Retailers and manufacturers alike are scratching their heads in befuddlement at the fact that what once worked for them is no longer effective. Tried and true tactics that were able to previously provide a boost to the bottom line are not delivering the anticipated results. Where in years gone by reliance on the ‘4P’s” (Price, Promotion, Placement, Product) could be relied upon to deliver results; that is becoming less effective over time and it is often commented by retailers and manufacturers that shoppers require larger discounts, more frequent promotions, multiple placement locations, etc. before they even seem to take notice or react. The “4P’s” also can only work if they are seen by the prospective shopper. Those that are not in the store cannot be reached and the” 4P’s” will have no impact on them. Further, to date; the work of Marketing Departments has been focused on “persuasion” (convincing the shopper that the manufacturer or the retailer have a better product or solution). However, the shopper is in search of the ability to make up his or her own mind about how to solve problems or meet future needs. For the shopper, being able to construct one’s own reality and control both the inputs and outcomes of actions has far more value than some level of “mass customization” that passes for marketing efforts currently.
Additionally, the efforts of the continuous improvement process brigade have zapped all of the steam out of those initiatives to guard against inefficiencies in our supply chains, operational efforts, and selling activities. However important those things are to manage and to monitor; you cannot save your way to growth. Growth can only occur from new consumption. So, the industry is at a crossroads as it confronts the following:
Open any industry publication or skim through any E-zine site devoted to CPG, Retailing, or related businesses and you will likely be presented articles, interviews, or opinion pieces on the state of the business that include mentions of these issues:
• Retailers are struggling to maintain/gain their share of visits as shoppers have exponentially more choices than ever before (from alternative classes of trade to internet options)
• Loyalty to outlets or banners is therefore down and efforts to stop the slide have not been universally successful
• Manufacturers are feeling constrained by store policies that limit the “in-store communication directed at shoppers” permitted in an effort to create a “shopping environment” conducive to the retailer’s strategy (clean aisle, assortment decisions, space constraints, location of category, what is co-located in the aisle, display challenges, packaging size constraints, etc.)
• Shoppers are frustrated by the mechanically designed shopping experiences – why can’t every store be as interesting to shop as those that commonly are cited for shopping experience differentiation: Whole Foods, Trader Joe’s, Stew Leonard’s?
• Shoppers are left feeling unfulfilled with the ability of their shopping trips to permit a connection with the retailer that is beyond transactional. Shoppers seek help in planning their shopping destinations, choosing ways of improving their lives through their choices and selections while shopping, and accomplishing the “job” they seek to meet (versus purchasing something that is merely adequate and marginally satisfying)
After all is said and done, is it any surprise that conversion is down and leakage is up, or that brand switching continues to grow? No one is happy in the current environment; not the retailer watching sales that used to be owned going to competitors, not the manufacturer who feels cost pressure on the one hand, and demands for more support on the other, and certainly not the shopper who has the vague (or not so vague) sense of missing out on something – and uses price differences as a club to make purchases since value cannot be differentiated often enough to matter.
The response has often been far more reactive than proactive. When in doubt, the standby is to throw money at the issue. Everyone upstream and downstream in the process subscribes to the belief that nothing speaks louder than money and it can drown out any other messaging or actions. However, the money being thrown around is in the form of discounts and is excused by the belief that, “if we don’t do it to get the sale, someone else will!” So, what we see are less effective activities being done better and better (to smaller and smaller returns):
• FSIs and circulars being stacked at the door to the lobby and rarely being opened or picked up
• Manufacturers relying upon advertisements, coupons, “pay to play” scenarios (TPR, Display, Features, etc.) and having to combat the effects of promotion fatigue among shoppers, growing distrust of everyday pricing, the trained responses among shoppers to wait for the next promotion (which is often imminent), etc.
• Frequent Shopper Cards that are thinly disguised as price discount cards that do little to advance the shopper’s experience of; planning, shopping, engaging, interacting, achieving, and accomplishing their jobs or goals. Rather, the entire experience feels derivative (why make me jump through hoops to get a discount that is only contingent on my carrying a key card and why aren’t I being marketed to in a way that makes sense for me?).
• Emails/texts bombard the shopper from all angles, but are interruptive and not aids to planning. They may be effective “when the shopper is in the moment” and have their place in guiding the shopper to a specific purchase when in the store; but they do little to advance the planning and strategizing that goes on IN THE HOME in deciding where to shop, what the goals or objectives of the shopping trip will be (FUTURE jobs to be accomplished), and how to prepare for the shopping occasion. They tend to be more of the same price discount/coupons being sent electronically that do not truly assist the shopper in the planning stages of purchases.
• Websites are filled with information, but the shopper must be tethered to the monitor (if using a laptop or desktop – IPADs and similar devices are beginning to change the mobility of the computer), but are still hard to navigate through or around (especially on the smaller screens provided with mobile computing phones and such). Therefore, the information sourced and collected from computers often has to be printed out and filed for later use or referral (as opposed to simply being saved online or electronically).
Solution/Competing with the Status Quo
To succeed at breaking through the fog or haze of what is currently standard operating practice in the industry, a look at merchandising through a new pair of eyes is needed. There needs to be a migration from the current “4P’s” communication protocols in place now to announce; assortment, price, promotion, product availability – to one that provides communication that shoppers need to help plan their shopping better. To accomplish that, there has to an awareness of the fifth P – Planning.
• Recognition that the shopping trip is PLANNED using information on PAPER (NOT electronic) the overwhelming percentage of times.
• Understanding HOW people plan their shopping trips and that it occurs at HOME – because that is where the paper is stored, filed, and accumulates.
• Appreciating that NEWS on PAPER is an essential tool to aiding in the planning of shopping
• Valuing the kinds of information that help shoppers to formulate plans in preparation for the shopping trip. As an example, at various times, the shopper may feel:
o I’m stuck and need a helping hand
o I feel like exploring and am curious where there may be treasures in the marketplace
o I have a mission and am seeking a destination to go to in order to meet it
o I have a vision, help me make it real or accomplish what I seek.
The table (Table 1) below allows for an easy comparison of how the solution would accomplish the stated objectives of; retailer, manufacturer, and most importantly, the shopper:
(Table 1: Comparison of 5 Fingers Model used in Job Theory to “4P’s” Model currently used)
Recommendations and a Vision of the Future
To accomplish the feat of reversing the spiral downward the industry is feeling, there is a solution that is right at our doorstep. It is the use of paper-based mail to operationalize the fifth P – Planning. While the party line among many is that mail has lost relevance in this electronic age, that thinking just does not stand up to scrutiny and analysis. In fact, paper-based mail is preferred as a planning tool over electronic communications because it is easier to navigate, assemble, disassemble, connect information presented, etc.
Shoppers are going to be driven to make choices from the planning they have done in anticipation of the shopping occasion. If the planning is to include paper-based resources, it only makes sense that retailers and manufacturers would be well-served to leverage that resource. In terms of how to do it effectively, the following will provide a good starting point:
• Differentiate the substrate (type of paper, size of paper, look and feel of the document) from other mailed pieces to help the recipient of the mail pieces (the shopper) to identify it as the “shopper’s assistant” mailed piece from local retailers.
• Create a template for this mail piece that helps the shopper improve their planning for shopping trips. In so doing, accomplish the following:
o Building trust to work with the information
o Answering shopper questions
o Communicating value for the money – preliminary comparison shopping to aid in planning
o Imagining outcomes, effect, or results (will it be worth it; could it work out for me?)
o Providing testimonials from neighbors or others who have achieved results.
The payoff is contained within Table 2 below. The retailer is able to enter into and sustain a dialogue with the shopper, the manufacturer is able to better position products to meet shopper needs, and the shopper is able to feel in better control of her destiny:
Table 2: How the use of paper mail for planning impacts decision-making
The need to break through the conventional thinking is apparent. The industry is in a runaway car on a road heading downhill, and the driver’s seat is filled with those that are relying on the clouds and wireless magic to undo what they can’t rather than regaining control of the car and steering it where it needs to go.