Hunting For Retail Innovation In Barcelona


I recently returned from a relatively rare business trip to Barcelona, Spain. Excited to be back in the market after a few years, I persuaded my client to take me on a tour of nearby stores. Predictably, of course Carrefour was on the list of stores we would go to, but so were Eroski’s Spanish subsidiary Caprabo and Spain’s own Mercadona. I was particularly keen to understand whether Spain’s economic woes had provoked any major retail innovations, and here’s what I found:

Discounters don’t have to be ‘cheap’

Think about hard discounters like Aldi and Lidl and immediately images of down-market stores, stocked with no-name brands and slim pickings in fresh foods come to mind. Not so in Mercadona, Spain’s home-grown answer to Germany’s upstarts.  Mercadona is no competitor to Whole Foods BUT a lot of thought has gone into the in-store environment and there is a clear focus on quality (sorry no photos here – I was under strict instructions!). This is most obvious in fresh foods, but interestingly also in home and personal care, where the chain has invested heavily in building own-label products that perform ‘better’ than the branded alternative. I’ told that to drive this, promoters work in stores to discuss the benefits of Mercadona’s range with shoppers directly. Indeed even my die-hard foodie guide told me he was happy to buy floor cleaner and laundry powder here, whilst spending the savings on high quality organic produce at the local market. This interests me as stores like Mercadona are creating an interesting new trend to split purchases across channels, which leads shoppers to cherry pick prices on more commoditized categories, whilst seeking out higher end offers for life’s little luxuries.

Online in-store 

Caprabos Wine Section

Spain has its fair share of online operators and these are increasingly popular in larger cities, but what grabbed my attention in Caprabo’s well-stocked wine section was this booth next to the main wine aisle.

Here shoppers are able to order wines that aren’t available in-store for delivery or pick-up. You can search by origin and variety on a well-structured touch-screen interface. We’ve seen this before in department stores like the UK’s Debenhams, but this is a relatively rare example of a grocery store exploiting the broad range it offers online in a small community store.

Price, price, price

Spain’s cash-strapped housewives are well served with discounted offers and like all the other markets I visit, retailers compete hard on price. It’ll be no surprise that Carrefour’s sole distinguishing mark is its price offer, at least if judged by the store I visited. But I did notice two particular differences in the way the Spanish affiliate communicates price, which contrast messaging in my neighborhood. The first was the use of a very clear messaging in the power aisle, where bright panels advertise buy two, get second at half price.

Carrefour Price Offer

The second was a VAT-free rebate on over 1000 non-foods lines.

Carrefour Price Offer 2

Both offers and their communication are not really new, but they do illustrate that the retailer has grasped that a sea of yellow labels does not good communication make. The clear -50% panels are clean, easy to comprehend and offer more compelling reasons to stop.

Capitalizing on changes at retail

I guess I would have been more excited if I’d have come away with some really new ideas from my trip (as well as a stock of Serrano Ham!) but I do think that the above reflects some global trends in grocery retailing, and for the manufacturer provokes three potential actions:

  1. Understand the changing roles of channels – if more shoppers are likely to split purchases, then different channels will play increasingly divergent roles for your brands – understanding these will help position your products more effectively in the future.
  2. Combine online and offline to extend the available range – many shoppers complain about lack of in-store availability; as grocers increasingly integrate online and offline, the opportunity to make wider ranges available in-store becomes more viable, even in the smallest outlets.
  3. Understand the role of price communication – much research suggests that shoppers respond more to the message of price than to the price itself. So, using clearer and more compelling price messages may deliver higher promotional off take. This is important as 70% of promotions lose money, mostly because they don’t create sufficient off take to deliver a payback. If better price communication is the secret then it’s time to embrace this.

Get in touch if you’d like to share your thoughts on retail innovations, or if you need advice on how to capitalize on the changes your retail customers are making.


What Consumer And Shopper Insights Do You Really Need?

