Transparency: An Opportunity and Challenge for Retailers

958

This post was written by Anton Xavier, co-founder of Label Insight

Shoppers in today’s marketplace demand convenience, personalization and transparency. They want the product they desire, at the time they want it and for the right cost. Shoppers are more knowledgeable than ever before about their purchases. They research online and have a complete understanding of the price, in-stock conditions, and materials that make up their desired product.

One of the keys to delivering on these shopper needs is correct product attribution. Today’s product attribution needs are much broader than the historic shopper decision tree–brand to size to flavor to price, etc. Many shoppers want to know exactly what a food item is made from, where an item is sourced from and all the components that make up an item. This higher-order attribution builds trust with shoppers and allows them to purchase the products that meet their needs.

The Role of Retailers in Attribute-Driven Category Planning

Retailers are collaborators with brand owners in developing category plans, and they make all the final decisions on these plans. Therefore, they are critical to leveraging high-order attributes for the benefit of their shoppers.

Exciting new capabilities in product attribute data and technology are making it possible to reveal the “why behind the buy.” Retailers have unique abilities and tools to deliver transparency to shoppers in ways manufacturers cannot. Retailers control the shelf and the display floor, as well as print circulars, websites and regular emails to their customers, many of whom plan their shopping trip using these. These tools provide multiple opportunities to leverage and promote the attributes consumers seek or avoid.

A particularly valuable capability is afforded by loyalty card data that allows targeting of shoppers based on transparency buying patterns. The ability to develop robust loyalty profiles around notions such as “heart-healthy shopper,” “lactose avoider,” or “protein seeker” can add a new dimension to retailers’ ability to personalize their messages and promotions, and offer enhanced levels of relevance to their shoppers, turning a weekly ad from a “nice to have” to a truly personalized experience enhancement.

The Challenge to Better Understand Customer Needs

However, retailers share some of the same challenges as manufacturers in today’s CPG environment. Most categories are growing slowly while competition from e-commerce vendors and other channels–especially dollar stores and deep discounters such as Aldi and Lidl–continue to grow at the expense of mass and conventional grocers.

Especially frustrating for grocers is the volume of dollar leakage they experience from their regular shoppers. According to recent research, retailers are losing as much as 25% of volume across all categories.

Understanding shopper need states = huge opportunity

Commitment to transparency can help retailers build volume by using attribute analysis to appeal to shoppers with demonstrated “need states” extending across categories. “Need states” such as those with food allergies, intolerances, sensitivities or ethical and supply chain requirements can all affect how shoppers make decisions about food across categories.

Understanding which shoppers are in which need state and then providing them with a shopping experience that supports their need state can be a significant opportunity to reduce leakage and build retail loyalty and volume.

Retailers can drive need-state shopping behavior with collaboration from manufacturers who have high-order attribute data and need-state buying behavior. Some retailers are already embracing this transparency-related need-state behavior and powering more engaging experiences for their shoppers. One such example is retailer Raley’s, West Sacramento, CA, who recently launched their Shelf Guide program to bring transparency to the grocery shelf. This unique tool offers a customized, interactive experience: customers can filter by category and attribute to find the products that meet their personal dietary needs.

There is a massive opportunity for retailers to tap into the market and give customers what they are asking for by providing an innovative shopper experience. But this will require help from manufacturers to identify items that fit into need states and then provide promotional and merchandising help to leverage the specific attributes, need states and items. Will they rise to the challenge?

LEAVE A REPLY

Please enter your comment!
Please enter your name here