Do CPG Companies Get Online’s Potential?

shopping-cart-buttonCONSUMER SURVEYS FROM Deloitte and others consistently report strong intentions by households to purchase more of their grocery and packaged goods online. This has been true for many years. I suspect there’s some response bias in play.

A recent Retailwire.com discussion raised this issue in the context of a gap between measured shopper interest in online CPG purchases and the less-than-dynamic efforts by most CPG companies to take full advantage of the opportunity. Are they missing the boat? Or are they just taking a prudent approach in the face of greater complexity?

Here’s my take:

Until the perspective shifts from, “How will we sell our products online?” to “How will we help households better manage their pantries?”, I believe this business will continue to be “just around the corner” for CPG, as it was in 1997.

Certainly, splintering the grocery shop into dozens of weekly decisions, transactions and deliveries is no way to help shoppers streamline their consumption routines. This was then and remains now the fallacy of the “consumer direct” concept. Disintermediation is bunk.

A re-consideration of the grocery basket and how it arrives to the home is another story. That requires a solution orientation on the part of the service provider (the retailer). Never-run-out tools, bulk shipments of high-consumption items, and secure unattended delivery have all been well-received in the past. Rapid delivery mechanisms from Amazon.com and others may add traction in areas with urban density, but the relevance will vary widely by location and purchase occasion.

Unfortunately for brands, these emerging concepts will not simplify the in-store shopper marketing imperative in any way. They do add, however, a whole new set of required practices for brand promotion and interfacing with online channels and shopper marketing outside the store. Set against the hard reality of somewhat inelastic total demand, that’s a very tough formula.

© Copyright 2013 James Tenser

The End of Loyalty

Tom Fishburne cartoonIF IT EVER WAS, it’s fading fast. I’m talking about shopper loyalty and the card-based frequent shopper programs that try to pass as loyalty builders.

I’ve long been a skeptic about the premise of customer loyalty. Card based programs are more about behavioral modification, segmentation and targeting. In many instances — airlines come to mind — the net result is the cultivation of dis-loyalty and skepticism, as a consequence of added complexity, suffocating rules, suspect prices and incentives that many users can never achieve.

Now comes news that the Kroger supermarket chain has begun converting its frequent shopper card holders to a smartphone app. This is news with big numbers behind it, as 96% of Kroger shoppers presently possess a card. Its personalized marketing subsidiary, dunnhumby, is surely driving this action.

This morning, the good folks at RetailWire.com asked its distinguished BrainTrust panelists: “Will Kroger’s App Replace its Loyalty Card?”  Here’s what I had to say about it:

Welcome to the post-loyalty era.

Card programs are not quite obsolete, but they are about to be absorbed by mobile apps. While a front-runner such as Kroger/dunnhumby may be able to convert many shoppers to its proprietary app for a while, the lasting future will be defined by electronic wallet solutions that aggregate frequent shopper plans, coupons and payments on the shopper’s terms. NFC communication with the POS will likely be a key enabling technology.

An observation: The pure value of of frequent shopper data is approaching its zenith. It now diminishes slightly in relative significance as the volume of social media interaction grows. This is the mind-bending next stage in behavioral-based marketing: Things people do, say and experience outside the store may soon eclipse what happens within the four walls.

For retailers that have steadfastly bucked the loyalty-card trend (like Walmart), this may be a moment of affirmation. Or maybe they just got lucky.

© Copyright 2013 James Tenser

Stalking Privacy

TargetedTHE ERA OF INDIVIDUAL PRIVACY may turn out to be a mere blip in the sequence of human history, as the smothering embrace of the World Wide Web makes our every click and consumption act a new molecule in the Big Data tsunami. Marketers salivate at the potential to sift the flow and aim relevant offers with pinpoint accuracy.

If they have their way unimpeded, privacy may turn out to be the human right that never was. People with means may put up barriers to make their personal information difficult to obtain. Everybody else would stand naked in the virtual town square, shielded only by the sheer numbers of their peers.

No wonder reasonable people worry that targeting may easily transmute into stalking when marketers apply automation to their process. The mechanisms and practices are not readily visible to normal citizens. I think this makes the reality both better and worse than it really seems.

This morning I offered this perspective on RetailWire.com as part of a discussion, Are Shoppers Entitled to Privacy While They Shop? This is a topic rife with assumptions that deserve to be challenged.

Here’s my take:

There is no natural right to privacy in the public domain. But protecting privacy may be the preferred practice for marketers and even governments.

If I enter a place of business (in-store or online), I should reasonably expect that my behaviors are open for observation.

But I’m not obligated to like or accept this. I can vote with my feet, clicks and dollars by preferentially visiting or patronizing establishments that adhere to a less creepy standard.

So I would propose that marketers make a habit of disclosure that is not buried on page 18 of the terms of use. Reminders about shopper tracking should be automatic and opt-out mechanisms provided.

If consumer privacy can be bypassed in the name of marketing relevancy, then certainly the marketers themselves should have zero expectation of privacy about their methods and objectives.

Disclose. Disclose. Disclose. Let shoppers tell you what they will accept; then market to meet that expectation.

[Tenser excerpt from Are Shoppers Entitled to Privacy While They Shop? discussion on RetailWire.com, Mar. 15, 2013.]
© Copyright 2013 James Tenser

Tablet Prescription: Take Two

Some TabletsIF THERE EVER WAS an instance of “the medium is the message,” tablets are it. Their tactile mode of interaction, image quality and scale, and untethered connectivity create a unique formula for shopping. Yes, PCs and smart phones each share some of these traits, but not all of them, and that is the difference.

Of course, shoppers don’t analyze the mediated retail experience much. I think most folks experience tablets on an emotional, instinctive level and do what comes naturally. It’s up to merchants to try to address those behaviors with relevant interactive options.

Tread lightly in this regard. Preferences change in a heartbeat, so it can be a mistake to try to corral shoppers using custom apps. Nimble is better than powerful; responsive is better than proprietary; rapid life-cycles are better than sunk costs.

[Tenser excerpt from “Will Tablets Reinvent How We Shop Everywhere?” discussion on RetailWire.com, Jan. 23, 2013.]
© Copyright 2013 James Tenser
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