Consumer Insight - Razors

Previously, I linked Dan Ariely's take on consumer, shaving and razors here.  Here is a video on an emerging trend from Wall Street Journal in razors and blades.  I agree as I am a part of this trend since one year ago.

Shoppers Reality at the Shelf

Having been the Architecture Leader at Procter & Gamble on the shopper and consumer virtualization platforms, I am thrilled to see that the statistics still hold true when you and I stand in front of the shelf to make the buy or not to buy decision.  My work was covered in AG Lafley's book "Game Changer" blogged here by friend and colleague Franz Dill.  Franz was instrumental in setting up the P&G Innovation Centers, now enabling P&G to be the leader in shopper and consumer insights to impact product development at the concept stage:

"In the Bases research, the biggest driver of new-product awareness in store was simply seeing the product on the shelf -- accounting for product awareness in 71% of cases where people cited the store. All the other tools marketers and retailers use to drive in-store awareness -- including off-shelf displays, retailer circulars, product demos, in-store media and samples, accounted for awareness in only 2% to 18% of those cases. In-store media and product demos both scored in the low single digits. That helps drive home the importance of packaging and signage, Mr. Twitty said."

States the article "This Upfront, P&G May Want to Boost Spend on Piggly Wiggly" here. 

Though AdAge's graph here from Nielsen showcases the impact of shopper based design, shopper driven marketing communication, shopper based package design, etc. see below a video from the Economist on the impact of TV on the shopper and the consumer.

World Retailing: Retail via eCommerce

In the Financial Times World Retailing this month, "Seamless service from clicks and bricks" talks about the growth of eCommerce driven retail, moving of luxury goods sales to the internet and their success, and a combination of clicks and bricks.

"Deloitte and Forrester, the technology and market research group, found that 40 per cent of retail sales in the US last year were influenced by the internet, with consumers either shopping online or using the internet to gather information on potential purchases."

Now the fun begins!  The five senses to be influenced available to a retailer in the retail store disappear on the web.  How does one create the right experience for the diversified, from the affluent to the lower middle class, to engage and convert them?  This is where pure analysis fails... for example, if a web shopper is recognized as liking red because they bought a red pen, does that imply they would also buy a red car, and a red shirt, and so on.  Insights into behaviors through aggregation can result in misfires and loosing the online shopper all together.  eCommerce retailers will need to move towards personalization - the market does not have but one true personalization player, one that can comprehend astronomically large coincidence points of the shopper and instantly connect the semantics to it, while providing this information at instantaneous speeds.

Current solutions can collect all the dots yet, as the article states, "But joining the dots takes time."  Most of the time the shopper has moved on or has been influenced by a different solution to their need.

eCommerce is also going to enable new entrants in the global market place as the "virtual shopper" can do shopping on the eCommerce "virtual shelf" from anywhere.  Like I said, now the fun begins!  Will the shopper and consumers be the winners in the end?

"As retailers rush to provide even better online shopping experiences for their core customers, they are also using the internet to procure new ones.

The next step for many is to use the internet to give them exposure overseas.

Next, the UK-based clothing chain, said last month that it was pulling back from expanding overseas through its own stores in favour of growth via the internet.

It has expanded its online operation to 36 countries and has been selling into the US via the internet since the middle of last year.

“Internationalising sales is a smart strategy,” says Mr Fitz- gerald. “With the internet, you can go into 20 new countries within a year. It is remarkable and you really can achieve that kind of scale if you prioritise and focus.”"

If you would like to read this and other articles in the World Retailing, download the complete file here.

World Retailing: It's all in the Data!

In the Financial Times World Retailing this month, "Good analysis and use of data can make all the difference" highlights the role of information technology from product manufacturing to in-market to consumption.

"“But what has changed since is that there is now a renewed focus on looking at where retailers make money, and that is in the store,” [Andy Park, industry leader for retail and consumer products for northern Europe at IBM] says."

What is interesting to note is "Retailers are still investing to improve the way they handle the last 50 metres of the logistics chain, from the stock room to the shelf."

The article does not fully touch on one of the most important piece, shopper data... data that has been collected for close on a decade, loyalty cards, credit cards, POS, etc.  Coarse grain segmentation with 10% to 90% hit or miss margins and marketing budget wastage may finally begin to be managed through not only statistical analysis, but making "sense" of the shopper decisions, i.e. the semantics of the shoppers actions or not.

"“There is a shift in focus to insight and not just measurement analytics, but to insights into the shoppers themselves,” says Renee Sang, who runs Accenture’s Customer Innovation Network.

“Price transparency is now a given, so retailers want to identify which customers are most likely to convert [to buyers]. Not all customers convert in the same way. For some it’s price, for others assortment, others service.”"

If you would like to read this and other articles in the World Retailing, download the complete file here.

