Retailer Power Play
In today's big-data reality, retailers and manufacturers alike are learning more about their common shopper. They understand the importance of household-level customization of marketing and neighborhood-level store merchandising—all in the name of stimulating growth of what the Category Management Association (CMA) calls “fast-moving consumer goods” (FMCG).
The CMA recently released a white paper, titled “Three Trends Changing the FMCG Ecosystem,” exploring the current shopper atmosphere and its implications on the retailer and the manufacturer.
“FMCG are changing rapidly, driven primarily by underlying changes in digital information delivery that is simultaneously weakening brands, strengthening retailers and empowering the shopper—all while creating an unprecedented tsunami of data,” the report stated.
Perhaps most importantly, the improvements in instantaneous interactive communication enabled by mobile communications is empowering shoppers to meet their needs in an ever more personalized fashion, “creating a new shopper paradigm characterized by cherry picking among retail formats to meet differing need states at different retailers more attuned to each shopper’s unique needs,” CMA found.
Three trends and their implications for the future include:
The Growing Power of the Retailer
The traditional weapons of FMCG mass marketing (TV and magazines) have lost effectiveness and, even moreso, efficiency—thereby debilitating brand equity building. At the same time, retailers have consolidated and now dominate the moment of truth at the shelf, aided by new tools such as loyalty cards. The balance of power has permanently shifted towards the retailer.
The Digitally Empowered Shopper
Today’s shopper can rapidly compare price and quality. This creates new shopping behaviors, especially relating to the cherry picking of formats to satisfy specific shopper need states.
The Big Data Big Bang
Digitally driven shopping behavior creates billions of variegated data points. This tsunami of data comprises “big data.” Applying new predictive analytics to this expanding data universe enables marketers to better understand and influence shopper behavior.
As the stars are better aligned for retailers, CMA calls on them to ramp up their efforts three ways:
- Immediately begin building a “big data” capability, primarily by identifying a small test situation where you may explore your capability to combine data sets to create a competitive advantage.
- Recognize the imperative to create customized stores by neighborhood through varying category space and assortment to optimize the shopping experience and total store profitability.
- Address the shopper “leakage” problem caused by shopper’s fulfilling specific need-state requirements at other formats. Recognize that internal organizational silos and inadequate processes frustrate your ability to build volume through superior need-state marketing.
Key takeaways for manufacturers include the following:
- Understand how total store optimization will affect your company.
- Begin mastering multicategory need-state marketing by partnering with a retailer’s efforts.
- Ensure that your company is organized to exploit big data primarily by identifying what you wish you knew and then identifying combinations of data that can yield the answer.
- Recognize you must collaborate more effectively with retail trading partners and move up the category management maturity curve.