retail news in context, analysis with attitude

Notes and comment from the Content Guy

LAS VEGAS - There were a couple of sessions yesterday at the National Grocers Association (NGA) convention here that struck me as pointing to the enormous challenges facing all retailers, but especially the independent grocer segment.

One came in a workshop that seemed primarily designed to motivate grocers to get involved in an NGA initiative that will look to replicate some of the data analysis functionality offered by dunnhumby and used by retailers such as Tesco and Kroger.

Gary Hawkins, of Hawkins Strategic, said that retailers need to find ways to engage consumers by being relevant to their specific needs and wants, that the next big retailing battle will be over which companies can do this best, "and what is fueling this battle is data," which will allow retailers to offer consumer-specific promotions. Kroger, Hawkins noted, does precisely this by using dunnhumby-generated data, which has allowed it to have 37 consecutive quarters of same-store sales growth; it has more than 300 full-time data crunchers analyzing Kroger sales data to find the best ways to appeal to shoppers.

Kroger, he said, is sending out personalized promotional pieces to 10 million shoppers on a quarterly/seasonal basis, and is getting a 66 percent response rate. "They are weaponizing big data," he said.

"As Kroger gets more of the high-spending shoppers who are more profitable, you may be getting...the lower spending shoppers who are less profitable," Hawkins said.

In addition, he suggested, marketing/promotion money offered by manufacturers is moving away from old-world, mass-audience programs and moving toward more targeted initiatives. "You can't blame the brands for this," he said. 'This is all about economics."

Later in the day, in a general session panel discussion, Natan Tabak, senior vice president at Wakefern Food Corp., made a similar point. Speaking about mobile marketing, he said, "You can't just send them information they don't want." Once you get consumers to opt into these programs, he said, it is important only "to send them relevant information." And, he argued, this will become even more important as the next generation of shoppers comes of age, because they are used to systems that are targeted and relevant.

Tom Furphy, CEO/Managing Director of Consumer Equity Partners, agreed, and suggested that there are technologies coming online that will make targeting even more feasible. Now, he said, smart phones can contain chips "that learn and learn and learn," and will allow app developers to create functionality that will build on how people use their smartphones, what they buy and look at with them, and even where they go. "It'll blow you away," he said.

The broad message, it seems to me, is that retailers of all stripes need to be thinking carefully about the mass merchandising/mass marketing efforts of the past, and doing whatever they need to do in order to create more focused targeting mechanisms that can compete more effectively with the kind of data analysis being done by retailers such as Kroger, Tesco, and, of course,

The primary battle will not be fought between bricks-and-mortar retailers and e-commerce, but between those who have and use data in relevant ways, and those who do not. A kind of new world thinking has to take place ... and those who do not embrace such an approach may find themselves to be out of synch with their shoppers.

Which is not a good place to be.

Other news from NGA...

• The announcement of the 2013 Creative Choice Contest winners took place, with the "Best of Show - Advertising" award going to Mollie Stone's Markets of Mill Valley, CA, for its "Shop Local" ad.

The co-recipients of the 'Best of Show - Merchandising" award were Harmons Grocery of West Valley, UT and The Fresh Grocer of Drexel Hill, PA. Harmons promoted its 16th location opening with the "Harmons City Creek Grand Opening" campaign, while The Fresh Grocer unveiled a new, health-focused supermarket field trip program to educate grade school students on healthy eating.

• Also announced were the winners of the annual Food Industry University Coalition Student Case Competition. St. Joseph's University won first place, with participants Mark Lang (faculty advisor), Lauren DeLeon, Norene Drici, Edward Fagan, Mary Sisti, and Devin Tanney taking home a combined $8,000. Runner-up California State University - Fresno received $2,000.
KC's View: