Transcript SmartRevenue-MSA_at_LEAD_2012x

Candace Adams, PhD., President, Global Retail Strategy, SmartRevenue
Suzy Silliman, Senior Managing Director, Management Science Associates, Inc.
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SmartRevenue Brings A Unique Combination Of People, Methods,
And Technologies To Exceed All Project Objectives
SmartRevenue is led by a team of highly-educated and experienced industry
experts, many holding advanced graduate degrees. Our leadership team is
skilled in collaborating with clients to define research goals and design highquality, in-depth research products.
SmartRevenue has conducted over 600 different studies with over 500,000 people
in 72 categories in 134 retail banners in all US markets and 8 countries and
specializes in leveraging shopper insights to drive actionable retail strategies and
solutions.
SmartRevenue employs a global field staff of over 850 ethnographers fluent more
than 40 languages, over half of which is enrolled in an advanced graduate
degree program. We recruit from social science programs to a form a unique
locally-based and nationwide research team. Our ethnographers receive
extensive training in our methods, protocols, and technologies, as well as in
manufacturer- and retailer-specific procedures.
SmartRevenue field staff use proprietary survey software and mobile technologies
to efficiently and accurately gather point-of-experience observations and
interviews. Equipped with our wireless handheld technology, ethnographers can
rapidly deploy real-time surveys, complete voice scanning, take photos, and
transmit data.
SmartRevenue seamlessly integrates quantitative and qualitative data, including
bio- and neuro-sensory tracking to provide the most accurate, data-driven, and
insightful results. Our analytics team is highly skilled in data collection
methodologies, analytics and data modeling, and integrated data analysis.
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SMARTREVENUE
SMARTREVENUE
SmartRevenue Provides Comprehensive Insights, Strategies,
And Solutions Along the Path to Purchase
needs & attitudes
media consumption
familial legacy
loyalty
shopper type by category
re-purchase intent
recommendation intent
family satisfaction
product satisfaction
occasion
GAP ANALYSIS
channel choice
consulting & assessment
list-building
CLOSE KNOWLEDGE GAPS
retailer choice
identify right methods & technologies
pack communication
ANALYTICS & DATA INTEGRATION
pack standout
promotions
signage
RECOMMENDATIONS
store experience
store dynamics
CREATE & TEST
store atmosphere
shopping style
shelf layout
shopping basket
shopping route
in-store advertising
SMARTREVENUE
About MSA
Providing information-based solutions that
integrate strategic thinking, information
technology, and analytics.
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cciPanel
– Innovative mobile research panel of
convenience store shoppers
• Captures purchase decisions,
behaviors, and attitudes
• Zeroes in on the channel’s most likely
shopper, the 18-34-year-old
Optimal Item Assortment
– Store specific item assortments that
maximize category profits
Trade Promotion Allocation
– Store-level promotion allotments based on
responsiveness to programs
Cross-Product Purchase Influence and Price
Elasticity
– Which items increase the total sale and at
what optimal price-point?
eOrder Clearinghouse
– Automating the pre-book and void
resolution process throughout chainMl
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Retailer web portal (joint offering between
MSA and CSP)
Convenience Channel Services
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cciPanel
– Innovative mobile research panel of convenience store shoppers
• Captures purchase decisions, behaviors, and attitudes
• Zeroes in on the channel’s most likely shopper, the 18-34-year-old
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Optimal Item Assortment
– Store specific item assortments that maximize category profits
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Trade Promotion Allocation
– Store-level promotion allotments based on responsiveness to programs
•
Cross-Product Purchase Influence and Price Elasticity
– Which items increase the total sale and at what optimal price-point?
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eOrder Clearinghouse
– Automating the pre-book and void resolution process throughout chain
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Ml
– Retailer web portal (joint offering between MSA and CSP)
BACKGROUND
The Retail Landscape Is More Challenging Than Ever
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Consumers lack confidence as they face
economic hardship and high unemployment
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In the face of economic contraction, the retail
landscape appears filled with all too many
channels (migration), banners, and SKUs
(consumption)
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Consequently, retailers need precise and
differentiated analytics to optimize:
– Capital planning
– Branding
– Marketing communications
– Merchandising
– Assortment planning
– Operations
Retailer Loyalty Defined
The biased (i.e. non random) behavioral
response (i.e. revisit), expressed over time,
by some decision-making unit with respect
to one store out of a set of stores, which is a
function of psychological (decision making
and evaluative) processes resulting in brand
commitment.
