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    Published on: September 28, 2009

    Next week, the first LEAD (Loyalty, Engagement, Analytics, Digital) Marketing Conference is scheduled to convene at the Westin O’Hare in Rosemont, Illinois, and it is a mark of how important these issues are – even in a time of recession – that registrations are beyond expectations.

    As described on the conference website, “The LEAD Marketing Conference is the first retail-centric conference to focus on understanding and leveraging these effective and emerging technologies which are crucial to attracting and maintaining shoppers, as well as providing much-needed differentiation in today's competitive marketplace.” Among the keynote speakers: Candace Adams, former Senior Director, Customer Experience at Walmart; Mark Heckman, VP/Marketing for Marsh Supermarkets; Stephen Vowles, Senior Vice President, Stop & Shop/Giant Supermarkets; and Gary Hawkins, president of Hawkins Strategic, author of “Customer Intelligence,” and CEO of Green Hills, a family-owned supermarket in Syracuse, NY.

    To get a preview of the kind of issues that will be discussed at the LEAD Marketing Conference, we engaged with Gary Hawkins in an exclusive e-interview about his topic: “Retail 3.0: The Next Generation Retail EcoSystem,” a new concept developed by Hawkins Strategic.

    MNB: You describe Retail 3.0 as “relevant, personalized marketing to individual shoppers, supported by realtime marketing and supply chain synergies, built on a foundation of shopper-identified transaction data.” But I can hear retailers all over America saying, ‘That’s fine…but I’m in a recession, I’m competing with Walmart, and I’ve got to focus on price, price, price.” How would you respond?

    Gary Hawkins: Retail 3.0 is about information, and leveraging that information, both product- and customer-based, to create competitive advantage. Retailers without shopper-identified transaction data, such as Walmart, are blind to the most important part of their business. They are able to see product-based sales and margin information, they may even be masters of managing product logistics, but they are not able to see - and individually market to - the shoppers that are actually driving their business.

    A majority of supermarkets have a loyalty program in place through which they gather shopper-identified transaction data, which is fundamental to targeting relevant promotions to individual shoppers. But, how many retailers are really leveraging that information? How many are combining that with email, web, mobile, and other ways of inexpensively communicating personalized promotions and content to their shoppers? The answer is, not many. And yet these retailers are overlooking a very potent weapon they already have to use in today’s retail battles.

    Personalized, relevant marketing drives sales, shopper retention, and provides further opportunity to collaborate with suppliers to deliver meaningful value to shoppers. As retailers build their digital communication interaction with shoppers, it provides an opportunity for cost savings through decreasing less effective yet expensive mass marketing.

    Though the economy has been a brutal one, we are seeing forward-looking retailers invest in infrastructure, systems, and solutions that are part of the Retail 3.0 world. I was talking recently with the CEO of a supermarket chain facing brutal competition in a part of the country hit hard by the recession. This executive is investing in technology infrastructure to position his company for growth even in the current environment.

    Many of the pieces of Retail 3.0 deliver strong ROI and gain in their own right. The real excitement begins when these different systems and solutions literally get connected, changing the retail paradigm.

    MNB: You seem to point to dunnhumby-type analytics as being the kind of differential advantage that can provide enormous advantages in today’s marketplace…and yet there don't seem to be that many companies availing themselves of this kind of technology. Is there more going on in this arena than it appears at this point? And if it is so important, why do companies as big as Publix and Supervalu – which you describe as “customer intelligence have-nots” – seem to think it is not critical to long-term survival?

    Gary Hawkins: Retailers that Hawkins Strategic has described as “customer intelligence have-nots” are aggressively searching for how they can enter the fray. They realize the significant value creation that can flow from shopper data. Their challenge is how to obtain vast levels of shopper-identified transaction data without launching a “me too” loyalty program, which many of these retailers refuse (rightly!) to do.

    There is no question that the success of the Kroger-dunnhumby partnership has generated strong interest throughout the industry. In addition to the significant sum of incremental trade promotion money Kroger is accessing, the company has financially outperformed all other supermarket companies over the past five years. Kroger has even outperformed Wal-Mart until very recently. This superior financial performance, driven by monetizing and operationalizing the insights gained through their shopper data, has garnered the attention of other retail executives, driven in no small part by Wall Street analysts putting Kroger forth as the benchmark. All this has been noted by the other big players - and each of the Tier 1 supermarket retailers, and a number of larger Tier 2 retailers, are engaged in active discussions searching for their “dunnhumby-like” dance partner.

