies upon to communicate and structure the understanding of the areas they operate within.

                Business organization view:  Captures the relationships among roles, capabilities and business units, the decomposition of those business units into subunits and the internal or external management of those units.

In addition, it is critically important that the interaction between each of these views be defined.  Completely constructed, this forms the foundation of the business architecture for any business process, business function or organization.  It allows the organization to understand goals, assign accountability, define the method of working, articulate success metrics and create measurable shareholder value that is linked to the company’s financial statements.  Lacking this, the discipline can easily spin out of control and drive value out of the enterprise.  The shopper marketing community must form an organization or commission to clearly articulate this to our practitioners.
Let’s get together

Warren Buffet remarked people should “never invest in a business you can’t understand”.  CEOs feel the same way about processes and capabilities.  If they don’t understand it, they won’t invest in it.  Companies like Conagra, Unilever, Coca-Cola, Crayola and Johnson & Johnson are investing heavily in the shopper marketing discipline and shopper marketing has made it onto their CEO’s agendas.  Other companies have taken incremental investments.  Others are still trying to figure out what to do.  This should trouble us.  What company do you know of that is deciding “should we invest in supply chain processes”?

The underlying success requirements are available.  There is a large transfer of knowledge from manufacturer to retailer due to the migration of manufacturing talent to the retail world.  This can only improve the knowledge of how this symbiotic relationship can evolve.  Jesse Spungin, VP of Shopper Marketing at Conagra stated in 2008 PMA Shopper Marketing Study that “the new common ground (for the retailer and manufacturer) is the shopper”.  Case studies are emerging that demonstrate the value of shopper marketing initiatives.  To ensure that Peter Hoyt’s fears are not realized, here are the six items that must be the foundation to “Create a common universally understood definition of shopper marketing.”

1.       Create a common universally understood shopper marketing architecture.

2.       As a subset of item #1, delineation of responsibilities between sales, brand management, category management and research must be clearly articulated.

3.       Establish as a common goal that shopper marketing’s over-arching goal should be to create an environment to bring retailers and manufacturers together using the shopper as the focal lens.

4.       Position Shopper Marketing in the eyes of the CMO and CEO as the single business process that creates an unified perspective of the shopper between retailers and manufacturers

5.       The career ladder for shopper marketing professionals must be created and integrated into corporate Human Resource organizations.

6.       Create a shopper marketing group that is commissioned to articulate items 1 and 2 above (underway through the good auspices of Coca-Cola and the In-Store Marketing Institute).

I challenge C-Level executives, and especially Chief Marketing and Chief Executive Officers to read this article.  Where else in your organization are you going to find a single point of convergence around the shopper that unites retailers and manufacturers?  Anne Chambers notes her firm has found that “the shopper creates a common target across all marketing disciplines from brand through the customer to improve brand equity and sales.  The company has a unified message pre-trip, in-store and consumption across the shopper lifecycle”.   Who in your organization is providing you with this unified view across retailers and manufacturers of what Mr. Walton refers to as the most important person, the customer (shopper)?  There is a reason there is so much energy behind shopper marketing.  Without the shopper, we are irrelevant!  As a community, let’s raise the level of our conversation and engage the corner office.

A Webinar presented by The Food Institute & Miller Zell — August 6, 2009

Featuring

Curt Johnson, SVP Consumer Industries, Miller Zell

Moderated by:

Brian Todd, President, The Food Institute

In the study, Gone in 2.3 Seconds, Miller Zell surveyed 999 shoppers to understand which in-store and out-of-store elements most influence brand perception and purchase behavior. In today’s economic climate, retailers and manufacturers cannot rely on rote routines to motivate shoppers to buy. They must understand the core sensibilities of shoppers and engage them based on their own predispositions.

This webinar will examine the data gathered through that research and provide guidance on how to more effectively target food and beverage shoppers in the grocery and mass channels by using the store as a valuable media.

DATE: August 6, 2009 12 PM Eastern Time

WHERE: Via your Internet connected computer and telephone

LENGTH: One Hour

Who should Attend: Food and beverage retailers, manufacturers, restaurants, suppliers, distributors, consultants to the industry and trade press.

In-Store Marketing Triggers Webinar – $149

**Special Discount: Food Institute Members Register For $99** (Contact Sue at santista@foodinstitute.com or 201-791-5570 ext. 212 to request promo code) The webinar will begin promptly at 12:00 PM on August 6, 2009. Registration entitles you to participate in the webinar from one PC, so the direct contact information must be provided for the person who will be attending. Once you register, you will be receiving an email from Boston Conferencing with instructions for attending the webinar, so please add the bostonconferencing.com domain to your list of accepted e-mail, otherwise the e-mail from Boston Conferencing could be held up by your spam filter.

About Curt Johnson & Miller Zell, Inc.

Curt Johnson is Senior Vice President for Miller Zell’s Consumer Goods Division. Mr. Johnson was promoted to this role in November 2006 after serving as Vice President Client Strategy for Miller Zell’s Consumer Packaged Goods accounts. In his current position, Mr. Johnson is responsible for managing the activities of several consumer goods clients including Hershey’s, Coca-Cola, Unilever, Johnson & Johnson, Crayola and Kraft Foods. Prior to joining Miller Zell, Mr. Johnson headed up the Roswell, Georgia office of BEN Marketing for 5 years prior to BEN Marketing being acquired by Ogilvy & Mather. After the acquisition he stayed on as Vice President Customer Marketing for Ogilvy Action Marketing Services. Mr. Johnson has served in a variety of brand management and marketing service roles over the past 18 years, managing and growing blue chip clients such as Procter & Gamble, General Mills and S.C. Johnson Wax to name a few. Johnson speaks fluent German and spent a year abroad working and studying for his MBA at The Koblenz School of Economics and The Pennsylvania State University, earning his graduate degree from Penn State. Born and raised in Cedar Rapids, Iowa, Johnson graduated from University of Northern Iowa with honors and a BA in Communications.

Miller Zell is a leader in strategic retail consulting specializing in retail design, graphic design, shopper marketing, shopper insights research & analysis, and store implementation, serving some of the world’s best known brands. Headquartered in Atlanta, Ga. for more than 30 years, Miller Zell designs and builds award-winning selling environments across retail sectors including grocery, financial institutions, dealer-based businesses, restaurant chains, consumer products and mass merchandise. More information can be found at www.millerzell.com

About Brian Todd & The Food Institute

Brian Todd became president of the Food Institute in 2002 and has worked for this 81-year-old organization since 1980. Mr. Todd oversees the day to day operations of the Elmwood Park, NJ-based association which disseminates industry information through its weekly report, daily e-mail updates, seminars and webinars, reaching over 100,000 industry professionals. Mt. Todd graduated from Ramapo College in Mahwah, NJ in 1980 with a B.A. in Political Science and serves on the New Jersey Food Alliance of Rutgers’ Food Policy Institute.

The Food Institute is a nonprofit organization with a single purpose: providing information. The Food Institute strives to be the best “single source” for current, timely and relevant information about the food industry from “farm to fork.” The association serves as a trusted source of information, providing balanced coverage of the issues. It delivers information through multiple media so that industry professionals worldwide can tap in when and how they choose. For more information, visit, www.foodinstitute.com.