Customizing the In-Store Experience to Meet Shopper Preference


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Customizing the In-Store Experience to Meet Shopper Preference

  1. 1. Customizing the In-Store Experience to Meet Shopper Preference Claire Quinn, National Shopper Insights Initiatives Michael La Kier, Shopper Marketing Strategy and Capability Justin Honaman, National Retail Sales
  2. 2. Clarifying the Win…Today!! •  About&Coca*Cola& •  Understanding&the&Retailer& •  Understanding&the&Shopper& •  Designing&the&Experience& •  Best&Prac=ce&Round&Table& 2"
  3. 3. The Coca-Cola System •  •  •  •  •  •  200+"Markets" 300+"Franchise"Bo4ling"Partners" 700,000"System"Employees" 14"MM+"Cold"Drink"Equipment" 20"MM+"Outlets" 1.7"Billion"Servings"per"Day"" Current&$1+&Billion&Dollar&Brands&
  4. 4. Shoppers have more choices and are less loyal… More Formats 80% of growth driven by new formats since 1980 Less Loyalty Grocery Share of Total Retail: 46% 2010 vs. 89% in 1990 (ie. dollar, club, discount) 4"
  5. 5. … putting more pressure on store performance More Choice Less Productivity Average supermarket carries: 3x more SKU s vs. 1990 SKU s growing 10x faster than sales per square foot Source: RNG 5"
  6. 6. Retailers and Manufacturers both want more … but we re negotiating instead of collaborating Brands want more… Retailers want more… Products People In Store Space Shopping Trips Displays Categories purchased Share Value in Baskets
  7. 7. How do we create a better playing field? 7"
  8. 8. Customizing the In-Store Experience to Meet Shopper Preference •  About&Coca*Cola& •  Understanding&the&Retailer& •  Understanding&the&Shopper& •  Designing&the&Experience& •  Best&Prac=ce&Round&Table& 8"
  9. 9. Beverages play 3 roles in generating Retail Profit Example: Large US Retailer & 2.9% Margin&& Operating Profit as % Sales on&Sales" " & Financing& (Float&on&cash)&" " 2.5x Services& (Rent&from&store&in&store:&bank,&beauty&salon,&insurance)" & Long&Term&Investment&in&& Real&Estate" " & Allowances& 7.0% Vendor Funding as % Sales (Trade&Promo=on&Allowances,&Rebates&from&Manufacturer)" " * Kantar Retail: USA 9"
  10. 10. To drive margin on sales, retailers must deliver both… Brand Promise: Drives Awareness, Traffic & Loyalty Grow Traffic More People in Store & + Drive Loyalty Share of Shopping Trips + Build Basket Value Categories Purchased & Value of Baskets Store Experience: Builds Basket Size & Repeat "10"
  11. 11. Executing both in a differentiated manner Brand&Promise& Differen=ated&Posi=oning,& &Well&Communicated& & Store&Experience& Strategy(( tailored&for&each& shopper&&&trip&type& Placement(( of&Priori=zed& Departments& 11"
  12. 12. Apple combines strategy + placement to deliver their brand promise in store Strategy What to sell + Placement Where to place it 12"
  13. 13. Generating the highest revenue per square foot in retail (in just 10 years) $5,626 / square foot >50% growth annually 2x #2 $2,974 per square foot 13"
  14. 14. There are four elements which define their experience Iconic Traffic& Core& Impulse& Elements&that& differen=ate & & Offers&that&drive& shoppers&to&the&store& Primary&Product&&& Services&inventory& & Hardware: Ipod, Ipad, Items&that&Build&Baskets& & Store branding & design, check out experience using technology & New products, opportunities to sample the technology and to learn how to use it " desktop and laptop computers " Accessories, power supplies, service and gift cards 14"
  15. 15. Placement of each element plays a unique role in delivering profitability for all types of trips… Entrance& Designed&to&engage& poten=al&shoppers&& & Department&Role:&" Drive"Traffic" & Center&Store&& Checkout&& Premium&&&new&products& & Broad&appeal&products&&& customer&support&& Department&Role:&" Drive"Loyalty" & Department&Role:&" Drive"Loyalty"+"Basket" Accessories&&&Services& & & Department&Role:&" Drive"Basket" First&Posi=on&&& & Ac=va=on:&" Ac=va=on:&" Bring"people"in"store"with"a4racMve" ConMnuous"sampling"on"top"end" communicaMon"announcing"new" products"while"waiMng"for"assistance" products" " " & & Ac=va=on:&& Core"offering"with"mulMple"price" points"to"drive"transacMons"and"" technical"support"to"upsize"purchase" & Ac=va=on:&" Sell"lower"price"point"accessories" and""addRon"services"" " 15"