    Certainly, vast insight can be gained by marrying transaction data with panel data and other third party sources; Walmart generates significant insights that they are able to monetize. But, those retailers who have high quality shopper-identified transaction data are in a superior position to follow the Kroger-dunnhumby path and capitalize on the Retail 3.0 ecosystem. As we have suggested in the Retail 3.0 series of Position Papers (available at, those retailers without shopper-identified transaction data will become increasingly disadvantaged in the marketplace, both in terms of financial performance and in delivering a strong value proposition to shoppers.

    MNB: You talk about personalized data leading to personalized marketing. Give me an example of how this would work…and what a retailer would be able to do with information to drive sales and profits.

    Gary Hawkins: There are countless opportunities to transform the marketing and shopping experience using shopper-identified transaction data, i.e., a detailed record of a shopper’s purchasing history.

    We can see how Stop & Shop is already working to leverage this through their Scan It! system, targeting promotions to the shopper’s handheld scanner as she moves through the store. Kroger is utilizing shopper data to target promotions to individual shopper households via their quarterly mailings.

    But a very clear example is provided by Green Hills. Each participating customer receives personalized promotions each week based upon their shopping history, communicated via email, web, and kiosks in-store, with the customer-specific discounts delivered automatically into the transaction. In place for over three years, shoppers participating in the SmartShop system impact a significant portion of Green Hills revenue. Participating shoppers spend more and shop more frequently than non-participating customers. Personalized marketing is very powerful.

    Personalized marketing will continue to grow in importance as more and more consumers have special dietary needs, lifestyle interests, and associated health & wellness concerns. There is a tremendous opportunity for the industry to leverage a Retail 3.0 ecosystem to take every shopper’s needs into account in how they market to them.

    MNB: Does that mean mass marketing is dead?

    Gary Hawkins: No. Mass marketing is not dead. But it will absolutely evolve as the Retail 3.0 ecosystem takes hold. Mass marketing has a strong role to play in branding and positioning, in addition to communicating various marketing programs. But mass marketing is no longer the most effective way to communicate all promotions. There is an optimum blend or balance between mass marketing, personalized marketing, and more traditional loyalty marketing.

    As we outlined in our latest 3.0 Position Paper, Shopper Marketing, it is possible in the Retail 3.0 ecosystem to at last measure marketing in terms of the actual number of shoppers realized in the store. With this guide, a retailer can begin to understand the impact and effectiveness (or lack thereof) of their mass marketing, and search to find the optimum marketing blend as evaluated by the customers in the store and the cost to attract those customers.

    MNB: To what extent is Retail 3.0 the purview of big chains with financial and technological resources? If not, give me an example of how an independent or small chain might be able to use it to compete more effectively with a behemoth?

    Gary Hawkins: The big chains certainly have a financial advantage in terms of being able to fund investment in the technology infrastructure required for Retail 3.0. And, to relate this back to your first question, we are seeing a number of the larger companies indeed making those investments.

    Historically, as retailing came to rely on technology to realize supply chain efficiencies and make store-level operations more effective, smaller retailers became increasingly disadvantaged. This was compounded by national brands’ increasing focus on the largest ten or fifteen retailers who drove most of their revenue, and to a great extent ignoring smaller retailers and even regional chains who simply could not move the needle for a national brand.

    This bleak environment for smaller retailers is changing, though, and changing rapidly. We are seeing technology providers realizing there is opportunity to provide sophisticated solutions to smaller retailers using a Software-as-a-Service (SaaS) model. Things like price optimization and pricing systems are now available to smaller retailers. Even sophisticated loyalty solutions are being made available such as Retalix’s for smaller retailers in the StoreNext network.

    It is in the area of loyalty that smaller retailers are best able to shift the competitive battle their way. Small chain retailers and independents are essentially closer to their customers and are far abler to build relationships with their shoppers using loyalty systems. And, as smaller retailers begin to truly understand their business in terms of shoppers, they are able to more quickly and aggressively shift their priorities and investments to align with the opportunities than larger companies can.

    MNB: Where does Walmart fit into the Retail 3.0 continuum?

    Gary Hawkins: Walmart can and does participate in the Retail 3.0 ecosystem to a large degree, but not completely. They have world-class capabilities relative to supply chain logistics and are becoming much more sophisticated marketers. The one area, though, where they cannot close the loop today, and where they will be challenged to in the future, is fundamental to the Retail 3.0 world: delivering relevant, personalized marketing to their individual shoppers.