VLUU L200  / Samsung L200In a world of “Big Data” it’s surprising that one of the major challenges that we come across every week is a lack of information. It’s not that there is no data; it’s just that many of the marketers we work with perceive that they have little or no useful insight that would help them grow. This is a common problem. The data people have, just isn’t helping them deliver the growth they need! So what data do you need to help make decisions that will deliver significant growth? 

To answer this question one needs to grasp a very simple principle – growth comes from getting people to do something they don’t already do now. For a brand to grow it needs to be consumed more, this means getting more people to use it, more often and in greater quantities. For this to happen, people who don’t already buy the brand need to do so, and those that already do need either to buy more or more frequently. So faced with the challenge to deliver growth, data that tells you where consumption gaps exist and explains how purchase behavior can be changed to deliver this is really useful.

Mike Anthony and I have written at length about this in our new book The Shopper Marketing Revolution, but here’s a simple rationale for holding this point of view:  a consumer can’t wash her hair with your brand if your brand is not in her shower. She might think your brand is fantastic, she might believe that your brand is the only one that meets her specific needs and she may well be aware no other brand can deliver what she needs, but if someone hasn’t bought the brand for her, she can’t use it. Just understanding her consumption needs is not enough – you have to also understand what would actually make her buy the brand.

Here’s a simple view therefore of what insights that we feel are really useful:

Consumer insights:

To define growth opportunities there are really only two types of question to ask:

  1. Who currently uses the category and your brand, how often and in what quantities? Which of these consumer segments could be encouraged to use more?
  2. Who doesn’t use the category or your brand and why not? Which of these consumer segments would use your brand and how could they be encouraged to do so?

A really good usage and attitude (U&A) survey is the best source of data that would help respond to these questions. That said, few marketers have access to “a really good U&A”: Many studies focus on users alone and ignore non-users and several limit their scope to a notional target market which excludes other demographics. Many companies conduct U&A research infrequently, favoring more frequent brand tracking surveys or adhoc “dip-stick” research. As a result, most companies end up with a narrative of existing consumption but little insight into the opportunity for growth. My advice would be to pair back on research that delivers this sort of narrative in favor of acquiring better insight into the opportunity to grow.

Shopper insights:

To realize growth opportunities there are again two groups of questions that need to be resolved:

  1. Who currently buys the category or brand for the consumer segments that could use more? What would make these people buy more frequently or in greater quantities?
  2. Who would buy for consumers who don’t currently use the brand but would? What would make these people buy your brand?

In many companies, data to help answer these questions is rare. For me this needs to change – in the short-term great proxies can be created from shopper panel data and from loyalty card data,  but often these are limited in their scope, either by sampling methodology or by the fact they are derived from a small proportion of the total market. In the medium-term marketers should seek more structured shopper research that helps then pin-point and unblock pinch points in the path to purchase.

It falls to the leaders of consumer goods businesses to seek out better sources of insight in the future. With many seeking to grow whilst trimming budgets, now might be a good time to do away with low-value narratives and focus scarce resources on insights that might deliver results. Simply put its time to stop buying junk that clutters up the decision making process and start investing in insights that really drive growth

Is Shopper Research The Only Option?

Is Shopper Research The Only OptionRecently, I’ve been spending a lot of time talking to marketing teams about how they can use shopper insight. On a number of occasions, I’ve been asked “doesn’t that mean that we’ll have to do loads of shopper research?” The answer to this question lies in the “shopper fitness” of the company. Some companies are like professional athletes when it comes to shopper insight – they have heaps of well-structured data which is used create clear strategies and plans and they work on it daily to hone their skills. Others don’t. We all know that to perform build muscle, you need spend a lot of time in the gym. The same is true with developing shopper marketing muscle – you have to work with and develop broad data sets to become really effective.

