Earlier this month, I had the privilege of delivering a talk about In-Store Implementation at the Annual Spring Conference of NARMS, the National Association for Retail Marketing Services, in Colorado Springs.
NARMS is an organization of more than 400 companies who perform value-added services in retail stores, including merchandising, measurement and event marketing. Its members have a strong vested interest in the professionalization of In-Store Implementation.
A PDF version of my presentation deck is available for download on the ISI Network site. See the item, “Illuminating the Black Hole,” at the top of the right-hand column on the home page. (Free registration is required.)
Subsequent to my talk, I was interviewed about the latest activities of the In-Store Implementation Network. That conversation was captured in a brief podcast that may be played with any common audio player.
TWO RECENT NEWS ITEMS about retail giants, radio-frequency ID tags and promotional displays have pundits punning and some market vultures vultching:
When Procter & Gamble declared it would no longer apply EPC/RFID tags to promotional displays built for Walmart stores, it triggered critiques of the technology and its underlying economics. Observers circling above the decaying carcass of the program sniffed that just maybe, Walmart wasn’t delivering a measurable benefit from the solution.
Within days Walgreen Drug Stores delivered a more positive spin, stating that the very same sort of radio-frequency tags had helped it improve its in‐store execution in the past year “to nearly double the industry average.”
Never mind that the industry average stinks like carrion.
David Van Howe, vice president of purchasing for Walgreens, called the information captured from the tagged displays a “game changer” for the chain, and at least one partner, Revlon, said the program delivered “unprecedented insight into what works and what doesn’t with consumers.”
So what are we to take away from all this? The vultures in our midst keep trying to declare retail RFID dead on arrival. The tech pundits claim they have seen a glorious future in those tiny transponders. I say the misdirected focus on RFID technology threatens to derail an important initiative.
It’s not the tech, it’s the practice! RFID has been ascribed with magical status by some, but I’m here to tell you – it’s no tri-corder, not even a silver bullet.
When it comes to at-retail compliance – potentially the largest business improvement opportunity presently facing the retail consumer products industry – point solutions are pointless. The system of practices is everything.
P&G’s decision exemplifies the frustration held by many manufacturers with In-Store Implementation of promotions. There is no routine, repeatable, measured and collaborative practice to execute planned promotions in stores. Data on compliance, if available at all, arrives weeks or months after the fact and it reveals that roughly half the spending is ineffective.
Even the mighty Walmart, it seems, has so far been unable to master this challenge on behalf of its trading partners. It means that billions of dollars in trade and promotional funds are badly spent while we debate which brand of ID code to attach to the display headers.
When it comes to optimizing In-Store Implementation, grease pencils and clipboards may be plenty of tech if the process is right. The retailer that formulates a compliance plan, enables it with appropriate solutions, and measures its outcome relentlessly will always achieve better performance on in-store programs. This is equally true for off-shelf display compliance, resets, planogram maintenance, new-product cut-ins, sampling programs, or floor polishing.
Of course large chains like the two Wals require some tools to help manage scale and stabilize best practices. For fixtures and displays, RFID may in fact be a useful input to the process. But it works at Walgreens because it has also instituted the in-store practices to make it work.
For the past two years, the In-Store Implementation Network has advocated establishment of a fully collaborative “plan-do-measure” retail compliance discipline that would ensure real-time visibility and accountability. We cannot improve what we do not measure. Retailers – and that includes even the likes of Walmart and Walgreens – must step forward on this issue if we are to see real progress on retail effectiveness and shopper experience.
When retailers seek to optimize the shopping experience and understand channel choice, much consideration is given to aspects of convenience. The literature generally breaks this down into two core elements: effort and time. For brick and mortar stores, the goal is to make shopping as easy as possible, and attractively quick, but not so fast that sales opportunities are missed during the shopping trip. In a multichannel environment, the puzzle gets more intricate. Shopping time covers multiple factors, including hours of operation, travel time, search time, time to check out, delivery time, and time to return. So time-saving convenience is highly conditional:
A mother will drive across town to a 24-hour drug store at midnight when she has a sick child, but she may leave a convenience store when faced with a long checkout line during the morning coffee rush.
An electronics shopper may spend hours researching flat screen TV prices online but grow impatient when forced to wait 10 minutes for sales help at the local electronics superstore.
A discount store shopper may watch TV at home four hours a day, but will attend to an in-store digital screen for exactly eight seconds before moving on to the next purchase task.
An online shopper will gladly wait three days for free delivery of a purchase from a multi-channel retailer, but grow agitated waiting five minutes to return the same item at a local branch store.
These examples are illustrations of what I observe to be six dimensions of shopping time. The academic literature generally identifies four of these:
1) Time to access (i.e. to reach the store or shopping site)
2) Time to search (i.e. to identify and select product to buy)
3) Time to transact (i.e. to complete the purchase transaction)
4) Time to possess (i.e. to physically obtain the purchased merchandise)
This classification may not reflect a complete picture of the influence of time on consumers’ retail channel choices however. I would add two additional time elements to the list:
5) Time of operation (i.e. days and hours that the retailer may be patronized)
6) Time of return (i.e. to return an item for refund or credit).
Considering these time factors is especially important as we reason about the choices shoppers make between options in a multichannel environment. It takes minutes to find and order a book on Amazon.com – even at midnight – versus an hour or more to stop by Borders during business hours and search the shelves, but the Borders shopper may leave with the book in hand, while the Amazon.com shopper waits days for delivery. Which is more convenient? Well, it depends…what did the shopper need most at that moment?
Leading multichannel retailers give deep thought to understanding this complex of time-saving behaviors. The best evidence that I’ve seen is the growth of “order online, pick up in store” service offerings at some consumer electronics retailers. Instant gratification is still a motivation, but shoppers like the protection from stress that comes with pre-shopping on line in the calm safety of the family den.
Shoppers’ time-related behaviors, I think, are relatively independent of current economic conditions. In general they will choose the options that suit their need states of the moment. At the same time, we may observe that some shoppers will devote more time and effort to planned shopping trips by clipping coupons, preparing lists, and advance online price comparisons, especially as retailers continue to make these activities as time-efficient and easy as possible.
But the general rule (and its inverse) still applies in retailing: Time is more valuable than money for shoppers who have more money than time.
The In-Store Implementation Sharegroup is expanding membership and redefining its mission. The decision follows the overwhelming response to the April 2008 release of the Working Paper, In-Store Implementation: Current Status and Future Solutions. To date, the group has received more than 600 inquiries and dozens of membership requests. To harness all of this positive energy, it is creating a new, more inclusive vehicle for the group, the In-Store Implementation Network. The ISI Network will continue and expand upon the work of the ISI Sharegroup. An e-letter last week outlined the following mission:
Continue to research and publicize ISI issues
Develop and share ISI case studies and superior practices
Research effective and practical ISI tools
Promote education on Implementation and at-retail compliance
Share learnings through industry conference presentations
Maintain an ISI knowledge resource for members
ISI Network membership opportunities will be communicated shortly. If you haven’t yet joined the free ISI email list, you are invited to do so now at http://instoreimplementation.com, where you may access more detailed information and many document downloads.
Coordinating the ISI Network and expanding its base is a major focus for my firm, VSN Strategies, and I consider it a privilege to be associated with the founding member companies. In coming months I anticipate playing a key role in advancing the group’s educational and communications missions.
The In-Store Implementation initiative will assume a high profile in 2009. It is a multi-billion dollar industry opportunity that may be realized only through concerted efforts of many in the retail and consumer products industry. The ISI Network will be a channel for that energy.
The In-Store Implementation Sharegroup is expanding membership and redefining its mission. The decision follows the overwhelming response to the April 2008 release of the Working Paper, In-Store Implementation: Current Status and Future Solutions. To date, the group has received more than 600 inquiries and dozens of membership requests.