    Walmart does not identify shoppers to their transactions on a massive scale. Other retailers like Kroger, Green Hills, and countless others, are able to do this via their loyalty programs, the loyalty card or key tag identifying the shopper. Interestingly, however, Walmart does have this data available to them through their Sam’s Club division: being a membership club, the company does gather historical shopping data tied to the shopper.

    MNB: If indeed there has been a supply chain power shift to consumers, does this make one of MorningNewsBeat’s central tents even more true: that the most effective loyalty program is the one that demonstrates consistent store loyalty to the shopper, rather than the other way around?

    Gary Hawkins: It is very challenging, perhaps even impossible, to make a shopper loyal to a retailer without the retailer being loyal to the shopper. In our view, the 3.0 Retailer is able to create and extend this loyalty by providing a superior value proposition to each shopper in the form of promotions and information relevant to each shopper’s interests and needs.

    Take, for example, the exploding number of consumers with special diet needs (e.g., diabetic) or lifestyle interests (e.g., organic). How can a retailer effectively market to all these different interests using mass marketing and mass promotion? If I’m a diabetic, I have no interest in the ice cream and soda advertised on the front page of the flyer. At the same time, the retailer is challenged to justify the cost of marketing to a smaller segment of their overall shopper base.

    Historically, as marketers increased marketing refinement, moving from mass to segments to individuals, the business gain was mitigated by the increased cost of the marketing effort. In the world of Retail 3.0 and low-cost digital channels, it is less expensive to market to individual customers—and doing so creates enormous business gain from increased shopper spending, improved retention over time, improved ROI on marketing investments, and the opportunity for cost savings gained through reduced mass marketing spend. This paradox is transformational, and we do not believe many in the industry fully comprehend its importance.

    For more information about the LEAD Marketing Conference, go to:
    KC's View:
    Sounds like it should be a good keynote speech…it is scheduled for Monday, October 5.

    Just as a matter of interest…I should point out that the keynote speech being given on Tuesday morning will be by yours truly. So if you’re attending the conference, please stop by and say hello. I’d love to meet you.

    (Full disclosure: The LEAD Conference also has been an MNB sponsor…but we would have reported on it anyway.)

    Published on: September 28, 2009

    “60 Minutes” and Vanity Fair magazine have launched a new series of online polls that are designed to get a sense of the American consciousness, with the results to be announced both on television and in the magazine’s pages.

    The first of the polls was noted on last night’s season premiere of “60 Minutes,” with the question being which of five companies – Walmart, Google, Microsoft, the National Football League, and Goldman Sachs – is the best symbol of America today.

    Walmart was the runaway winner in the poll, favored by 48 percent of respondents – in what admittedly is a self-selecting sample of people who go on the Internet and choose to answer the poll questions. Google came in second, at 15 percent of respondents.

    Of course, this is the same poll that asked, “Which of these men would you most like to trade places with for a week: George Clooney, Barack Obama, Tom Brady, or Bruce Springsteen?” Clooney beat out Obama by a narrow margin.
    KC's View:
    The Walmart response certainly reflects a common sensibility today, and of the companies listed it probably was the best choice…though I might have chosen Apple because of its ability to be both a thought leader and innovator. And there probably are a lot of other companies out there that could’ve been included on the list of choices.

    As for the Clooney vs. Obama poll…I’m not sure how I would have voted. However, they also should have listed Glen Beck as a choice…just because his current celebrity would have made it a more interesting survey.

    Published on: September 28, 2009

    The San Jose City Council has voted to ban the free distribution of single-use plastic bags within the city limits, a ban that will go into effect in 2011 – assuming that it survives an environmental impact study and one more vote by the City Council.

    Northern California seems friendly to the notion of such bans, with San Francisco having approved one in 2007 and Palo Alto’s ban having gone into effect just last week. And other local communities seem to be more willing to consider a ban on bags once San Jose implements its legislation. One difference in the San Jose ordinance – it also includes paper bags, though it seems less likely that this part of the ban will make it through the political process.

    The San Jose Mercury News writes that “the city's legal department also will need to determine whether the city can require retailers to charge a fee for bags and how the fee would be shared by retailers and the city.”
    KC's View:
    This keeps popping up, and keeps generating a lot of email…and I get it: it seems like the majority of MNB users hate the idea of bans and fees, believing that we should trust market forces to decide whether a shift to reusable bags makes sense.

    The thing is, market forces are often determined by who has the most money to plow into public relations efforts…and it almost certainly won’t be the people on the side of reusable bags. All I know is that I feel good about the fact that we never use paper and plastic in our household….it feels like the smart environmental decision. And I keep seeing more and more people bringing reusable bags into the stores where I shop, in communities where there are neither bans nor fees. It is a small sample, but mine own.

    Published on: September 28, 2009

    The BBC reports on how Tesco identified 32-year-old, Gambian-born Fatou Cham to be one of six employees used as “real women” models in a current ad campaign for its clothing lines.

    The only problem – it now ends up that Cham is in the country illegally.

    According to the story, “Ms. Cham arrived in Britain in 1998 on a student visa to study at London Metropolitan University in Holloway, north London. She joined Tesco in 2002 when foreign nationals only needed a national insurance number to gain employment.

    “But the rules have now changed, meaning Ms Cham now requires a valid work visa. Her applications have so far been turned down and she had appealed to the High Court.”

    If the appeals do not work, Cham could be facing deportation.

    Tesco is said to have done everything by the book, and is in no legal jeopardy in the case.
    KC's View:

    Published on: September 28, 2009

    Brand Week reports that Procter & Gamble has unveiled two new sustainability initiatives – a “Future Friendly” program that “is designed to inspire and educate consumers about making sustainable choices that can have a positive impact on the environment,” and a program that will place items meeting certain sustainability criteria in 30 million homes by the end of next year.

    In addition, Brand Week writes, “P&G also pledged to provide 4 billion liters of clean drinking water by 2012 through the "Children's Safe Drinking Water" program. This will save nearly 20,000 lives and prevent an estimated 160 million days of diarrheal illness.”
    KC's View:
    These are the kinds of narratives that more and more manufacturers have to embrace…in part because they resonate with an increasingly environment-minded public, in part because retailers like Walmart are demanding it of their suppliers.

    Published on: September 28, 2009

    • In the UK, the Observer reports on speculation that Kraft Foods is willing to launch a hostile takeover bid for Cadbury. An earlier $16.7 billion unsolicited bid by Kraft was spurned by Cadbury as being insufficient, and while Cadbury management has said it isn’t interested in being acquired, Kraft’s leadership seems focused on moving forward with its effort.

    • In Texas, the Lufkin Daily News reports that Brookshire Brothers is acquiring Kaine’s Grocery, a third generation, family-owned retailer that is the only supermarket in the town of Buna – a community of about 2,200 people northwest of Houston.

    • The Los Angeles Times reports that Johnson & Johnson’s McNeil unit has recalled 57 lots of infants' and children's liquid Tylenol products because of possible bacterial contamination. While no bacteria was found in finished products, an inactive ingredient in the Tylenol did not meet internal testing requirements and so J&J, in consultation with the US Food and Drug Administration (FDA), decided to recall the lots.
    KC's View:

    Published on: September 28, 2009

    • ConAgra said that its first quarter profit was down 63 percent to $165.9 million, from $442.4 million during the same period a year ago. Q1 revenue was down three percent to $2.96 billion.
    KC's View:

    Published on: September 28, 2009

    • The Boston Business Journal reports that Gary Pfeil, Roche Bros.’ vice president and general manager, has been named president of the Massachusetts-based retailer.

    • dunnhumbyUSA, a joint venture between Tesco and Kroger, announced that Stuart Aitken has been hired as the company’s Chief Operating Officer and will assume management of dunnhumbyUSA from CEO Simon Hay, who is departing the US to assume broader responsibilities with the company’s London-based operations. Aitken is the former Chief Marketing Officer at crafts chain Michael’s Stores, as well as a former executive with Safeway.

    In addition, Gary Cofer has joined the firm as Global Executive Vice President/ Manufacturer Practice Leader. Cofer is the former Vice President of Customer Business Development for North America with Procter & Gamble.
    KC's View:

    Published on: September 28, 2009

    William Safire, who went from public relations executive to the White House as a speechwriter for President Richard M. Nixon, and then carved out a distinguished career and won a Pulitzer Prize as a conservative political columnist for the New York Times and as a weekly columnist on language, died yesterday of pancreatic cancer. He was 79.
    KC's View:

    Published on: September 28, 2009

    MNB had a story on Friday about the worsening labor situation in Colorado, as unionized employees seem to be rejecting what is said to the final offer by Safeway and King Soopers and vote to authorize a strike, though no date has been set for a walk-out.,

    In my commentary, I wrote: I simply cannot believe that during a recession and a time of high and growing unemployment, the union will go on strike and that the two sides won’t come to some sort of accord.

