Making travel just a little more pleasant

This year, I’ve been on the road more than ever, which is one of the perils of working as a consultant.  Over time, I’ve accumulated a variety of junk that I haul around  in my bag to make life a little bit easier while away from my home base.  One colleague likened my bag to Mary Poppins’ magic bag (which I am hoping was meant as a compliment!).

This is a departure from my usual food/CPG industry writing, but I know there’s many readers who travel as much as I have, and I hope you can find a little something useful to take away, or find something to share with a frequent traveler in your life.

travel-gear

1. Pencil case: Carries many of the pens and other tiny things in this photo. I have the Nomadic PE-08, which appears to have been discontinued and replaced by the PE-18, but any small case will do.

2. Umbrella: It doesn’t happen often, but when it does, it is terrible to be caught in the rain.  I carry a Lewis N. Clark umbrella.

3. Power strip: This might be the most useful things in my bag.  It converts a single power outlet into four.  I’ve made many friends in airports and meeting rooms when we all need to charge up at the same time.  My model is discontinued (and it has a piece of electrical tape on a part that lights up, which was very annoying in dark hotel rooms), but some like this Accel model, which includes some USB ports.

4. Back up power: I can get about 4 iPhone charges out of my old Anker, and newer ones can charge 7 times.  I can get about 75% charged in 30 minutes.  It’s a life saver when a call goes way longer than expected and your battery is almost dead – and you’re not anywhere near a power outlet.  I’ve loaned this charger to coworkers and even strangers and it has made their day.

5. Tide pen: This can often remove a stain without much residue. And I drop food on myself all the time.

6. All sorts of charging and connectivity implements:

7a. Writing implements: My favorite pen (Uniball Jetstream), a highlighter, and a Sharpie (not shown).  Sometimes some whiteboard markers if I expect it to be useful.

7b. Mouse: If you have the luxury to work at a table top or desk while on the road, Logitech’s Marathon Mouse makes it so much more comfortable to mouse around, especially if you’re doing a lot of Powerpoint.

8. Headphones: I buy at least two of these at a time because I seem to lose them.  My Panasonic earbuds are great, and I wrap them around a wrap thing from Sumajin, which keeps them from being a big jumble in my bag or pocket.  I have a bag of extras of the soft earbud tips at home because they seem to fall off and get lost.

If you want to splurge, the Bose QuietComfort noise-cancelling earbuds are ridiculously amazing. It’s amazing how much of the world they can filter out on an airplane or in a noisy airport or train. The earbuds work nearly as well as the giant headphones and take up a fraction of the space in your bag.

9. Medicine: I hate needing to track down a place to buy common medicine when an ailment strikes.  I keep ibuprofen, Immodium, and cold/allergy medication in my bag.  There’s no reason to carry the full container, and I’ve found these small baggies to be a great way to carry a few doses of each with me.  You never know when something is going to strike, and it’s helpful to have some common stuff on hand without taking up too much space. The baggies go inside my pencil case. I also like to keep a cheap nail clipper with me in case of an annoying hangnail or neglected long nails.

10. Notebook: I’ve liked the Moleskine large notebooks for a long time, and the Evernote edition is great, in that you can snap photos of pages and they import to your Evernote account.  There’s even some handwriting recognition that allows you to search handwritten notes.  It’s not perfect, but when it works, it’s so cool.

Some other stuff not shown:

  • Snacks: I have Kind bars (madagascar vanilla) and GoodnessKnows bars just in case I need to eat.  Sometimes it’s tough to fit in a meal before a meeting, and having a boost of calories at the right time can be very helpful.
  • Shaving: At 0.5 oz, this shaving oil takes up so much less space than a shaving cream container.
  • Airport security: Sign up for PreCheck or Global Entry.  It makes the security process so much more pleasant.  No worries about removing liquids, placing your laptop in a bin, or taking off your shoes and belt.  It’s like a throwback to how security was in the 1990s.  PreCheck is $85 and valid for 5 years but only works in the U.S.  Global Entry works in the U.S. and some places outside the country, too, and it costs $100.  (I signed up for PreCheck before learning about Global Entry, so I’m less familiar with it, but it seems worth the extra $15 if you ever plan to travel outside the U.S.)

(Note that I’ve chosen these products through my own trial & error, and most of these links are Amazon affiliate links.)

Are there any travel hacks you’ve found? I’d love to have you share them in the comments.

The story of self-checkout

I probably consume more media via podcast these days than any other format.  (I have such a large queue of shows I listen to that I speed them up by 25% so I can fit them all in.)  One of the earlier podcasts to get a big following is NPR’s Planet Money, born out of the 2008 financial crisis.  From its beginning with explaining the root causes of the housing crisis, they have broadened their reporting to so many little known nooks and crannies of the global economy.  It’s a great show and worth listening to regularly.

supermarket_self_checkout

Source: https://commons.wikimedia.org/wiki/File:Coles_supermarket_Self_checkout.jpg

One recent topic was supermarket self-checkout machines.  Did you know that an ER doctor invented the first self-checkouts in his spare time?  The first pilot ran in a Price Chopper in the mid 1990s.  Not what I expected at all.  Listen below.


Listen above or go to: http://www.npr.org/sections/money/2016/10/19/498571623/episode-730-self-checkout

You get what you pay for

If you’ve been into a Walmart in the past few years, there’s a good chance you were disappointed in your experience. You weren’t the only one — Walmart’s management agreed with that sentiment.

The New York Times recently reported, “Shoppers were fed up. They complained of dirty bathrooms, empty shelves, endless checkout lines and impossible-to-find employees. Only 16 percent of stores were meeting the company’s customer service goals.” To boot, Walmart’s same-store sales numbers had dropped for five quarters, and total revenue actually dipped for the first time in the chain’s history.

walmart-check-outSource: https://www.flickr.com/photos/walmartcorporate/5684720360

During that time, I was making the rounds of Walmart stores to check on new items my company had in distribution. I’d often pick up household necessities while making those visits, and I continually had a hard time finding common items. I remember looking for diapers for my daughter and found vast swaths of items to be out-of-stock. For the variety of diapers we used in my daughter’s size, I had to borrow a mop from a nearby aisle and climb up onto a shelf to sweep the very last box available off that shelf. And there was no one around to help me.

What was less visible to shoppers was the intense cost-cutting measures behind the scenes. Walmart’s wages had dropped to a point where they could not attract quality employees, nor did they staff enough of them. They even eliminated the famous greeters that had graced the entrances to its stores for more than three decades. Founder Sam Walton would not have been pleased — he championed the idea of greeters and thought they had many benefits: to make Walmart shoppers feel special and well treated so they would return, and to prevent shoplifting in a benign rather than tough-cop way. (Walton’s autobiography touches on this topic and much more of his thinking.)

Once they saw the balance sheets, however, Walmart’s management realized they had cut too deep. In a video-feed address to its 1.2 million U.S. employees on Feb. 19, 2015, Walmart CEO Doug McMillion said, “Sometimes we don’t get it all right. Sometimes we make policy changes or other decisions and they don’t result in what we thought they were going to. And when we don’t get it right, we adjust.”

And adjust they did. Over the past 18 months, Walmart’s average non-managerial wage has increased 16 percent compared to 2014. For a price-driven retailer, that’s not trivial.

Though not discussed in the NYT piece, Walmart took an unprecedented step to move some financial burden to its vendors at the same time it announced that it would be increasing wages.  Payment terms were extended from typically 10 days to as much as 90 to 120 days, with an “early payment” discount of 2% still applying.  Additionally, new fees of 1% to hold inventory in Walmart warehouses were instituted, along with a one-time charge of 10% of the value of inventory shipped to new Walmart stores and DCs.

Employees are undoubtedly happy to have higher pay. Walmart also made moves to allow greater scheduling flexibility and better access to training for more opportunities for advancement, hence even higher wages. The goal is to help employees feel part of an organization that respects their work. I suspect this will lead to higher employee satisfaction scores. And, yes, same-stores sales have started growing again.

This mirrors findings from some of my past professors’ research, which found that employee satisfaction leads to customer satisfaction, which in turn leads to improved sales. To connect the dots: as employees become happier, sales become better (notwithstanding the increased employee shopping at Walmart, now that they’re making more money).

There’s a point when cost-cutting goes too far, and Walmart clearly found that point. Nearly unique among huge companies, though, is the speed at which it took action to make a change and reap the benefits.

As a result, I haven’t had to climb any shelves lately to grab a lonely box of diapers. Happier, better-paid employees are more available around the store. Greeters are back. Walmart is getting what they are paying for.

Manufacturers: If you supply (or aspire to supply) retailers like Walmart, it’s important to know that when you sit across the desk from a retail buyer on a sales call, they might have a lot more going on than is apparent on the outside. During the time I called on Walmart when they were cutting costs, it wasn’t perfectly clear to me as an outsider that they were feeling pressured and, in retrospect, it was an enormous burden on the people I was meeting with.

When you have your meetings, can you probe to find out what your buyers are challenged with? Can you help them meet their goals and not just yours?

Why doesn’t everyone use online grocery?

I answered this question on Quora, where I enjoy answering questions from time to time.  One came up recently wondering why people still go to the supermarket when one could just order via one of the online grocers that has popped up in recent times.

The question:

Why do many people still go regularly to the supermarket when they could save time ordering grocery online & getting it delivered to their home?

Thinking about it… they could save money for the gas too if they regularly use their car to do the shopping. Is it a matter of customer experience? How buying grocery offline is better than doing it online? Is it a matter of habit, & people need to get used to it as we got used to buy books online?

I’ve heard this line of reasoning from friends who are close to the tech industry and think it’s obvious that everyone will glom on to the latest innovation.  (I once heard some aspiring tech innovators suggest that children’s’ toys and games could be made irrelevant if they could just make iPad apps that were good enough.)

My answer, as I wrote on Quora:

A glance at Instacart’s Service Areas would make one think that they have already locked up coverage across much of the U.S., but it’s far from the case. I crunched some numbers quickly against metro area population counts, and Instacart serve maybe 25–30% of the population. It might even be less if I wasn’t as generous in some of my counting.

If you add some other providers like Google Express, Peapod, Amazon Fresh, FreshDirect, etc into the mix, they may bump up overall coverage to something higher, but it’s far from a majority of the U.S. population.

But if we focus just on those who can order groceries online, there’s other good reasons to avoid online grocery shopping.

  1. It’s too expensive. Instacart marks up prices from some supermarkets by an amount they don’t disclose, plus sometimes a delivery charge of $4–6 — or more with “busy” pricing — plus tip. And you can’t take advantage of coupons or in-store sale prices. Amazon Fresh costs $300/year for a subscription, on top of the price you pay for food. I think the online services will always be at least a little more expensive, as they need to cover the cost of their operations.
  2. It’s not fast enough. When we ran out of diapers for my daughter the other night, no one could get them to me fast enough. I needed to simply get in the car and go to the store.
  3. It’s inflexible. When the services are busy, you might have to specify the delivery window many hours (or even a day) in advance. That means you have to be home to accept the delivery or take the risk that your groceries might spoil. If something comes up at work and I can’t get home on time, I’m in trouble.
  4. You can’t choose the bunch of bananas you want. Someone else is doing the shopping for you. So the bananas might be too green. Does the chicken look spoiled? Is that melon just ripe enough? And some services, like Google Express, don’t even deliver perishable items yet.
  5. It can be hard to find stuff. I was trying to find a certain flavor of ice cream that Iknow is carried by a store, and it just wasn’t coming up on a search. If I had been in the store, I would have known exactly how to find that item. In fact, I possibly could have driven to the store near my house and actually bought the darn ice cream and been back home in the time it took me to figure this out.
  6. Services make mistakes. Once I ordered a pint of strawberries from an online grocery service. For some reason, they delivered 16 ounces worth of strawberry yogurt. Not quite the same. So I then had to make a trip to the store to buy strawberries. And do something with the yogurt I didn’t want. Some people don’t want to deal with these annoyances and would rather just do things themselves.
  7. Some people like to shop. Even though it’s not rational or efficient, some people enjoy going to the store and browsing.

But, like Joshua Herzig-Marx says, there is no doubt there has been success in online grocery and some real shifting in the industry. I’ve found online grocery to be incredibly helpful when I’ve been crunched for time — and especially when my daughter was an infant and it was tough to leave the house. While I think there will be more migration in the years ahead, there’s always going to be a place for traditional bricks & mortar grocery shopping.

3 Ways to Kickstart Pricing Discussions with Visualizations

Price cut tags on supermarket shelves

Of the four Ps of marketing, price has the most power to transform a company’s revenue and profit. The best way to kickstart a pricing discussion is to visually display price analytics.

Ultimately, these visual tools support portfolio and channel strategy development.  Importantly, they help take emotion out of pricing decisions and focus strategic discussions on the heart of the matter.

Among others, these are three powerful tools to visualize prices:

  • Price Waterfall
  • Candlesticks
  • Discount Curve

Each tool demonstrates a range of insights that can drive strategic thinking.

1. Price Waterfall

The price waterfall shows us where we might have problems with profit leakage.  Though the chart is simple, it can be shockingly difficult to calculate some of the costs, especially trade costs, and translate them to costs for an average unit.
Price Waterfall Example

Example of an interpretation: Above, much of the manufacturer’s profit is eaten up by discounts, shown as trade spending, which is used here largely to allow the retailer to discount from MSRP (manufacturer’s suggested retail price) to its ASP (average selling price).

The full amount of trade spending isn’t reflected in that discount amount, and we might suggest reducing the amount of trade spending or re-negotiating with the retailer to reflect more of the discount in the price it charges on-shelf.

2. Candlesticks

Candlesticks help us visualize the spread between the different types of prices seen in retail outlets — spanning from MSRP to the promoted price.

Price Candlestick Example

Example of an interpretation: You might imagine that the manufacturer wants to move its average price at its Mass channel customer closer to $3.50 but they refuse to do so.

Looking at the candlesticks, we might see some great reasons why: Their Grocery channel competitors are regularly undercutting this Mass retailer, selling as low as $2.39 on promotion and $2.75 on average.  Why would the Mass channel customer want to be undercut even more?  You could understand their point of view.

We can also see that there is poor price discipline.  This company has a suggested price that it rarely, if ever, earns from its consumers. This will lead to high rates of trade spending that might not be necessary.

3. Discount curve

How much do consumers pay on an equivalized basis?  Typically, we would look at price per pound, ounce, gallon, dozen, or some other volume measure, for all the items across a portfolio.

We ideally see that consumers receive a consistent value across sizes in the portfolio, with a discount as the volume in each package increases. We would want to see a smooth (or, at least, smooth-ish) line sloping from the high index to the low index.

Discount Curve Example

Example of an interpretation: We can view this two ways.  One, the Large package is too expensive on a per-ounce basis, and it should cost less.  Or, two, Small, Medium, and Club size packages should be priced to reflect the value that consumers see in the Family Size package.

There is no one right answer, but the goal is to remove kinks in the discount curve.  An optimal curve would be relatively smooth, without upward or downward kinks.

4. What else?

Additionally, at Simon-Kucher & Partners, we use a number of proprietary tools that help structure thinking about pricing and assortment. Our PriceMap tool visually displays a product portfolio and can highlight opportunities.  Our ResourceMap tool provides price and assortment summaries based on channels, retailers, customer segments, and other important classifications.

Visualizing prices is an important step as part of strategy work. But in most companies, prices sit on a list for price quotes and internal reference. It’s hard to get visibility into what’s happening in the real world.

Freeing pricing information from that piece of paper transforms it into living analysis that drives strategic decisions.

Do Holiday Shoppers Prefer Brick & Mortar Grocers?

The holiday season is upon us, and we can’t help but think of shopping — and shopping for food. The shopping stories are a combination of Black Friday craziness and the shift to buying from online retailers like Amazon. Here at Simon-Kucher, we were wondering about the intersection: Do holiday meals and online buying intersect? The question occurred to us after multiple clients asked us about product and pricing strategy for Amazon. We know that a growing number of traditional grocery dollars are shifting to online retailers, but how much of this happens during holiday season, when grocers have their biggest weeks of the year?

Do Holiday Shoppers Prefer Brick & Mortar Grocers?
Source: https://www.ars.usda.gov/is/graphics/photos/oct05/d260-1.htm

In my family, Thanksgiving meals usually feature the obligatory turkey, Grandma Sherry’s sweet and sour meatballs, Ritz cracker stuffing, and an array of other sides, desserts, and drinks. Thinking about meals like this, with the preponderance of perishable ingredients, we intuitively thought there would be little room for an online retailer. And we were mostly right.

With research firm Instantly, we conducted a survey where we asked a panel of 1,052 shoppers how they planned to shop for Thanksgiving and winter holiday meals. Among other things, we asked about usage of Amazon in general, plus Amazon’s Prime and Prime Pantry programs.

You might have guessed it: Hardly anyone is planning on shopping for their holiday meals on Amazon. Shoppers plan to buy about four percent of their holiday meal items there, consistent for both Thanksgiving and a winter holiday meal. Comparatively, shoppers will buy 39 percent of their meal items at a traditional grocery store, 29 percent at Walmart, seven percent at a specialty food store, and 22 percent somewhere else, which includes warehouse club stores.

Narrowing down the group to those who say they will use Amazon, they will buy only 22 percent of their items there, leaving 78 percent for shopping in stores. For Thanksgiving, these Amazon shoppers are 87 percent more likely to shop at Target than the average shopper, 38 percent more likely to shop at a specialty store, 19 percent less likely to shop at Walmart, and a whopping 54 percent less likely to shop at a traditional grocery store.

So — they are more likely to shop where specialty items are available (Amazon, Target, Whole Foods) and less likely to shop in a conventional retailer.

They are also more likely to shop for electronics, shop via mobile phone, expect discounts, and be influenced by promotions. This suggests that Amazon will be used for items that can be easily compared across retailers, such as common dry goods, and perhaps expensive ones that are sold on a discount.

There’s not many of these Amazon shoppers looking for groceries, right? Yes, but…

Our study also covered the non-food side of holiday shopping — the gift-giving time of the year. This world is less interesting for this publication’s readers but we found important lessons that can apply to the future of grocery shopping, online and offline.

1.  More holiday shopping time is spent online, both on the web and on mobile. Some of this is actual shopping while some is pre-shopping. No doubt, this will grow, as more prices and product information becomes available online. It is important to have information on your products easily available online.

2.  In some categories, where shoppers may be looking for very specific items, like electronics and toys, more time is spent shopping on the web and mobile. Part of this is because consumers expect more discounts online than in-store, and retailers have trained consumers to expect this. Be careful not to train your consumers to expect discounts.

3.  Shoppers still prefer to shop for apparel, footwear, and healthy/beauty items in stores. In those categories, consumers want “receive product right away” and “feel and try the product before purchasing.” This lines up well with the grocery experience. Part of the experience is that of choosing fruits and vegetables up close, finding the right cut of meat, or grabbing a treat to eat on the way home. It’s hard to replace the experience of seeing, smelling, touching, and tasting in a store.

One area that will be hard for Amazon and other online retailers to match is shopping for perishables. Some shoppers are always going to want to select those items in person. But Amazon is piloting its Fresh program, where they deliver a full range of grocery items via refrigerated trucks, along the lines of Peapod and Fresh Direct — and with a hefty $299 per year fee. It’s a different direction from Amazon’s Prime and Prime Pantry programs and will give the industry more to think about.

P.S.  Belated happy Thanksgiving to you and your family.  There’s so much to be thankful for, including my wonderful colleagues, friends, and family.

(Reposted from Project NOSH.  Thanks to Jeff Klineman for his editing and for allowing re-use.)

The Numbers Behind the Mustard Wars

Ketchup wars! Mustard wars! It’s a Condiment Armageddon! And it’s also an analytical opportunity.

This spring, Heinz relaunched its mustard with a new, improved formulation to compete head-to-head with French’s, the category leader. Answering this shot across the bow, French’s launched a new ketchup, challenging Heinz’s leadership.  At least two publications have called this situation a “war” — presumably between a pair of rival condiment nations.

Over the last 12 months, Heinz’s mustard’s $10 million in sales represents a 300 percent year-over-year increase, while French’s new-to-the-market ketchup grabbed about $3 million. Looking at each brand’s mainstay product, Heinz’s ketchup is up three percent, while French’s mustard is down 3.9 percent. That might point to a clear winner and loser in the great condiment skirmish of 2015, but I think broader trends say they both may end up being losers.

Mustard Tins
Source: https://www.flickr.com/photos/mcbeth/1075913767

In recent months, Fortune (“The War on Big Food”) and The New York Times (“Small Food Brands, Big Successes”) have pointed to the proliferation of small brands.  Boston Consulting Group analyzed this shift, showing that large food companies lost 2.3 share points to smaller ones from 2009 to 2013 and another 0.7 points in 2014.

So how do we account for entrepreneurial brands in all of this? Well, hiding in the data, there’s the ascendancy of “all other.” And that’s a group that entrepreneurs know well. After analyzing the top brands in a category, there’s always dozens of others that make up the long tail of results — usually ranging from a few percent to maybe 20 percent of the category’s sales.  In my analysis, there’s never enough space to list them all out, so they get collapsed into an “all other” grouping. But that’s where the momentum and innovation often resides, waiting to break out.

In condiments, there’s share dominance by the big guys. The top three brands in ketchup make up 97 percent of sales, and the top six brands in mustard make up 83 percent.  Aside from those, no other brand represents more than two percent of sales in ketchup and mustard.

But Ketchup grew $21.1 million (+2.6 percent) this year.  We can attribute 74 percent of that growth to Heinz, 15 percent to French’s, 9 percent to private label, and 6 percent to all other brands. (This doesn’t add to 100 percent because of two medium-sized brands that declined.)

In mustard, it’s even more striking.  The category grew $2.0 million (up 0.5 percent).  Many brands declined, and others grew at rapid rates. Gainers picked up $10.8 million, and declining brands lost $8.9 million.  French’s was one of the notable decliners, dragging down the entire category.  Meanwhile, Heinz’s gain was 3.85 times of the category’s growth, and the “all other” segment added 1.37 times more than the category’s growth, drawing from brands like Inglehoffer, Maille, Boar’s Head, and Annie’s Naturals, one of those entrepreneurial brands that is starting to see significant scale.

Even more telling is that this data set also doesn’t account for the natural and specialty channel, which has an even greater assortment of small brands (such as Tessemae’s and Sir Kensington’s) — and I suspect, even for the graying condiment category, some trends are starting in that channel and migrating to conventional grocery outlets. My local Shaw’s and Star Market stores have been increasing assortment of specialty products, and Target has an initiative to do the same, both in terms of bringing on new brands and co-developing sets with emerging product partners. (Hey, I loved finding Intelligentsia Coffee at my local Target last week!)  In these cases, there is no doubt smaller brands are stealing shelf space — which is eventually going to translate into share.

I often hear from folks in the food industry who have an idea to make something better.  These have included colleagues who wanted to improve baby and toddler nutrition, make tasty yogurt with better health attributes, bring Asian snacks to an American audience, and more. Most of them are still in business and thriving.  And while they (mostly) aren’t becoming big businesses, they are providing livelihoods for their owners and employees. Some have broken out; more will.

Consumers — particularly Millennials — are reacting to this demonstration of authenticity and are enjoying the newfound availability of novel products on shelves where they shop.  And they pay premium prices for this benefit.  In some cases, the premium isn’t much in dollars and cents, and consumers are willing to make the trade.

In other cases, larger premiums simply mean that new-age products are treats or consumers set aside larger budgets for packaged food than older generations have.  But in all cases, it’s leading to category growth at the expense of entrenched brands.

Among the headlines of wars among the big players in the food business, be sure to look for the hidden story of what’s happening with smaller brands.  If recent history is any lesson, there are some great stories that are waiting to spread.

Reposted from Project NOSH.  Thanks to Jeff Klineman for his editing and for allowing re-use.

Continue reading The Numbers Behind the Mustard Wars

All the trends from the Summer Fancy Food Show

Just before the July 4th holiday, I walked the aisles of the Summer Fancy Food Show in New York, meeting colleagues and looking for trends.

The show is run by the Specialty Food Association at the Javits Center, with more than 2500 vendors.  It’s a lot of work to try to work through the entire show.  Exhibitors focus on what speciality and natural stores purchase, which can sometimes stray a bit from what one would call “fancy” but satisfies retailer buyers who are looking for new items to sell to their shoppers.