World Retailing: Consumerism and The West

In the Financial Times World Retailing this month, "Consumption starts to shift to China, India and Brazil" discusses that the average shopper and consumers balance sheets are in better shape than they were a year ago.  Yet, the article states:

"But if the consumer is coming back to malls and high streets, their attitudes are changing, according to recent research.

Consumers around the world are reining back spending on non-essential items, according to Datamonitor.
Half of shoppers say they would cut back on buying new clothes and shoes, while 41 per cent say they will be reducing the amount they spent on cosmetics and fragrances.

Meanwhile, ostentatious consumerism is out, as shoppers are uncomfortable about flaunting wealth in more austere times. As a result, retailers are beginning to replace branded handbags and other high end goods with more subtle items."

I am tempted to ask if this is temporary or here to stay?  The outcome that the article highlights is "...that spending in the US, which currently accounts for 72 per cent of gross domestic product, should move back to its historical level of 66 per cent."

The more likely scenario that is emerging is that the consumerism begun through the design innovation of Raymond Loewy may merge into socially responsible products being the pull from the shopper and consumer.  This seems to be the case as stated multiple times else where in the "World Retailing", specifically in the article "Green moves make savings".  Another one is the growth of eCommerce creating a completely new sector rather than a sales channel.

If you would like to read this and other articles in the World Retailing, download the complete file here.

World Retailing: Circumspect

In the Financial Times World Retailing this month, "More circumspect attitude prevails" provides some intriguing highlights into the GCC market place - "Mirdif’s developers, Majid Al Futtaim Properties, insist the Dh3bn ($820m) project makes sense. Like businesses in other sectors, they are betting on recovery in an oil rich region that has a reputation for rampant consumerism and the emergence of a “mall culture” whereby shopping is a primary source of entertainment."

As an example, here is a list of Malls in Dubai with links to the stores in the malls and shopper comments where the mall culture is alive and thriving

If you would like to read this and other articles in the World Retailing, download the complete file here.

World Retailing: Indian Shoppers Promise the Highest Growth

In the Financial Times World Retailing this month, "Traditional vendors still dominate" discusses how India remains the "world's most attractive developing country for retail investments."  The article states that "large foreign players such as Wal-Mart, Tesco and Carrefour, have been kept on the margins by New Delhi’s ban on foreign direct investment in so-called “multi-brand retail.”" but believes that it will and has to change in the near future - "“I think all the domestic players have burnt up a lot more cash than they thought they would,” says Mr Mukherjee [an AT Kearney principal in New Delhi]."

Today, Trent (Tata group's retail arm) operates Westside department store.  In groceries, Tata gets technical support from Tesco for their HFS Star Bazaar.  Similarly, Bharti Enterprises has Easy Day with technical support Wal-Mart.

India, a nation whose primary language is English, has a shopper whose behavioral patterns are more desirous of Western culture does seem like the ideal candidate for retail investment.  Question is if it will end up inventing solutions designed specifically for its shopper and consumer and create a new market place for shopping?  For example, the HFS format is an Asian invention adopted and improved upon by the rest of the world.  A version of "dhaba-walas" has always existed throughout the developing coutnries.

If you would like to read this and other articles in the World Retailing, download the complete file here.

World Retailing: China's Wild West

In the Financial Times World Retailing this month, "The Wild West with razor-thin margins" documents the complications associated with exponential growth opportunities associated with open markets.  Specifically, the case of "Huang Guangyu, founder of the giant Chinese electronics retail chain Gome, was named China's richest man two years ago... But in February, he cele- brated his second Chinese New Year behind bars, awaiting trial on vague charges of bribery and stock manipulation."

Chinese retailers ramped up their growth fast... more importantly, as good friend and colleague Mr. Tony Tsai, CEO – BHG Retail Innovation Institute and EVP Operations – The BJ Hualian Hypermarket Co. highlights, the Chinese retailers have adopted methods of understanding their shopper and consumer as well.  China is a place where the behavioral change of the shopper and consumer is simply very fast in comparison to the developed markets because "people who were at subsistence level a few years ago are becoming consumers."

The article states:

“Retailing in China is still highly regional, highly frac- tured and overpopulated,” says Paul French, manag- ing director of retail consul- tancy Access Asia.

For example, in the western city of Chengdu, half a dozen high-end mega-malls are scheduled to open in the coming months. A giant statue of the late Communist leader Mao Zedong now points towards a Cartier store crowded in next to a Starbucks.

The wild west environment in which Mr Huang carried out his ambitious consolidation and which ultimately saw him toppled has spawned a cut-throat model that has been widely replicated."

Yet, China may also be developing its own in-store shopper engagement and conversion models:

"Companies such as Gome and Suning, its biggest competitor in the electronics sector, rely on product agents instead of inhouse salespeople as a way of con- trolling costs.

This means that when customers enter most Chinese appliance stores, the only people directly employed by the retailer are the cashiers, the security guards and the warehouse staff."

One thing is for certain, China has a ways to go in its experimentation as the shopper and the consumer remain an evolving base from needs vs. desires to affordability vs. affluence.

If you would like to read this and other articles in the World Retailing, download the complete file here.

World Retailing: Fight for the Shopper and Buyer in the US

In the Financial Times World Retailing this month, "Stores prepare to fight for every last customer" covers the retailers approach in the US to convert their shoppers to buyer and loyal customers.

"Glenn Murphy, chief executive of Gap, ... has a hard-nosed view of what to expect this year from US retailers, as their customers gradually emerge from last year’s slump in spending.

“It is going to be mano a mano,” he told a recent investors meeting. Success will not be “based on square footage and capital. It is based on execution, differentiation, knowing your target customer . . . and fighting for every one of them”."

Interestingly where the square footage was the measure for retailer growth now:

"Most US retailers have slowed or stopped square footage growth. Notable exceptions include those that have benefited from the frugal consumer mood. Dollar General, the discount store, is planning to add 600 out- lets to its 8,700 network, and TJX Companies, the end-of-line retailer, is increasing its square footage growth rate from 3 per cent in 2009 to 5 per cent.

In contrast, Wal-Mart, the largest US retailer, is slowing its square-footage growth rate to less than 2 per cent, compared with more than 7 per cent in 2006."

So how does this conclude?

"“They’re all saying they will win the market share fight. But they can’t all win a bigger slice of the pie,” [Emanuel Weintraub, a veteran retail consultant] says."

If you would like to read this and other articles in the World Retailing, download the complete file here.

World Retailing: Sustainability

In the Financial Times World Retailing this month, "Green moves make savings" discusses the influence of the shopper on pushing the retailer towards "green".

"Joanne Denney-Finch, chief executive of the IGD, says she is not seeing strong evidence of retailers opting for the schemes that save most money, partly driven by consumers.

“The shopper has been very clear [that] it’s not price at the expense of all the other things on their wishlist,” she says."

Interestingly, during a seminar in Pakistan to some of the top non-profits and philanthropic organizations in the development sector, I put up a slide with three large alphabets only - CSR.  I found a bit of education in the discussion that followed on how the development sector views for-profit organizations of the world using CSR (Corporate Social Responsibility) in marketing and perception value.

I am thrilled to have worked at Procter & Gamble where social responsibility is inherent in all business.  Have a look at a "Sustainability Report" here from nine years ago.

If you would like to read this and other articles in the World Retailing, download the complete file here.

World Retailing: Operations and Retail Staff Matter

In the Financial Times World Retailing this month, "Global view with a local focus" highlights the shift in emphasis on optimization of retail operations and engaging the retail staff to convert the shopper into a buyer/consumer.

"Don Williams, head of retail at BDO, says that if businesses have underlying operational issues, these will be thrown into sharp relief: “Tough operational conditions magnify issues mercilessly. You are going to be exposed if you have an operational flaw,” he says.

But Mr Hyman points out that retailing is not just about strategic vision. Having the right staff in stores will be a key weapon.

“One of the things that is really going to sort the men from the boys is store managers,” he says. “More and more, this battle is going to be fought on the sales floor, not in the boardroom.

“So having a brilliant strategy that is articulated in a compel- ling way in the boardroom is academic, unless it can actually be executed, which means . . your regional and store management, and staff loyalty, never mind cus- tomer loyalty, will play a much bigger part.”"

If you would like to read this and other articles in the World Retailing, download the complete file here.

Will Design Thinking Deliver to the Consumer?

A new mantra among the corporations of the world is emerging for the teen years of the 21st century - Design Thinking.  Just like the concept of Innovation rose in the early 2000s, Design Thinking as an idea is finally on the rise.

The leaders in this space have existed for a while, couple of examples being IDEO and Procter & Gamble (with its Innovation Centers).  The level of understanding, misunderstanding or not understanding this space are clear from the Business Week article "Inside the Design Thinking Process", here.  The author, Helen Walters, discusses the Aspen Design Summit where multiple design driven sessions were conducted to solve hard problems.

I give credit to Ms. Walters on stating about the Design Thinking process as implemented at the Aspen Design Summit, "... the strongest takeaway was that those looking for a prescribed way to implement design thinking are destined to be disappointed. It's a messy, opaque process that depends as much on group dynamics as intellect or insight."

Preparation of such sessions requires experience and insights into human behavior.  Someone I personally know to be exceptionally talented at this is the Marketing Consulting Services of Copenhagen, see information here.

Yet, the one reason I suggest giving this article serious consideration is because the author highlights the key to the success of all Design Thinking processes, having the end user or consumer of the product or service engaged, which apparently was missing from all the sessions conducted at the Aspen Design Summit.  The author termed the results being developed out of the sessions to "seem like entirely inappropriate bunk" for the end user or consumer.

Perhaps all this is becoming news due to Roger Martin causing an uproar with his open challenge to the research driven, heavily analytical product and service development organizations and management consultancies, see my blog "Roger Martin - On Designing the Future", here.

I believe that exciting times are ahead as the left and right brained individuals realize that to truly deliver a breakthrough to their consumer, they must work collaboratively, break down the silo and unburden themselves from the past to really "create".

Roger Martin - On Designing the Future

My astute friend from McKinsey, Samvit Kanoria forwards "What's Thwarting American Innovation? Too Much Science, Says Roger Martin", in Fast Company, see here.  The article highlights Mr. Martin's focus on creativity in innovation being a combination of science and design aspects of product or service development working together.

For the scientist, he states - "The future has no legitimacy for analytical thinkers."

Mr. Martin thrashes the large management consulting companies and lays the blame of innovation bottle neck on a corporate structure mired in research and analysis of the past - "But what they analyze is the past.  And if the future is not exactly like the past, or there are things happening that are hard to measure scientifically, they get ignored."

Mr. Martin is asked - "Are you saying that the regression analysis jockeys and Six Sigma black belts have got it all wrong?" and he states - "Well, yes."

Interestingly, my tenure at P&G was during the time Roger Martin was advising A.G. Lafley and I was a part of the substantial changes brought within P&G's approach to business.  See information on some my work related to Virtual Shopper here on my friend Franz Dill's blog, who also was one of the founders of the P&G Innovation Centers.

Though Mr. Martin speaks candidly, yet the change he suggests carries pain to the corporate as a whole and the machinery of suppliers supporting it.  Corporate innovation remains more perception than reality, with incremental results seen in their markets from licensing, buyouts, etc.  Breakthrough innovation remains the domain of the entrepreneur, one who can imagine a future unburdened by the past!

Brand Manager vs. Brand Advocate?

Forrester has finally caught up with the leading marketing companies of today!  Forrester published a report recommending the shift from the designation "Brand Manager" to "Brand Advocate" in their report - "Adaptive Brand Marketing: Rethinking Your Approach To Brands In The Digital Age", here.

I was activitly engaged in creating this new pathway seven years ago at PG-Tremor, details here.  The Advertising Age magazine states as much in their article, "Why its time to do away with the brand manager", here:

"Executives of big marketers Procter & Gamble and Unilever note that they're already doing much of what Forrester recommends.  The global brand strategist/local brand advocate breakdown, for instance, resembles how they and other big household and personal-care marketers already organize."

I remember one of the big moments was when the brand managers discovered they had minimal to no insights on the digital social networks driven communities of choice forming around the "choice" i.e. the brand that fulfilled a need.  The AdAge articles states this to be a necessity today:

"[Rex Briggs] believes marketers in the digital age need to be more "numerate", with more training in research and analytics..."

Interestingly, I remember listening to Paul Poleman current CEO of Unilever when he was at P&G about the importance of information technology in reaching the consumer.  He is quoted in the article stating:

"Web-enabled consumer intelligence may be one of the biggest benefits of social media for marketers."

The astute will note that Mr. Poleman used the words "intelligence" not analytics!

Yahoo and Maktoob - Social Web Growing Up in the Gulf

Yahoo will be acquiring Maktoob.com.  Click here for details.

About four years back, while working with Mr. Khurram Hamid who was leading digital mobile marketing for P&G out of Dubai, I met with Mr. Ahmed Nassef, GM of Maktoob (website here) to review their web and social network analytics capabilities.  Ahmed stated his goal of becoming the Yahoo of the MENA region.

Maktoob impressed me with what they were trying to build.  More importantly Maktoob Research (website here) was starting to develop deeper understanding and garner insights on the Arab consumer.  I had worked on the definition and concpet of the Muslim consumer for P&G and felt that Maktoob was leading the way in social networks and social media for the Arab populace of MENA.

Congratulations to Ahmed and Maktoob employees!

Unilever and New Markets

While reading my friend Franz Dill's blog regarding Unilever here, I was reminded of an excellent article on Unilever's growth and capturing of market share in the emerging economies.

Unilever has been a household name in the emerging markets prior to other consumer product goods companies. It's Lifebuoy disinfectant soap is one of the world's oldest global brands. The above referenced article delves into the competition to be the brand for the household goods of the growing consumer base.

Here is an excerpt from the conclusion of the article:

"Although Unilever has tried to steer clear of head-to-head competition with P&G, that will not always be possible. But with the balance of the world economy shifting, Unilever's head start in emerging markets is a valuable advantage, not least because many of its brands are already well-known there."

The CPG / FMCG market in emerging economies is going to be a race, an adventure of consolidations and let us not forget that new players within those markets will emerge.