METHODOLOGY
Important to Understand Drivers of Loyalty Across Channels
Service
Convenience
Shoppability
Green/Local
Sourcing
Store
Environment
Retailer
Value
Proposition
Unique/
Innovative
Products
Variety/
Assortment
Product
Quality
Overall
Quality
Brand
Equity
Product
Displays
Food
Drug
Mass
Club
Convenience
Dollar
Departments/Department Stores: Home Improvement, Electronics, Office Supply, and Apparel
Purchase
Overall
Shopping
Experience
Corporate
Image
Post-Shop
Web
Presence
Store
Associates
In-stock
position
Point-of-Purchase
Family
Dynamics
In-Store
Pre-Store
Segment
Media/
Communication
Influences
Loyalty
Sample
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Robust, nationally representative sample
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8,500 US shoppers:
– Grocery in past 30 days (regional grocery included)
– Drug, Mass, Convenience, Dollar, Club in past 60 days:
• Convenience Banners:
– 7-Eleven
– Speedway
– Wawa’s
– Shell
– BP/Amoco
– Circle K
– Exxon/Mobil/On the Run
– Department Stores or Departments within stores past 90 days
including:
• Electronics
• Apparel
• Home Improvement
• Office Supply
Questionnaire Outline
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Segmentation Questions/Algorithm
–
–
–
–
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Shopping behaviors (i.e., list building and coupon clipping)
Price, Brand, Environmental, Health Conscious Drivers
Use of digital and on-line
Importance of web presence and green or local sourcing
Pre-Store Variables
– Influence of media and family
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In-Store Variables
– Customer service, shopping experience, staff helpfulness/knowledge
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Point of Purchase Variables
– Product availability, assortment, and quality; role of national brands
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Post Purchase Variables
– Channel performance on key brand equity measures
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Loyalty Composite
– Overall satisfaction, likelihood to recommend, store substitutability
Factors Behind Trips & Loyalty Are Inter-related; traditional
methodology naively assumed linearity
Store
Associates
Quality of
Products
Navigation
Unique/
Innovative
Products
 Assumes linearity
Shopper
Loyalty
Overall
Shopping
Experience
Store
Environment
Assortment
Corporate
Image
 Can only examine direct
effects
 Measure are one
dimensional
 Doesn’t account for
temporality
Providing Leadership to Retail Partners
• Research by McKinsey, Forrester and others
has shown that a better customer
experience drives improvement for three
types of customer loyalty: willingness to
consider another purchase, likelihood to
switch business to a competitor, and
likelihood to recommend to a friend or
colleague.
• SmartRevenue has been successful in
helping retailers prioritize marketing and
merchandising spend to increase ROI by
understanding drivers of loyalty using
structural equation modeling (SEM). In our
research, loyalty is a composite of four
variables: Overall Satisfaction, Quality of the
Overall Shopping Experience, Ease of
Switching, and Likelihood to Recommend.
• SEM allows you to quantify the relative
contribution of variables along the path to
purchase to understand where to expect
the greatest impact or ROI.
• Understanding the priority of these variables
and how they are interrelated, Nestle will
be able to provide thought leadership to its
retail partners and help them better target
decision-making pre-store, in-store and post
purchase
Advanced Analytics Used Key Metrics
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DRIVERS OF LOYALTY along the path to purchase identify which levers and
strategies optimize marketing, messaging, and merchandising to:
– Drive investment strategy based on high-impact levers
– Scorecard select retailers/channels against other retailers/channels
– Optimize assortment, product mix, and store layout
– Drive pre-store and in-store communications
The SEM Model Also Identifies Which Drivers Will Generate A
Greater Return Of Investment
$35 mm
Price /Value
Quality of Product
$33 mm
Variety of Assortment
$31 mm
$23 mm
Store Associates
Corporate Image
Overall Quality