  16. 16. In grocery, the same structure applies to profitably deliver the brand promise Strategy What Categories + Placement Where Locations 16"
  17. 17. Product categories play different roles … Iconic& Elements&that& differen=ate& Traffic& Solu=ons&for&everyday& Items&that&block&a&loss& of&a&sale& needs" & " Core& " Impulse& Elements&& that&drives&profit& " High Penetration Variable Margin High Penetration Low Margin Low Penetration Medium Margin Low Penetration High Margin Differentiators like signature categories, store services, or price leadership Milk, Bread, Eggs, Produce Cereal, Spices, Salad Dressing, Paper Products Cheese, Wine, Magazines, Confectionary 17"
  18. 18. … and placement plays a unique role in delivering profitability across all types of trips Entrance& Perimeter& Center&Store&& Location Role: Drive Trial Location Role: Drive Traffic Location Role: Drive Loyalty + Basket Departments: Produce Departments: Deli, Meat, Bakery, Dairy Departments: Beverages, Food, H&B, Household items, etc Store*in*Store& Checkout& & Location Role: Drive"Basket Departments: Impulse Zones, Services 18"
  19. 19. Grocery brand promises come to life through the holistic experience Brand Promise: Highest quality natural and organic food Store&Experience& Brand Promise: Save people money and help them live better Superior&Quality.&Fresh&Des=na=on& Price&Leadership& Iconic&Elements& Organic"Produce,"Fresh"Food," Flowers"in"1st"posiMon" Price"CommunicaMon,"Special"Offers," PromoMons"in"1st"posiMon" Traffic& Organic,"milk,"seafood" Milk,"bread" Impulse& Wine,"cheese" Seasonal"items" Core& Dry"Grocery,"Frozen"Food" Health"&"Beauty,"Household"Products"" 19"
  20. 20. Customizing the In-Store Experience to Meet Shopper Preference •  About&Coca*Cola& •  Understanding&the&Retailer& •  Understanding&the&Shopper& •  Designing&the&Experience& •  Best&Prac=ce&Round&Table& 20"
  21. 21. Great Merchandising Starts with Great Shopper Insights Insights Path to Purchase Look of Success Macrotrends& Channels& Retailers& Shopper&Targets& Category&Strategy& Trip&Missions& Beverage& Occasions& In*Store& Ac=va=on& 21"
  22. 22. To Understand How People Shop, We Must Understand How They Live Current Macrotrends Affecting Shoppers Wide*ranging& economic&downturn&& Increase&in&“non* tradi=onal”& households& Aging&U.S.&popula=on& Increased&U.S.& immigra=on& Extended&work&hours& &&growth&in&dual& income&households& Increased&awareness& of&behavior*related& illness& Environmental&values& mainstream&and& personal& 22"
  23. 23. Who is the Shopper? They are Not the Same as Consumers Shoppers Consumers buy our brands drink our brands 23"
  24. 24. And in Specialty Retail, shopper segments accommodate preferences. 24"
  25. 25. Understanding Shoppers by Individual Store Enables Tailored Assortments Store s Shopper DNA •  Right Brand •  Right Package •  Right Occasion Message •  Right Price •  Right Place 25"
  26. 26. Three Elements of Shopper Behavior Strongly Influence Store Design Why they Shop Mission & Occasion Where they Shop How they Shop Navigation Speed 26"
  27. 27. The Shopper s Trip Mission Drives Behavior Time Money Family Self Speedy Fill-In Bargain Hunting Household Stock-up Browsing Urgent Item Everyday Savings Just-In-Time Meals Immediate Consumption Source: Landmark Study, 2010 27"
  28. 28. Beverage Occasions Can Inspire In-Store Shopper Messaging A Day in the Life of a Consumer 1Source: Beverage Digest Fact Book 2009 for 2008 Data; Total US – All Channels – Bottle/Can/Fountain Note: NARTD definition excludes Tap Water, Coffee, Powdered Soft Drinks and Milk 28"
