|
Each year hundreds of millions of pounds are invested in in-store marketing. Industry estimates place in-store spend at around 7%-8% of total marketing budgets, excluding trade-funded promotions (such as money off, bogofs etc.) with growth in excess of 20% YoY (Deloitte). To put this into perspective, cinema marketing represents 1.5%, and radio and internet advertising each account for around 5% of ad spend.
The size of investment makes sense, as 70% of all purchase decisions actually occur in the store, so communicating brand messages where it counts is critical to success. In the UK grocery market, a massive 3.7 billion retail trips are made per year. Hence in-store activity has evolved from a tactical, sales-led promotional tool to a key component of the marketing mix, at the heart of strategic marketing activity.
What's become increasingly apparent though is the lack of a standard system to plan, implement and measure the effectiveness of in-store activities such as POS. At present the benefits of in-store investment can be assessed through a variety of methods - sales data, sales by store, observed store audits or consumer insight. Fine, if the activity is implemented at store level as planned and agreed. With no standardisation having been adopted across the industry, there is huge inconsistency.
To try and remedy this, Nielsen teamed up with the In-store Marketing Institute and a consortium of retailers, manufacturers and media agencies to run the PRISM pilot (Pioneering Research for an In-store Metric). The ongoing US pilot, begun in 2007, has been so successful that it is being rolled out nationwide as an ongoing market measurement service during 2008, and it will be introduced in Europe at the same time, under the name In-store. Briefly the study involved combining EPoS sales data with in-store behavioural inputs from shoppers, and analysing them against factors including in-store product marketing.
Dave Calhoun, Chairman & CEO of the Nielsen Company explains, "Industry accepted metrics typically emerge because of a need. There is too much money being invested in in-store marketing to go on intuition alone."
One of the main benefits of a universal in-store metric [measurement] is transparency. It will provide a greater factual basis for decision making. It will allow retailers to quantify how effective in-store activity is and identify return on investment. Manufacturers and retailers will benefit because it will allow them to create strategies for in-store activity in line with the rest of the marketing mix - it will create a simple way of setting down and measuring against KPIs for in-store budgets. Manufacturers will know exactly what they are paying for and be able to invest based on known returns.
The system works to support the 'dayparts' concept of targeting product marketing at consumers by time of day, as is common in TV advertising. The In-store metric quantifies the specific numbers involved - or shopper 'impacts' - by time of day, day of week, area of store, size or type of store, and store location, and builds further on this by telling us specific information around consumer segmentations and, all importantly, actual purchases made or, uniquely, purchases not made - missed opportunities.
When combined with audit information which specifies which type of marketing stimuli was in-store when the purchase were made, it is possible to build up a clear marketing plan which provides specific, optimum exposure while minimising wastage. Right down to rotating creative executions according to time of day or mobilising displays according to aisle traffic, category conversion rates or category adjacency efficiencies.
The US pilot tells us that only 13% of shopping trips include children but when children are present many more items are bought and more aisles are visited. Soups, water and canned vegetables have a high conversion rate when children are present but, surprisingly, presence of children has no effect on the amount of sweets bought. This could lead to decisions to site secondary displays promoting a family or kid's water brand, for instance, during midweek daytime hours when mothers shop with children. These might be rotated out through the evening in favour of more adult category displays.
Category sales transactions alone are not a reliable indicator of category traffic. Two-thirds of those who visit the savoury snack section make a purchase. Traffic through the dairy section is much higher but the 'closure' rate, or percentage of shoppers who make a purchase, is much lower. This is a missed opportunity for marketing stimuli.
The In-store pilot found that 4.5% of all purchases occur around 2 pm, but 7% of store traffic is seen then. This presents an opportunity to bring sales levels up to customer levels, perhaps by 'happy hours' offering discounts.
In-store will also allow retailers to benchmark performance versus competitors. Insight about closure rates shows us that these vary significantly by category, by channel and even by retailers within a channel or fascias within a retail estate. Retailers can look at closure rates over time in any given store and see whether they are improving, taking variable factors like layout into account.
Ultimately this precious data can help with major store planning decisions and real estate management - allowing for more effective layouts and smarter decisions for new store openings. Store operations will also benefit with more sophisticated inputs into labour and stocking scheduling allowing staffing levels tied to customer presence rather than sales precedents.
The vision of the In-store initiative is to provide the retail, manufacturing and advertising/media industries with a global standard that can measure in-store audience and retail audience exposure to in-store marketing and evaluate the effectiveness of each marketing investment. As a by-product, detailed insight which marries store traffic monitoring with actual sales data and insights into how people shop - never before available - will allow retailers and manufacturers to tailor the store environment to suit their shoppers and make the shopping experience even better.
The industry needs to make maximum use of the precious commodity that is store space - where purchase decisions are made. In-store will help UK retailers do just that.n
BRANDS AND RETAILERS COMMENT
The partners involved in developing the US pilot 'metric' for measuring shopper behaviour were the In-Store Marketing Institute, Nielsen In-Store and a consortium of major retailers (including Wal-Mart, Walgreens, Target, Supervalu, Stop & Shop, Sears/Kmart and others). Also on the consortium were manufacturers (Coca-Cola, ConAgra Foods, General Mills, Kraft, Mars, Miller Brewing, Procter & Gamble, Unilever, Mattell, Hewlett-Packard) and media and promotion agencies (Group M, OMD, Starcom).
Project aims included confirmation that in-store consumer reach can be measured and predicted; deeper understanding of which consumers are exposed to in-store messages and promotions, and when. These would help retailers understand how their in-store media can convert shoppers to buyers. Some comments:
Steve Bratspies, senior vice president of marketing, Wal-Mart Stores: "The richness of the data will help us better understand what is working and what isn't for our customers."
Sandy Douglas, president/ CEO, Coca-Cola North America: "In-store will create more insightful analytical tools to help us connect with shoppers in a more effective way."
Bob McDonald, CEO, The Procter & Gamble Co: "Nothing matters unless we can delight the shopper and In-store is going to help us deliver that experience every time."
Has the number of customer complaints about the price of goods increased recently?