    One MNB user responded:

    Wow...I can’t believe how biased you have become!

    Before you print your opinion on most everything you post you seem to always get both side of the story. In this post I do not see anything from the employee side. You make a statement that says to me, that because the economy is so poor the employees are lucky to have a job and that they should simple take whatever the employer is willing to offer. I wonder how the companies that you side with are performing. Will they open up their books to prove that they are struggling and that this offer is a fair one, or is this only about leverage? What increases/concessions is there for the top wage and benefit earners?

    I would have to say that average wage increases of $8,000 over five years sound fair but what are the cost increases being shifted to the employee for pension and health and welfare? Is it more then $133/month that is being offered in wage increases? Let’s take look at the whole package before condemning the employees.

    Kevin, please get all sides before you post your opinions... otherwise you risk becoming irrelevant!!!

    Another MNB user chimed in:

    Granted these are difficult economic times, but to agree to a 4 yr bad contract is hard to do. These workers have been working w/o a contract for almost a year. They aren't overpaid. I don't know all the details, but it's been reported that the company has offered a 25¢ raise per year, but the employee will contribute $15/week to health care, simple math this is a pay cut. The grocery stores are making money, maybe not as much as in the past, but there is no reason to be slamming the already underpaid workers who make the profits for these chains. I know there will not be a lot of public support for anybody on strike, but get all the facts before you speak against these union workers.

    I suppose what I should have written was that it seems unfathomable that in this environment workers would even consider going on strike or that management would consider a lockout. Though I have to say, I don't think I was being all that biased against the union side.

    One MNB user offered a view of why management should avoid labor strife:

    It seems obvious that the real winner in a Kroger and Safeway strike will be non-union Walmart. They have lots of super centers in each state and no one minds saving money. If Walmart gets a bunch of forced trial, I’m sure a fair amount will “stick” as people discover that the experience isn’t so bad and the prices are great. And you don’t have to mess with a keychain full of “ loyalty” cards. Seems like a replay of the US automobile industry.... non union Japanese manufacturers in the south prospered while unionized Michigan based manufacturers went bankrupt.

    That’s not to say that there isn’t plenty of anti-union sentiment out there.

    Yet another MNB user wrote:

    The better question is when has the union ever done anything that makes sense? They clearly don't have the best interest of their members at heart!

    And another MNB user wrote:

    I don't know what the unions are asking for, but it sounds like the contracts were an improvement. I say let them go on strike, fire them all and hire non-unionized workers. Unions had their place at one time, but now they are just a drain on the system.

    MNB user Maggie Solberg had may what be a common idea:

    Humm, let’s see. 1) 10-12% unemployment. 2) Colorado is a very popular location to settle into. This is not rocket science – It stands to reason that there are going to be lots of people standing in line for the jobs that these union employees are rejecting. I’m packing now and can leave tonight.

    Do I think that people who have jobs ought to be grateful for their employment? Absolutely. Do I think they should risk that? Not for me to say … but if I were dependent on my supermarket job to feed my family in this economy, it would be very difficult for me to entertain the idea of walking out.

    And let me repeat something I’ve said here before. I am not anti-union; Mrs. Content Guy is a third grade teacher and is a union member.

    However, I also am not blindly pro-union, and do not kid myself that union leadership positions are filled with Gandhi-wannabees. Let’s get real. This is all about power and political posturing.
    KC's View:

    Published on: September 28, 2009

    In Week Three of National Football League action …

    Cleveland 3
    Baltimore 34

    Jacksonville 31
    Houston 24

    Atlanta 10
    New England 26

    Green Bay 36
    St. Louis 17

    Tennessee 17
    NY Jets 24

    Washington 14
    Detroit 19

    San Francisco 24
    Minnesota 27

    Kansas City 14
    Philadelphia 34

    NY Giants 24
    Tampa Bay 0

    Chicago 25
    Seattle 19

    Denver 23
    Oakland 3

    New Orleans 27
    Buffalo 7

    Pittsburgh 20
    Cincinnati 23

    Miami 13
    San Diego 23

    Indianapolis 31
    Arizona 10
    KC's View: