I spy on what you buy
People outside the grocery business are usually shocked at how much data we have available to us. Likewise, those in the business often forget how lucky we are. Those who transition to other industries have a hard time conducting analyses, simply because they don’t have enough information available to them.
As a basic level, most CPG manufacturers can see detailed information on what sells in their categories, in most U.S. supermarkets and a smattering of other retailers (including Walmart, as this spring), broken down weekly, and spanning 50 to 100 metrics. This includes their items, plus their competitors items, and more if they decide to buy that data.
It’s an amazing business. Two companies in the U.S., SymphonyIRI (formerly Information Resources Inc.) and Nielsen (same company that does TV tracking) buy data from most supermarkets in the country. That data represents every item that scans through a cash register at a supermarket that’s part of the network. SymphonyIRI and Nielsen process the data, enhance it, and resell it to hundreds of manufacturers. Generically speaking, we refer to this as syndicated data.
Why in the world would a supermarket part ways with one of its most precious assets, its sales data? Well, it’s worth some money to SymphonyIRI and Nielsen. I don’t have details on the exact arrangement, but there is some revenue sharing back to the retailers who provide the data. Also, SymphonyIRI and Nielsen provide data services that might be hard to do in-house — plus data on what’s happening in the retailer’s aggregate competitive market, without detailing any specific competitors.
One of the few restrictions is that competing supermarkets are not allowed to see one another’s data. Manufacturers are required to withhold data from competing chains. If I go to visit Ahold (owner of Stop & Shop), I can’t share Shaw’s data with them. But for my own internal use, it’s all fair game.
Walmart sales data
And this, I suspect, is why Walmart was out of the game for about a decade. Until this spring, Walmart did not provide data to the two big data providers. Rightfully so, I suspect Walmart was suspicious that their sales data would end up in the hands of its competitors. And as the biggest guy in the game, they could do what they wanted.
They provided data through their own proprietary portal, RetailLink (and still do) at no cost, but they were very selective in sharing it and restricted its use. Walmart has started sharing data again, which really changes the analytics game — and I’m still curious as to why they made that decision.
Specialty data providers
Aside from the two big providers who cover most of the U.S. supermarket business, there are some specialty data providers. A division of Nielsen provides special analytics for fresh categories, like produce and deli, that don’t always scan through registers in uniform weights and have other idiosyncrasies. Specialty and natural/organic/health food stores have special services, too, provided by SPINS.
A colleague from a specialty manufacturer asked me to give an opinion on how useful this data is. It’s expensive. Very expensive. And the data isn’t perfect. We sometimes see things that look a little funny, and it’s hard to know if it’s right or wrong. But it’s an incredibly valuable read on what’s happening with the business, even if it’s simply used to understand your business’s general direction rather than sales down to the penny. Many small manufacturers hire outside organizations to help with this work, and it spreads out the cost dramatically. Brokers are commonly used for this help. And if you’re not familiar with what brokers do in the grocery business, more on that soon.