But just like novice athletes, getting going can seem daunting. And as with all things, taking the right first steps builds a foundation. Here’s a few tips that might help:

  1. Recognize you probably already do some shopper research: The start point for most shopper insights is often an understanding of what is bought where and in what quantities. So measures of retail sales are simple and accessible measures of shopper behavior. If you are buying data from Nielsen, GFK or similar providers, you are already buying data about shopping behavior (and importantly not about ‘consuming behavior’). Homescan™ type data gives you an idea of who is buying what, how often and where. If you are able to analyze data from retailers, a further level of detail is possible. All of this is ‘shopper research’ you are already doing. 
  2. You could be learning more about shoppers without spending money: Every single week, brands make subtle changes to how they are presented in retail. These changes have impacts on shopping behavior that are measurable. If these activities were evaluated carefully two things would happen: companies would learn what has a positive and negative effect on shopping behavior and they would save money by not repeating activities that have negative or neutral activities. We often meet people who avoid evaluating activities because they believe they don’t have enough data and yet, ironically, by evaluating activities one creates a massive amount of data.
  3. Don’t spend any money on research until you know what you want to know: Shopper research can be really disappointing. It’s quite common to hear that a whole load of work has been done and nothing has been learnt. Most often though the reason for this is because the questions asked are low value. If you want to drive consumption of a brand, shoppers will need to change their behavior to fill gaps in consumption so questions like “Who would buy product for our target consumer or consumption occasion? What stops them from buying? Where could we influence them to buy? AND, What would make them buy in those places?” would all help drive sales and consumption. Before you start a research program it’s wise to be super clear on the consumption occasions the brand needs to deliver upon and define what’s missing from your existing understanding.
  4. Remember you might be wrong: A lot of business decisions are based on beliefs. Research tests the validity of assumptions and therefore challenges belief. What research does not do is lie (unless it’s extraordinarily misconceived). So a well-researched hypothesis which shows that beliefs are wrong should never be ignored. So this poses a challenge to most businesses which is that if they are not prepared to act on the insight they get from research, it’s not really worth spending the money on research. After all as Mike Anthony often says, “you can be wrong for free”.

If your business is on the brink of beefing up its shopper marketing muscle right now, taking the following steps will get things going: First do an audit of the data you already have and define what this data tells you about consumers and shoppers; then identify the data that could easily be sourced that might fill in the gaps and start gathering that (for example data you can get from evaluating activities, voxpops you could run, in-store observations, customer interviews and so on); finally establish what you really need to know and build some research hypotheses to test. Overall you will find this is much effective way to start than jumping straight ill-conceived research programs.

It would be great to hear some success stories from anyone who tried other approaches.


China Sets The World Record for the Biggest Sales Online in One Day

Singles Day China

This was the doorway of an express company in Guangzhou on November 12th 2012. Its warehouse could not accommodate all the packages received from Taobao on “11.11 Singles’ Day – Online Shopping Festival”. Never heard of it?  On that single day, 72 million online-shopping-packages were sent out. This amounted to RMB19.1 billion transactions which is equivalent to about US$3 billion. The Singles’ Day promotion was created by Taoba and targets single men and women of China. It is neither traditional nor official  but for this one special day, Taobao’s Tmall  offered huge discounts to online shoppers.

These results complete eclipse the combined sales online during BOTH Black Friday and Cyber Monday in the US this year:

This year’s Black Friday saw an increase in online sales by 26% to $1.04 billion. Cyber Monday sales reached a record $1.25 billion, up over 20 percent from last year, to become the heaviest online shopping day in American history. According to the Wall Street Journal, this is only the second time a billion dollars in online commerce has occurred in one day. And yet, on the other side of the world, Taobao’s  Single’s Festival delivered nearly three times the turnover.

More than ten years ago, when e-commerce was sprouting in China, some retail professionals asserted that three barriers – “trust”, “payment method” and “delivery” would prevent an e-commerce explosion.. Taobao has conquered the three barriers completely. Founded by the Alibaba Group on May 10th, 2003, Taobao Marketplace facilitates C2C and B2C retail.  The marketplace structure has effectively emulated and built on the core concepts which drive trust in ebay. Tmall’s payment system, Alipay shares similar functionality with PayPal and  Taobao’s delivery system is unsurpassed in China..  This system has made availability ubiquitous, which is essential to online shoppers.