A press release from the Specialty Food Association spells out what the organizers felt were the official trends:

  • Gazpacho to go
  • Can’t beat beets
  • Flower power
  • Cocktail culture
  • The maize craze

It’s hard to argue with the official announcement of trends from the show, so I have to agree with what they saw.  A few others things caught my eye, too:

  • Ginger: Ginger beer and craft ginger ale
  • Jerky and meat snacks: Seeing creative protein offerings increase
  • Matcha tea: Formats from bottled to powder
  • Cold brew coffee: Bottled, concentrates, kits for making your own at home
  • Yogurt: Fancy vanilla flavoring, savory flavors, whole milk, non-cow milk
  • Bone broth: Seems similar to traditional broth/stock but described differently – but I may be wrong
  • Honey: Additive in a number of products I saw

These are trends only because there were a number of offerings that had these attributes.  A trend doesn’t always equate to success; it’s always possible a number of brands are jumping on a trend without demand.  We’ll see them first in specialty shops and Whole Foods, then migrate to larger grocery chains.  Let me know if you see any interesting products on your supermarket shelves.

Everything’s on sale!

For all of 2014, New England grocery chain Market Basket is discounting every item, every day by 4%.

“The additional 4% off promotion is a reward for its loyal customers and an investment toward a long-term growth strategy to attract new customers, increase sales, and continue to strengthen and build Market Basket’s brand identity,” said a press release from the company.

I can’t think of any past examples where such a discount has been offered for such an extended period of time.

Of course, there is an interesting back story about the feuding Demoulas family, with two factions, each led by a cousin named Arthur Demoulas (Arthur T. and Arthur S.).  This is probably relevant.  It’s also probably relevant that supermarket competition in the Boston area is about to increase, with a new Wegmans opening this month and more planned.

But I’m more curious to see if this year-long discount is going to be an effective sales technique.

In some early (and generalized results), sales are up modestly and outpacing the overall market.  And in the competitive supermarket industry, a modest increase is a good increase.

Interestingly, prices are also up modestly.  It seems that Market Basket raised its average prices in advance of this discount offer (or is selling more expensive items, on average, but more likely that average prices increased).  Even with this increase, there is still a healthy discount being offered across the board, but it’s interesting to see the dynamic.

I’ll be continuing to watch this bold strategy throughout the rest of the year.  Will it result in sustained sales and share gains?

Why do I need data?

In the long time since I’ve last written here, one of the most common questions I get from colleagues with smaller food and CPG questions is about syndicated data from Nielsen, IRI, and other providers.  Why would I want it?  

What many people outside the industry don’t realize is that most supermarket, drug store, and mass merchant (Walmart/Target) transactions are recorded by those retailers, purchased by Nielsen and IRI, then resold to hundreds if not thousands of CPG manufacturers.  Those manufacturers can’t see who is buying products but they can see what’s moving through the cash registers — at the most basic level, the dollars and units selling in a chain.  What you’ll usually get is week-by-week sales data at the UPC level, broken down by retailer.  

For smaller manufacturers, cost is a big hurdle, since costs can start in the tens of thousands — and rising to several million per year.  At the low end, you may end up receiving a series of static reports once a year.  At the high end, Nielsen or IRI will have dedicated staff at your site.  Variables that affect cost will include:

  • which product categories, retailers, and measures you subscribe to
  • how often you receive updated data
  • the level of customization you require compared to IRI/Nielsen’s standard databases
  • extra services added on top of simple data access

If your business is large enough to be over the cost hurdle, then you need to understand why to buy this data.  The most basic reason is that it will help you understand the reality of what’s happening at your customers — at retail shelves.

  • What prices are your products really selling at?
  • Are your items selling throughout an entire chain where your items are authorized? (Though be careful: syndicated data sometimes provides a false reading.  A bigger topic that I can address if there’s demand.)
  • When your items are on sale, how do they perform?  Are retailers claiming rebates properly?

What these questions address is the gap between what you can see from shipments leaving your warehouse and what retailers see when items come off their shelves.

Oh, but there’s one more biggie: All the questions above can be answered about your competitors too!  Your retailer customers review your performance versus your competitors, and you can follow along in real time to see where you’re having success and where you’re not.

CPG Data Tip Sheet has some great tactical questions to consider, too.

Two notable asides, by the way: In the months since I last wrote on this blog, I joined a great data analytics company, Pivotstream, and look forward to writing about my work with them.  And more importantly, my wife and i welcomed Maya Jayne to our family on January 16, 2014 — a happy, healthy, delightful baby girl.