shopper

Lessons from the Transit of Venus

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YESTERDAY I ATTENDED an event that will never be repeated in your or my lifetime. It was a viewing of the transit of the planet Venus across the face of the sun. That’s something like a solar eclipse by the moon, except much rarer and quite a bit harder to observe since Venus is much farther away.

The kind folks at the Loews Ventana Canyon Resort here in Tucson hosted the afternoon on the hotel patio, and scientists from The Planetary Science Institute, also based here, were our very enthusiastic guides. They set up several specialized solar telescopes for public viewing and presented a series of lectures which explained what was happening and what it meant, astronomically speaking.

The story of the transit of Venus is as much about cultural history as it is about science. For many centuries, natural scientists have been aware of the relative movement of the sun, moon and planets. Venus is the most visible object in the night sky, after the moon itself, but it is not normally visible in the day time. The transit itself happens in pairs, eight years apart; pairs then follow alternately by spans of 121½ years and 105½years. This makes it nearly impossible for a single observer to study.

According to the PSI scientists, it took several centuries for European astronomers, working in concert, to recognize and work out the basic facts of the transit. Once they did get it figured, it yielded important insights about such matters as the distance and size of the sun and whether more distant stars might also have planetary systems.

With the special telescopes it was easy to for us guests to observe the dark dot of Venus as it crept slowly across the solar disk. Several sunspots and solar prominences were a fascinating bonus. The lecturers had tons of anecdotes and insights about what could be learned from observing and measuring the transit.

Since I tend to view our world (and other worlds!) through the peculiar lens of the retail marketer, I was bound to consider what lessons we might derive from the transit of Venus. Several learnings came to mind:

You can see a lot just by looking.* The transit of Venus is hard to view due to the overwhelming brightness of the sun, but as I learned yesterday it’s not that difficult if you have a plan and the right scope. Active observation is key. This made me think about the challenges of in-store sensing and of capturing shopper insights in general. Valuable observations don’t happen by accident; they are a result of carefully planned and executed practices. (*Props to the Yankee sage Yogi Berra.)

Some misses are forever. June 5 marked your last chance to see a transit of Venus. It won’t happen again until 2117. Luckily astronomers recorded this event, so you may watch the video. How many merchandising opportunities and rare marketing insights pass us by just like this? What can we do now to ensure that we don’t miss out on future learnings that may enable us to to be better prepared for the next window of opportunity? In retail merchandising and marketing, it begins with active sensing and collaborative data sharing.

Long cycles are hard to track. Under the most fortunate of circumstances, an individual astronomer gets to see the transit of Venus twice in a lifetime. Many never see it once. Even the lucky ones must count on other recorded observations to grasp its periodicity. With such a slow rhythm, it’s tough to draw reliable conclusions about the nature of the phenomenon. In the product marketing world, we discover that fast-turning consumable products offer some informational advantages as compared with infrequently purchased, higher consideration products, like cars, TVs and appliances. With many fewer data points and behaviors to draw upon, slow-moving consumer goods engender a less granular picture for marketers.

Sometimes you just need a team. Understanding the transit of Venus and its implications has required numerous observations separated by both time and physical distance. The relevant data has been collected by teams of scientists and coordinated among them with a common intent. Consumer insights also accumulate from observations collected across many locations and moments in time. You can’t unlock their potential alone. The implications are too vast, and the effort must be shared and sustained over time to reveal actionable insights and best practices.

The transit of shoppers through retail stores can reveal insights that we can best capture through systematic tracking and observation. When we can get the shoppers themselves engaged in documenting and sharing their actions and preferences – as through mobile devices – even greater wins are possible.

© Copyright 2012 James Tenser

“Omni” What? It’s Da BOMB

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IN MY MEANDERS around the vibrant NRF Expo hall (#NRF12) in New York this month, I tried my best to spot the visible stars of the show and detect the invisible three-degree background radiation that lurks behind the retail firmament.

The atmosphere was energized, the crowds were large and buzzwords were flying. Shopper insights swirled in the cloud, mobile technology hype charged the atmosphere, and business intelligence oozed out of every software booth into glowing puddles on the Javits Center exhibit floor.

Ultimately there was too much for one greying, recovering journalist to absorb. This is surely why I wound up at the bar in Manhattan’s Landmark Tavern one evening with a group of senior retail business writers (a.k.a.,”ink-stained wretches”) who gather each year to drink beer and tell lies.

The BSQ 

We talked about how NRF has become primarily a retail operations exhibition, and how that had evolved to be primarily about software solutions. Egged on by my fellowship of professional cynics and emboldened by many lagers and stouts, we began evaluating the first day’s bullshit quotient. The BSQ is a pretty simple ratio – buzzword repetition divided by genuine new ideas. (This is a party game only old journalists could love.)

The buzzwords were easy: “Insights” (every retail software solution promises better ones); “Analytics” (every retail software solutions promises faster ones); “Business Intelligence” (how every solution promises to deliver the insights and analytics); “Big Data” (what results from gathering so many insights and analytics); “Cloud” (the place in cyberspace where every vendor proposes to house its Big Data); “Dashboard” (a screen where retail practitioners are supposed to want to access their BI); and “Omni-Channel” (a state of retailing where online commerce coexists with mobile commerce and bricks & mortar, empowered by – you guessed it – insights, analytics, Big Data and BI).

As ever, the genuine new ideas were harder to detect. “Performance Management” may be a good one (the quaint notion that retailers might want to measure the outcomes of their insight-driven plans to see if they are really paying off). “Retail Industry Creates Jobs” is another, presented as a core theme by the NRF itself.

Readers familiar with basic arithmetic will quickly reason that for the umpteenth consecutive year, the BSQ on the exhibit floor was off the charts. The principle factor here is buzzword repetition, which drives the numerator toward infinity, while really genuine new ideas to pad the denominator are rare indeed.

Da BOMB
There is a lot to say about each of the major buzzwords and concepts that enlivened the NRF Expo. Right now let’s focus a little on “omni-channel retail,” which is recent nomenclature for an idea that has been around for quite a while. As far back as the dot-com boom in 1998 we began discussing the interplay between virtual and physical stores, catalogs, kiosks and call centers. By 2000 we identified several multi-channel players – like Eddie Bauer, and JCPenney – who had succeeded admirably (we thought then) in melding online, offline and catalog businesses to the benefit of shoppers.

The “shop anywhere, buy any where, return anywhere” principal was captured in the final edition of VStoreNews, where we labelled it “Broadband Merchant,” re-purposing a popular adjective. By then much of the industry had adopted “multi-channel” as the nom de jour.

At NRF this month, alot of folks were calling this “Omni-Channel,” I think because of the stunning influence of mobile technology within the mix. We can (and will!) argue long and hard about the appropriate understanding and application of mobile technology in retail, but for now let’s just stipulate that mobile is colossal in its influence. Explosive even.

Which is why I’d like to humbly offer an “omni” alternative. Call it BOMB retailing – Blend Online, Mobile & Bricks into a single entity where every channel shares a common information platform and consistent shopper interface. One brand, one shopper relationship, one inventory, one set of service standards, many moving touchpoints.

Surely after 14 years on the interweb machine, the omni-present, omni-channel, but hardly omniscient retail industry is ready to blow up the status quo.

© Copyright 2012 James Tenser

Why In-Store Implementation Is the Next Frontier

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I CALL IT the Paradox of Scale: Grocery chains keep getting bigger, but industry profit performance remains stagnant.

It’s been a doggedly persistent trend. Between 1992 and 2009, the top 20 U.S. grocery retailers increased their cumulative market share from 39% to 64%, according to the U.S. Economic Research Service. Meanwhile from 1996 to 2010, industry net profits have hovered consistently around 1% of sales, according to the Food Marketing Institute.

These facts seem to run counter to intuition. After all, bigger chains are supposed to have top-of-the-line executive talent, fine-tuned supply chains, advanced IT systems, greater buying clout and economies of scale. A deeper look reveals the paradox: Bigger chains also suffer from intensified store operational complexity, larger assortments and poorer visibility from the home office.

Bottom line – as chains expand, store performance management gets much, much harder. This begins to explain why out-of-stocks continue to run at 8.2%, unchanged in 15 years, yet 78% of items sell fewer than 3 units per week. It begins to explain why as many as half of all authorized in-store display promotions are never erected or erected late. It begins to explain why most retailers have no effective process in place to ensure or even monitor everyday planogram compliance.

A Rich Prize

Where some may find darkness and frustration in these statistics, others identify a golden opportunity. The In-Store Implementation Sharegroup identified tens of billions of dollars at stake – a rich prize indeed. Bold retailers and marketers who commit to improve retail compliance practices in the next few years should gain a distinct performance advantage over their less nimble competitors.

In-Store Implementation is not an isolated solution; it’s a multi-threaded initiative that incorporates improved in-store sensing and measurement; better inputs into planning processes; a performance-oriented culture; and alignment of trading partner resources. Many of the enabling practices and tools already exist, ad hoc. Still needed is an organizing principle that can tie them together into an effective set of best practices for the industry.

Workshop at LEAD

In just two weeks, a select group of industry thought leaders will come together to explore how to make this ambitious agenda a beneficial reality. They will be participating in a pre-conference workshop at the LEAD Marketing Conference in Rosemont, IL, on Sept. 19.

The workshop is presented by the In-Store Implementation Network, a membership organization with an educational mission centered on advancing awareness and knowledge of ISI practices. The group boasts more than 1,400 practitioner members in 28 countries who share a common goal – the establishment of a culture of performance at retail that makes stores work better, shoppers more successful and businesses more profitable.

Thanks to the generous sponsorship support of our friends at Gladson, ISI Network has assembled an all-star faculty to address key facets of the opportunity. The workshop format is intended to ensure that participants will leave the half-day event with a fresh perspective and practical ideas that may be applied immediately to their own ISI business challenges. As Executive Director of the ISI Network, I will be the lead facilitator of this workshop.

A few seats remain available; admission is complimentary to retail and CPG practitioners. I look forward to greeting many of you in Rosemont!

To register for the LEAD Marketing Conference, click here.

For a detailed agenda about the ISI Pre-Conference Workshop, click here.

© Copyright 2011 James Tenser

Pay Cycles: When Month Outlasts Money

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I WAS STRUCK to read comments a couple of months ago by Walmart CEO Mike Duke who stated that the chain’s shoppers seemed lately to be running out of money in the waning days of the month. He cited the shrinking size of market baskets as evidence. Tough times leading to tough choices.

Separate recent reports about the worrisome state of our consumer economy observe that budget-conscious shoppers tend lately to purchase smaller package sizes near the end of their pay. This, of course, is a key contributing factor to smaller baskets. William Simon, Walmart U.S. stores chief, made reference to this “paycheck cycle” at a recent analyst meeting.

This morning a report in Bloomberg News described shoppers upping their use of credit cards for purchase of household necessities and gasoline. This is a confounding signal that looks on the surface like a rebound in consumer confidence. In fact, it seems to be concentrated at the end of the calendar month. This may be a sobering sign that many households’ flat and declining paychecks can’t keep pace with price increases.

I’ll leave the economic and social import of this behavioral trend to the true experts. But I would like to offer a few thoughts about the time-based shopper insights that allow analysts to detect and measure the trend. Looking at detailed market basket trends day by day, it seems, can reveal a great deal about short-term household economics.

Not Card-Sharp? Then Be a Basket Case
This is interesting because we hear a different tune about insights from the many advocates of frequent shopper programs, a.k.a., loyalty cards. The detailed segmentation data these programs can deliver offer a wealth of target marketing opportunities for retailers and their suppliers, along with behavioral insights so detailed and profound that we don’t always know how to apply them in practice.

This is very cool stuff and it is credited with upping sales and profits at some pretty sharp retailers, like Kroger. Card-linked data allows marketers to put together a picture of a whole customer relationship over time, evaluate it, and group customers into target-able groups. Walmart and the so-called “dollar” stores, however, do not go in for those card marketing schemes. They stick deliberately to their EDLP guns instead, and resign themselves to data-poverty.

Or so it may seem. Actually, there is a great deal that may be learned just by looking at basket trends, especially at those retailers who enjoy very large footprints and shopper penetration. Card-free chains like Walmart, Publix and Dollar General can track the transaction logs by day and by local geography to extract very meaningful insights. Even if the shoppers are not individually identified, their collective behavior reveals much about pay cycle trends on a store-by-store basis.

Here is where even “data impoverished” retailers can find basis for some global and targeted merchandising tactics. Carrying sufficient smaller pack sizes in key categories every day is one obvious response Walmart says it has pursued. Sales and events may be scheduled to coincide with payday for local large employers. Managers’ specials may be timed to hit key mid-month and end-of-month dates.

Well there you have it. It’s still a share-of-wallet game, even when wallets are growing slimmer. Walmart knows, there’s much of tactical value embedded within store transaction-logs, even where there’s no loyalty data in sight. It’s not just dollar size of baskets that may influence action, it’s also item counts, categories included/avoided, package sizes and purchase influences from outside factors.

When the month runs long, wise retailers jump on their cycles.

© Copyright 2011 James Tenser