E-commerce still has a long way to go in China: according to the transaction data for the “Single’s Festival”; sales are clustered around the affluent tier one conurbations. But it is not hard to imagine more and more people living in less developed districts  joining this “online-shopping army” in the near future as availability to consume improves.

Transaction by City (unit: million)

Transaction By City

China’s e-commerce world is not only  a huge opportunity for Chinese retailers; increasingly, international retailers also see this trend. The international fashion giants like Uniqlo, Gap and Forever 21 took part in TaoBao’s campaign. Forever21 launched its Tmall on Taobao almost at the same time as they opened   their first bricks and mortar store in China. This underlines the necessity to build multi-channel environments as a critical success factor in China.

China’s e-commerce rise is of global significance; it demonstrates that the massive emerging economies of Asia are ripe for online shopping. With 200 million potential online shoppers in China alone (according to BCG), it’s easy to predict that these markets potentially dwarf the US and Europe combined. Today much of the world’s focus is  on the changes on retail in the developed markets but the changes in emerging Asia  are likely to be faster, more dramatic and more profound. This will require some major re-thinking in sales, marketing and logistics.

What has been seen recently is just the beginning, China’s e-commerce boom is soon to be tested again .  Taoboa has announced another campaign just one month after their succes, the “12.12 Shopping Festival”. They have promised even lower discounts. This could be the biggest online shopping day ever!


Researched and written by Irene Luo (engage Shanghai) & Toby Desforges

If manufacturers aren’t researching then they’re probably guessing

I happened to be shopping this weekend for an accessory for a personal electronic device. Nothing special but it was a little specialist and knowing this I thought the best place to head was Singapore’s Funan IT Mall. Here over several floors you’ll find a range of specialists offering everything from high end audio to hello kitty iPhone covers.

Many of these guys are sole traders, a few of which might have a couple of outlets in the mall. Most of the staff know their stuff and if you happen to know exactly what you want and can find the store that sells it, there’s a good chance you’ll get just what you need.

But here’s the thing, what if you’re not sure? Well then it’s a frustrating experience in one store after the next your met with blank looks or faint recognition which ultimately ends in disappointment. But here’s the kicker – when you, the shopper ask, “do you know where I might find something like that?”, there appears to be a complete reluctance to suggest somewhere else. Why? In case someone else gets the sale!

The following idea may seem utopian but here’s where the world of online could help. Millions of microsites and blogs earn decent money out of referral revenue – they get paid for directing shoppers to where they can find an item. Why can’t this happen in the the bricks and mortar world? Everyone wins – the shopper who finds the product, both the retailer who makes the referral and the referee who makes the sale and finally the manufacturer.

So why is that these things don’t happen? I see three key reasons and they all spring from the manufacturer. The first is that few manufacturers really make the effort to find out the role independent retailers play for shoppers. In discussions with TNS recently, a friend in the know estimated 10% of revenues came from shopper studies – that’s up nearly ten times since a decade ago but still not a lot of investment. If manufacturers aren’t researching then they are probably guessing. Guesswork is rarely the best way of understanding human behavior.

Secondly manufactures underestimate independent retailers in their prioritization of different trade segments. You only have to listen to the language they use – “general trade”, “traditional trade”, “distributed trade” of perhaps worst of all “lower trade” are common terms to discernible independent retailers. Traders are seen as being low volume and so they are often de-prioritized in favor of more ‘organized’ retailer channels. Big mistake! independent retailers can be huge influencers of shopper behavior in many cases and often deliver higher profitability.

The last reason is that the solutions manufacturers create for independents don’t look at the opportunities for everyone to make money, rather they focus on shifting more stocks.

If independent retailers play an important role in the path to purchase and they represent a profitable vehicle for influencing shopper behavior, then it’s high time manufacturers started to think more creatively about marketing in these outlets.