Marketside Rises in Phoenix

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IT’S NOT QUITE your grandmother’s corner grocery store.

I had the opportunity to join residents of several East Valley communities near Phoenix at a preview of a possible small-supermarket future on Oct.4, when Walmart simultaneously opened of four 15,000 square foot Marketside stores.

The Marketside openings seem like a challenge to UK grocery powerhouse Tesco, which already operates 25 of its small-footprint Fresh & Easy Neighborhood Markets throughout greater Phoenix.

“This is a conventional grocery store shrunk down,” said John Rand, director of retail insight for Management Ventures, Inc., who was spotted taking notes at the Tempe Marketside location. “Shoppers will understand it immediately, whereas people are still figuring out Fresh & Easy.”

The Marketside assortment heavily features national brands, a marked contrast with Fresh & Easy, which emphasizes private label. However like the Tesco format, this new effort from Walmart features an appealing range of ready-to-eat, and ready-to-prepare foods and meal kits, evidently intended to serve the grab-and-go lifestyle of many busy consumers. The company also claims some 300 natural and organic products throughout the store. Prices were deemed “competitive” by several observers and competitors on the scene – some visibly lower than conventional supermarkets, but only a few matched the Walmart Supercenters that seem to permeate the area.

The four Marketplace units are located in freestanding former Osco drug store locations. At least one location still had its drive-thru intact – a porte-cochere-like structure that could be adapted for grocery pre-order pickup, although no such services were offered. On the opening Saturday, arriving crowds were tempted by indoor and outdoor sampling stations offering deli meats and cheeses from suppliers Dietz & Watson, Sushi rolls from Chef Select, Marketside pizza, and 8 ounce bottles of Vitamin Water beverages.

A variety of prepared food items – side dishes, entrées and “family sized” meals – were offered for $2, $4, $6 and $8 each, displayed in sleek coffin coolers. Shrink-wrapped meal kits, priced at around $10 and $11 included chopped raw ingredients and sauces for such dishes as chicken fajitas, Mongolian beef stir fry and Asian orange chicken. Staffers clearly were challenged to keep these displays filled, as shoppers armed with opening day coupons (one offered a discounted price on an entrée of six cents) emptied them into their carts.

All prepared and ready-to-prepare foods had two-inch wide adhesive labels indicating the date each item was prepared and when it should be used by. These items are packed and delivered to the stores by an area contractor, according to an employee. In contrast with Tesco’s Fresh & Easy operation, which does its own food prep and pack at a centralized facility for shipment to the stores, Walmart has not yet set up such a facility.

We learned some local residents had received gift bags filled with product samples and coupons in the days prior to the opening. They may have brought in the crowd at the Chandler store on Saturday morning, but there were also an impressive number of observers, staff, and local Walmart employees on hand, and at one point a busload of Asian visitors who were evidently on an organized tour.

Three of the four stores offer beer and wine, however the Chandler location did not, and employees volunteered that this was because of its location directly next door to a KinderCare day care facility. As a result, the Chandler store had a little bit of floor space to spare, which was largely absorbed by what may be described as a “power square” where temporary promotional displays were located. One pallet display was stacked with cases of Niagara drinking water, 24-count half-liter bottles, priced at $2.97. Another offered 3.25-ounce bags of Pop Chips, “market value” at $1.50 each. Other display tables offered baked goods and fresh fruit – bananas were 68 cents a pound, and medium honeydew melons were $3.27 each. One shopper commented that this area, at least 20 feet wide, would easily accommodate eight or more café tables and chairs during the lunch trade.

A visiting Walmart operations person informed that energy-saving features adapted from the well-known Walmart green project stores in Texas included pull-down “shades” on the cooler cases that can be closed at night to save on electricity use. Overhead lighting was compact fluorescent throughout, with liberal use of LED lighting in the black-framed freezer cases that made product stand out clearly, even through the double-glass doors.

Notably, package sizes throughout the store were small, a contrast with Walmart’s supercenters. Individual steaks were available in the meat case, and the largest size liquid laundry detergent available was the 50-load concentrate. This perhaps reveals a great deal about the Marketside method – it’s designed to serve the grab and go world of commuters and single-person households. Mass consumers would do better to pilot the SUV over to Sam’s Club or the Supercenter.

© Copyright 2008 James Tenser

Bulletin from the Big Easy: Giant Killers

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I RETURNED FRIDAY from the Northshore Business Conference, sponsored by the Southeastern Louisiana University Small Business Development Center, where I was privileged to be invited as the keynote speaker. (The event brochure may be downloaded here.)

The event took place Sept. 25 in Slidell, LA, a fast-growing town located north of Lake Pontchartrain, which makes it a bedroom community for both Baton Rouge and New Orleans. The area is enjoying a modest economic boost due in part to the displacement caused by hurricane Katrina a little more than three years ago.

Conference delegates represented regional retail, wholesale, service, finance and other trades. Especially considering the duress some of their businesses had just suffered due to the one-two punch delivered by hurricanes Gustav and Ike, I was grateful for their attendance.

My talk delivered a snapshot of current economic, retail, consumer trends; discussed where they are leading the industry; and proposed how independent retailers – “Giant Killers” – might position themselves for success within that competitive landscape.

Preparing for and attending this conference was a learning experience for me. In particular, I’d like to relate two brief anecdotes about the flexibility and resilience of businesses in Louisiana’s North Shore that are worth at least a second thought.

First is from an area fencing wholesaler who attended the conference and was evidently engaged and enthusiastic throughout. At the break he described how post-Katrina re-development had caused demand for fencing materials to boom. His business had grown considerably and he had expanded his facilities. Some retail competitors were not so lucky, however, so home and business owners were coming in to his warehouse searching for materials and parts which had become harder to find locally.

“We are being pushed into retailing,” he said, expressing some regret that his newly enlarged warehouse did not have a showroom area set aside for the walk-in business. The good news: some of the parts now in greater demand bring higher margins. The bad news: the new direct-to-customer business adds complexity, expands his assortment, and requires longer weekend operating hours. Talking to this energetic and positive business owner, I had little doubt that he would rise to the opportunity.

The second anecdote involves Folse Seafood, a retail and catering business operated by Jerry Folse and his son Jay out of Gonzales, LA. I was impressed by some press coverage I uncovered while researching my talk, and decided to give them a call. The answering machine indicated that the shop was temporarily closed following Gustav and Ike, but gave another number for Jerry, which I dialed.

To my surprise, Jerry answered his cell phone from the cab of an 18-wheeler. He and Jay were caravaning in two rigs toward one of the oil refineries in southwestern Louisiana, on a catering job. It seems the 2,000 workers laboring around the clock to bring the refinery back on line needed to be fed, and Folse Seafood had thousands of pounds of frozen shrimp and house specialty crawfish bisque that could keep the hungry workers nourished.

“Our power was out, and I knew the merchandise in our freezers would eventually go bad,” Jerry told me. “I sent ten emails to contacts I had at the oil refineries and other businesses along the Gulf Coast and six of them responded ‘yes we need you’.”

He booked a month’s worth of catering business at facilities in Louisiana and Texas, closed the retail location, loaded the trucks and hit the road. I asked Jerry if he was worried about the consequences of closing his doors for so long and the certainty of his answer impressed me deeply: “Our customers will come back to us in late October when the new crawfish season begins.”

Both these stories tell us something about the resilience and ingenuity of independent business owners in the face of extraordinary circumstances. I can hardly imagine a chain retailer responding to local challenges with these levels of commitment and creativity. Hats off to these “giant killers” and their peers across the Gulf Coast who are battling their way back to prosperity with grit, smarts and heart.

© Copyright 2008 James Tenser

SCAMP: Five Pillars of Shopper Experience

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I HAD AN INVITATION recently to address an executive summit on Shopper Experience on the subject of In-Store Implementation. Regrettably, the event did not materialize, but the thought process it inspired could not be stopped. I decided to capture some of it here in the Tirades.

But first, are you experienced?

If you have ever shopped, of course you are. Shopper Experience is one of those big ideas that is hard to define because it encompasses everything we encounter in connection with a retail shopping visit. It begins with the traffic on the drive to the store, takes in the sights, sounds and smells of the store environment, and layers on the actions that take place while we are there. It probably even extends to the drive home and the interaction with purchased products.

Wikipedia defines it this way: “Customer experience is the sum of all experiences a customer has with a supplier of goods or services, over the duration of their relationship with that supplier. It can also be used to mean an individual experience over one transaction.”

A large and complex construct, as the consumer behaviorists might say. To my mind, Shopper Experience cries out for a bit of de-construction. I took a crack at it.

As I see it we can break down the shopping experience into five “pillars” or components. Taking each in turn may make the whole concept easier to grasp for purposes of analysis. More importantly, it may lead us toward practical ways to improve the whole shopper experience by optimizing its elements.

My proposed five pillars of Shopper Experience are: Service; Convenience; Ambiance; Merchandising; and Price (SCAMP). I’ve thought about these pretty carefully and I believe this breakdown meets the MECE test. That is, they are mutually exclusive and collectively exhaustive. Each of the five pillars merits its own definition, and each encompasses much detail. For the purposes of the present post, let’s briefly define each:

Service. People, practices, policies, and the training that enables them. Top performing retailers excel at both hiring the right people and setting service practices that sustain and support their success.

Convenience. Both time-saving and effort-saving. Sometimes the line between time and effort may be blurred with other pillars – as when it takes too much effort to locate a desired product. Is that a merchandising problem?

Ambiance. Physical design of store environment, including lighting, spaciousness and other sensory cues like temperature, odors, and sound. And yes, other patrons figure into this experience pillar – we tend to like to shop with people like ourselves.

Merchandising. The product assortment; their arrangement on shelves or displays; all associated messaging designed to inform and persuade.

Price. Base or every-day pricing and store price positioning, of course, but also promotions and markdowns when they occur. Shoppers tend to form a relative price-value perception or price image for each retailer based on all these cues.

SCAMP is submitted for your consideration. I find it a useful first cut at analyzing Shopper Experience. Of course, each of the five pillars merits much more detailed discussion. That’s an opportunity for future Tirades.

© Copyright 2008 James Tenser

Understanding Shopper Media

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THE TITLE OF THIS POST is meant as an homage to media sage Marshall McLuhan, whom I admire greatly as a thought leader regarding the impact of television, radio, print and film on the collective culture and consciousness of our society. I had the very good fortune to learn about the maestro’s work at the knee of his protege the late Dr. Neil Postman, professor of Media Ecology at New York University, when I studied there in the early 1980’s. I would encourage readers to look up books by both these great scholars. One can only imagine what they would have to say about the present state of blogging, text-messaging, and in-store digital media.

Their work has certainly influenced my own attempts to understand retail marketing and merchandising. In the early 1990’s, while working as managing editor of BrandMarketing magazine, I penned: “The retail store is a communications environment for brand messages.” This statement I believe captures the modern shopping experience at several levels, and it may help us confront and make sense of the incredible complex of messaging that takes flight at shoppers between the electric doors and the point-of-sale terminals every day.

Start by visualizing the 30,000 package labels in a modest sized supermarket – many of these multiplied by two, 10 or more facings into section and category tableaus. Add to those the shelf-talkers, aisle signs, price labels, floor graphics, coupon dispensers, shopping cart signs, and product displays that decorate stores and you begin to form a picture of the imposing gauntlet of competing attempts at persuasion that shoppers confront and navigate on a daily basis.

And that’s just the visual, static communications. Lighting, fixture design, even environmental systems all convey implicit and explicit messages aimed at influencing shopper behavior. Sales people cannot be overlooked as messengers of persuasion. Modern retail environments are also rife with electronic media of various stripes – from in-store audio and radio (“Attention Kmart shoppers…!) to a variety of interactive kiosks, and most interestingly of late, to networked video screens that display full-motion service and advertising content. These are often referred to as “in-store digital signage” because the folks that make the hardware (screens, switches, network gear) and software (media asset management systems) imposed their terminology on the emerging industry.

Two major influencers in the digital media trend, Walmart Stores and its supplier PRN Networks, originally dubbed their network, “Wal-Mart TV” – a metaphor that stuck, because after all, television monitors were used to display the content, and commercial time was sold to fund it. It seemed at first to mirror the classic advertising model favored by the television industry – audience reach, delivery frequency and wrap-around content. But don’t let the rectangular, glowing screen deceive you:

This is not TV! Any more than the rectangular glowing screen on your computer is TV; or the rectangular glowing screen on your cell phone; or the giant rectangular glowing screens on the strip in Vegas; or the rectangular glowing screen on the dashboard of your car that tells you what direction to go next. These are all video monitors, but what they are, in essence, is determined not by their form factor but by the communications environments in which they are viewed.

Let that sink in a bit. What I’m proposing here is that the observer’s context and mindset are what define the media experience. It’s about where the viewer is when they confront the screen (living room sofa, desk, auto, store, street, transit hub, etc.) It’s about what they are doing and what objectives they are pursuing while they view the screen. It’s about how the viewer feels before they confront the screen, how they feel viewing the screen, and how they feel after they view it. It’s about what they do after they view the screen, what they remember about the experience and the enduring feelings they carry with them for minutes, days or years afterwards.

So the retailers, advertisers and marketers who are today struggling to press in-store media into the classic advertiser mold of reach, frequency, cost-per-thousand (CPM) and gross rating points (GRPs) are barely confronting the scope of the challenge before them. The in-store media measurement models we are newly hearing about don’t begin to tackle the really big issues that come along with the revolution in Shopper Media. What does the shopper see? What does she feel about it? What does he do about it? What do they do and feel about it later?

These questions impose a new discipline upon us, like it or not. It’s time to get busy on the basic shopper behavior and attitude marketing research that begins to shed some light on how people confront persuasive messaging in the retail environment. Only armed with this data will we be able to make reliable inferences about the value we assign to a delivered message. Counting “opportunities to see” is simply too crude for this complex, multi-shaded media environment.

I’ll have a lot more to say about this topic going forward. For the time being, let’s pause and consider how little we understand so far about digital media and the shopper experience – and how much of an opportunity lies before us.

© Copyright 2008 James Tenser