$9 mm
$8 mm
Advanced Analytics Used Key Metrics
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PERFORMANCE SCORECARDS to:
– Develop strategies around relative competitive positioning
– Identify opportunities for differentiation
– Shift share from competitors
– Determine which segments are the most profitable
Assortment
Loyalty Card
6
5.5
Corporate Values
5
Navigation, Layout and
Product Display
Store Environment
4.5
4
Corporate Citizenship
Unique / Innovative Products
3.5
Customer Complaints
Quality of Products
Returns
Price / Value
Checkout
Employee Knowledge & Store
Associates
Cross
Channel
CROSS
CHANNEL
FINDINGS
Findings
Convenience lags others on key drivers of loyalty
Overall Quality (0.49)
Service (0) 7.50
Price / Value (0.35)
7.00
Need for
Quality of Products
6.50
solutions/ideas (0)
(0.25)
6.00
5.50
Convenience (0)
Equity (0.21)
5.00
4.50
4.00
Unique/innovative
Store Associates (0.2)
3.50
products (0.01)
In-Stock Position (0.03)
Assortment (0.2)
In-store Digital
Media/TV (0.03)
Store Environment
(0.1)
Corporate Image
Family Dynamics (0.03)
(0.06)
Shoppability/Navigati
on/Layout (0.05)
Food/grocery
Drug/pharmacy
Home improvement
Convenience
Electronics
Dollar
Apparel
Club
Convenience
Channel
CONVENIENCE
CHANNEL
FINDINGS
Findings
While convenience drives trips, it is not the key to loyalty
Direct and Indirect Effects on Loyalty in Convenience Channel
0
0.1
0.2
0.3
Overall Quality
Shoppability/Navigation/Layout
Shoppability/Navigation/La…
Corporate Image
Service
Convenience
Quality of Products
Equity
Price / Value
Store Environment
Need for solutions/ideas
In-store Digital Media/TV
In-Stock Position
Unique/innovative products
Assortment
Family Dynamics
Store Associates
Direct
Indirect
Effect 0.4
0.5
0.6
0.7
Loyalty Drivers: All Retail vs. Convenience
All Retail
0
Convenience
Direct and Indirect Effects on Loyalty
0.1
0.2
0.3 Effect
0.4
Overall…
0.5
0.6
0.7
0
Direct and Indirect Effects on Loyalty
0.1
0.2
0.3 Effect
0.4
Overall…
Price / Value
Shoppability
Quality of…
Corporate…
Assortment
Service
Equity
Convenien…
Store…
Quality of…
Corporate…
Equity
Shoppability
Price / Value
Store…
Store…
In-Stock…
Need for…
In-store…
In-store…
Family…
In-Stock…
Unique/inn…
Unique…
Convenien…
Assortment
Need for…
Family…
Service
Store…
Direct
Indirect
Direct
Indirect
0.5
0.6
0.7
Implications of Convenience Loyalty Drivers
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Many of today’s leading Industry initiatives can be validated by the
ranking of loyalty drivers across Convenience Stores:
– Efficient Assortment/Focus on Core influence shopablility and quality of
products
– Emphasis on better servicing the Independent impacts corporate image
– Education and automation fosters higher levels of service
– Stocking National Brands assures high quality of products offered
– Trade Promotions passed through to the consumer levels the playing field
for price/value
– Social Media Engagement helps to build equity and improve corporate
image
Performance Scorecard: Top 3 Convenience Chains
Performance Scorecard: Bottom Convenience Chains
8.50
6.50
5.50
4.50
3.50
Service
Need for solutions/ideas
Convenience
Unique/innovative products
In-Stock Position
In-store Digital Media/TV
Family Dynamics
Shoppability/Navigation/Layout
Corporate Image
Store Environment
Assortment
Store Associates
Equity
Quality of Products
Price / Value
Overall Quality
Grocery & Drug Outperform:
Potential Convenience Encroachment
7.50
Food/grocery
Drug/pharmacy
Convenience
Dollar
Mass/supercenter
EQUITY INDEX
Retailer Equity Defined
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The differential effect of store knowledge on customer response to the
marketing activities of the store
– First, the differential effect of the brand is determined by comparing
consumer response to the marketing of a brand with the response to the
same marketing of a fictitiously named or unnamed version of the
product or service.
– Second, brand knowledge is defined as brand awareness and brand
image, characterized by conceptualizations and relationships among
brand associations.
– Third, consumer response to marketing is defined as consumer
perceptions, preferences, and behavior arising from marketing mix
activity (e.g., brand choice).
Retailer Equity Defined
In sum, “a brand is said to have a positive
(negative) customer-based brand equity if
consumers react more or less favorably to
the product, price, promotion, or distribution
of the brand than they do to same
marketing mix element when it is attributed
to a fictitiously names or unnamed version
of the product or service”
Dimensions of Brand Equity
Advanced Analytics Used Key Metrics
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EQUITY INDEX calculated across 4 dimensions: affect, cognition, operations and
perceptions. Can:
– Tie to loyalty, trips and other business metrics (develop correlation coefficients)
to grow the company
– Develop differentiated marketing, merchandising and operations strategies
– Benchmark brand equity against best-in-class retailers
208.7
210
200
190
179.6
182.3
183.8
184.3
Retailer E
Retailer F
Retailer G
180
170.7
170
160
157.7
153.9
150
Retailer A
Retailer B
Retailer C
Retailer D
Retailer H
Equity Index – Top Retailers
Drug
Convenience
• Walgreens
• CVS
• 7 Eleven
• BP
• Speedway
Mass
Dollar
• Target
• Walmart
• Dollar Tree
• Dollar General
Factors Driving Brand Equity for Convenience
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Compared to Food, Drug, Dollar and Mass Channels, the
Convenience Channel was rated lowest on all dimensions of brand
equity
– This creates vulnerability for channel migration to Drug or small format
Mass Merch/Grocery who are encroaching on traditional Convenience
territory
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While lower than other channels, scores were comparable on image
perceptions but less so on operational and emotive (feelings)
variables
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And although equity is a key driver for Retailer Loyalty within
Convenience, it is not the only driver
– 2 of the Top 3 “Equity” Retailers rank in the bottom “Loyalty”
“So What?”….for you, the Manufacturer
Why should you care about Retailer Loyalty? You have your own
portfolio of brands to build equity and consumer loyalty for!
Shoppability
Family
Dynamics
Store
Associates
Web
Presence
In-Store
Pre-Store
Segment
Overall
Shopping
Experience
Green/Local
Sourcing
Store
Environment
Retailer
Value
Proposition
Unique/
Innovative
Products
In-stock
position
Variety/
Assortment
Product
Quality
Product
Displays
Corporate
Image
Overall
Quality
Brand
Equity
Food
Drug
Mass
Club
Convenien
ce
Dollar
Departments/Department Stores: Home Improvement, Electronics, Office Supply, and Apparel
Purchase
Convenience
Post-Shop
Service
Influences
Point-of-Purchase
Media/
Communication
Drivers most influenced
by Manufacturers
Loyalty
“So What?”….for you, the Manufacturer
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Isn’t building Retailer Loyalty the Retailer’s responsibility?
– As Channel Leaders, you have a commitment to see that the Industry
remains viable
– Sharing your knowledge with Convenience stores will facilitate stronger
collaboration and trust – build better partnerships
• Can positively impact many of the top drivers
– Profit margins for products sold through Convenience are healthy for
Manufacturers; mitigate the risks of the convenience shopper migrating to
a more deal/price sensitive channel for those same purchases
– A loyal shopper is a satisfied shopper. A satisfied shopper will spend more
time in store and make more store visits, therefore improving the odds that
they will purchase one of your products on impulse and drive sales growth
for you, the Category, and Retailer
CONCLUSIONS
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Across all drivers of retailer loyalty, the convenience channel falls
behind all others; the convenience factor is the only exception
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Importance of Drivers Differ for Convenience
Loyalty Drivers (All Channels) Loyalty Drivers (Convenience)
Price/Value
Store Associates
Assortment
Overall Quality
Shoppability
Corporate Image
Service
Quality of Products
CONCLUSIONS
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WaWa, Speedway and RaceTrac represent the top 3 convenience
banners.
– Speedway matched WaWa’s scores on a couple of drivers (e.g., in-stock
position and assortment)
– Speedway’s positioning likely influenced by being one of the first to
embrace a customer loyalty program
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The bottom 4 banners were 7-11, BP, Exxon and Circle K
•
Convenience lags the aggregate on total retail on all drivers of
loyalty except convenience. The risk here is possible shopper
migration to other channels (e.g., Walgreens, small format
mass/grocery, etc.)
EXAMPLES (Duane Reade)
EXAMPLES (Giant to Go)
EXAMPLES (Target Pfresh)
EXAMPLES (RaceTrac)
EXAMPLES (P&G – Walmart Food Truck)
EXAMPLES
CONCLUSIONS
•
Equity is a leading driver of Loyalty, but not the exclusive driver
– So, basically we are defining equity in this context as the "r-factor" that causes
a shopper to select one store over another if all other dynamics regarding the
marketing mix, etc. are equal. This is more of an emotional influencer.
•
As with loyalty, the Convenience channel rated lowest on all dimensions
of equity. (This again, adds to the vulnerability of channel migration.)
•
The dynamic retailer loyalty equation has some specific drivers that the
Manufacturer (and Distributor) can directly influence. Most of these fall
into point-of-purchase factors and include in-stock position, assortment,
product quality, product displays. But there are many other areas that a
less direct influence can still be achieved.
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The Manufacturer/Vendor might not realize that they should or why they
should care about helping the Retailer build loyalty, but we’ve identified
some high-level win-win's for those "so-what's"...basically a loyal and
satisfied shopper will buy more!
SMARTREVENUE
insights strategies solutions
thank you
Candace R. Adams, PhD
President, Global Retail Strategy
203-247-5241
[email protected]