Let’s kick-start the 2nd year of Outside In looking at some global insights and best practices for creating value in a shopper’s world – by picking snippets from Hershey’s popular report by the same name (!). Ever since it was published around 2 years ago, I have read it multiple times as a ready checklist on what FMCG players and retailers should be focused about in their daily lives. In the pandemic both these sectors faced unprecedented challenges in fulfilling dynamic customer requirements and had to transform the way they conducted their business. In a post-pandemic world (fingers-crossed), there’s obviously an excitement about new consumption potential but there’s some anxiety as well on how to meet this demand – that is relevant for the post-pandemic customer today
My point of view – Focus on the first principles, as always. To refresh what those first principles are – we read the Hershey’s report again…
The Value Equation
Consumers select their retailer based on a value equation consisting of 3 main components: Spend Time and Convenience. Shoppers build specific loyalties toward retailers for specific trips based on how well they satisfy the value equation
In omnichannel world, shopping trips now move seamlessly between channels. They may start in-store and end online or start online and end in-store. An integrated omnichannel approach is a given – as consumer’s become more and more digitally-savvy
Shopping Fundamentals
Aligned with the 3 main components of the retailer value equation and the need for developing an integrated omnichannel approach for consumers, there are 3 fundamentals of shopping that need to be addressed:
I. Findability – Did the customer find what he was looking for?
II. Engagement – Did it catch the customer’s attention?
III. Personalization – Was it tailored for every customer?
Let’s now dig deeper into the Hershey’s Way…
I. On Findability
1. Integrate Digital and Physical Navigation Seamlessly –
Navigation helps consumers browse the digital and physical shelf
Improve navigation through aisle flow, usage occasion and brand placement
Make in-store and online experiences cohesive
Category Managers must collaborate closely with the digital managers to build holistic navigation. They must visualize about how online shopper behavioral data can be used by the store category manager and vice versa
2. Simplify Search to Build Baskets –
Search is a combination of merchandising and browsing to narrow selection
Content and merchandising matters both online and in-store. Online tools: Product images, videos, descriptions, on-site banners; In-store tools: Packaging, point-of-sale displays, secondary placements
Organizations can (and should) build an online content quality scorecard with their FMCG partners, so that they together have consistent quality across all product detail pages
3. Satisfy the Shopper at Checkout –
Payment process is the close of every trip and an important opportunity for a last-minute treat
Consistency across Payment touch-points within the store is key, including traditional check-lanes, self-checkouts and app payment
Ensure that shoppers are getting the same checkout experience online to close the trip
According to a Forrester report “Consumers cringe at slow checkout”, the payment experience ranks as 3rd post important criteria for consumers – behind price and location. So it is very important to set this right from Day One
Organizations should have ‘payment experience’ specialists who will who oversee and shape every shopper pay point experience—physical and digital – as smoothly as possible
II. On Engagement
1. Reach the Right People –
As step 1, responsibly collect and organize shopper information for growth insights
The data will reveal which groups of consumers will most contribute to growth
Where consumers go and what they're interested in informs your content and where it goes
“Targeting media makes your reach smarter, not smaller. It means you’re creating better context by interest group.” – Charlie Chappell, Head of Media & Communications Planning, Hershey’s
Organizations must connect their media team with the FMCG partner media teams to align on shared objectives and jointly determine how best to spend media dollars
2. Create Experiences with Shopper’s Needs in Mind –
Engaging experiences that also fulfill a shopping need help to drive conversions
Solution-oriented displays add value for shoppers
Engage cross-category buyers to build merchandising that is focused on consumer experiences and solutions (as compared to pushing standalone item purchases)
3. Get Shoppers Talking –
Retailers that create notable experiences will have shoppers who share their thoughts
Ratings and reviews are the most effective user-generated content (UGC) for driving conversion
Conversion rates are nearly 30% higher when sites contain UGC
Organizations should aim to build a digital platform that includes easy ways for shoppers to write, read and share reviews – as it not only provides consumers with transparency but allows the retailer a new way to build trust
III. On Personalization
1. Make the Right Offer at the Right Time –
Making an offer based on previous purchase history and individualized shopper preferences is efficient and effective
Determining optimum frequency per person enables retailers to better target spend
This allows more reach and continuous experimentation
According to a Google Incrementality (!) study in 2017, cross-channel media strategies drive an 80% higher rate of incremental store visits
Organizations must map their POS data, addressable media data and FMCG partner’s media data to drive new value for your shoppers through more relevant media
2. Curate the Right Assortment Every Trip –
Offer the same assortment options and positive experience no matter how your shoppers choose to shop
Curate as much of the assortment as possible to shoppers' purchase history
Consumer Speak: “I want to be able to shop whenever and wherever I want based on what personally works best for me and my schedule.”
Organizations must evaluate customer convenience through 3 key attributes: one-stop-shop, assortment and easy checkout. They must bring cross-functional teams together to evaluate where they can provide the most value based on their shoppers' monthly patterns
3. Enable Shoppers to Create Their Own Shelf –
Personalize online shopping experiences from digital shelf to web page curation
Real-time personalized digital displays can be created by linking website/mobile apps to in-store purchasing journeys
Organizations must direct their data and insights team to understand the patterns and purchase history of their key shopper groups, so that they can customize offerings based on their preferences
Key Takeaways
In Conclusion
Every retailer—big and small—is experimenting with new strategies to revitalize store trips, build ‘wider-category-penetrated’ shopper baskets and reinforce long-term loyalty. The industry continues to sprint forward, through transformative technology, elevated retail services, new fulfillment models and unique product offerings. This pace will never let up. This transformation means incredible opportunity for retailers and manufacturers to grow together – and address an omnichannel customer’s needs seamlessly between in-store and online ecosystems. When organizations build their foundation with this shift in mind, they will succeed in realizing the new consumption potential we spoke about…
References and Sources:
1. Hershey’s Report: https://www.thehersheycompany.com/content/dam/corporate-us/documents/pdf/Creating%20Value%20in%20a%20Shopper%27s%20World.pdf