  29. 29. They Drive The Shopper s Beverage Choice and Purchases… Weekends/ 6 AM 7:30AM 10:30 AM 12 NOON 3 PM 5 PM 6 PM 9 PM Vacation Breakfast at Home On The Go Break at Work & Study Eating Out Break at Work & Study On The Go Meals at Home Relaxing at Home Leisure Away Activity Consumption Occasions Beverage Need States Associated With These Activities Trip Missions Sensory Pleasure & Food Enhancement Routine Refreshment Energy/ Stimulation Having a Good Time Health, Beauty & Nutrition Household Stock-Up Energy/ Stimulation Immediate Consumption Speedy FillIn Sensory Pleasure & Food Enhancement Energy/ Stimulation Having a Good Time Immediate Consumption Routine Refreshment Sensory Pleasure & Food Enhancement Comfort & Relaxation Routine Refreshment Having a Good Time Health, Beauty & Nutrition Just-InTime Meals Just-InTime Meals Household Stock-Up Speedy FillIn Classified"R"Internal"use" Immediate Consumption Household Stock-Up Health, Beauty & Nutrition Speedy FillIn Just-InTime Meals 29" 29"
  30. 30. Store Navigation Patterns Help Determine Optimal Placement of Points of Inspiration Entrance Traffic is counter-clockwise around perimeter, shopping back to front 30"
  31. 31. Navigation Patterns Vary by Shoppers Trip Missions Percent visiting > 1/4 of store Stock Up Trips 88% 20 minutes + Routine Trips 28% 10-20 minutes Quick/Fill In Trips < 10 minutes Each map represents a single trip and does not represent a dominant pattern 1% 31"
  32. 32. Understanding Shopping Pace Can Also Inform Placement Buy Time™! Slow! Fast! Start of! Trip! Trip Progress! End of! Trip! Shoppers are more open to new information or ! complex messaging earlier in their trip " Source: Supermarket PathTracker Study, 2005! 32"
  33. 33. Merchandising Objectives Can be Tailored by Trip Mission Merchandising Objectives Stock Up Trips Routine Trips Quick/Fill In Trips Improve main aisle navigation and center store tie-ins Placement in key perimeter areas, e.g., Deli and Endcaps Inspire Impulse purchases near Checkout and key destination areas Each map represents a single trip and does not represent a dominant pattern 33"
  34. 34. Eye Tracking Research Provides At Shelf Insights •  Color blocking increases the visibility of most frequently purchased items –  Increases shopability & sales –  Provides Navigational Signposts Eye-Track Heat Map* •  Strong positive correlation between visibility and purchase consideration* *Source: Perception Research Services **Source: PRS, The Wharton School, University of Pennsylvania 34"
  35. 35. Busy Shoppers Are In and Out Quickly •  58% of Trips are Less Than 20 Minutes •  Over half of trips visit less than 1/4th of store Quicker Decision Shoppers ( 0 – 3 minutes) " In/Out of store as quickly as possible " Immediate Need / specific item " Inspire the impulse purchase by leveraging Front-end/Checkout and Impulse Zone placement Early Progression Shoppers (3 – 10 min.) " Items for a specific meal create cross-promotion opportunities " Replenish items low on / out of " Beverage placement in key perimeter areas such as Deli and Endcaps Total Store Shoppers (20+ min.) " Stock-up variety grocery / household items " Satisfy needs/wants of family " Improve main aisle shopper navigation and tiein other center store categories HIGH DENSITY LOW DENSITY HIGH DENSITY LOW DENSITY HIGH DENSITY LOW DENSITY 35"
  36. 36. Leveraging A Full Range of Insights is Key to Great Merchandising 36"
  37. 37. Insights to Action Framework Iden=fy& Define&the&& business& objec=ves&or& challenge& Insight& Ideas& Impact& Turn&data&into& ac=onable& insights& Create& shopper* based& solu=ons&that& meet& objec=ves& Execute&the& solu=ons&that& provide& Shopper,& Coke&&& Retailer&wins& SUCCESS&METRICS& 37"
  38. 38. To Identify True Opportunities, We Must Look from Multiple Perspectives Shopper& Win& Customer& Win& Coca*Cola& Win& Op=mal& Solu=on& 38"
  39. 39. Design Makes Stuff Better! •  About&Coca*Cola& •  Understanding&the&Retailer& •  Understanding&the&Shopper& •  Designing&the&Experience& •  Best&Prac=ce&Round&Table& 39"
  40. 40. Design: 1. Thinking 2. Doing Design makes stuff better.
  41. 41. Makes: 1.  Simplicity 2.  Speed 3.  Scale 4.  Synergy Design makes stuff better. COCA-COLA / Global Design / CONFIDENTIAL / 2010
  42. 42. Stuff: 1.  Brand identity 2.  Labels 3.  Packaging / POS 4.  Equipment 5.  Retail experience 6.  OOH 7.  Fleet 8.  On premise Design makes stuff better. COCA-COLA / Global Design / CONFIDENTIAL / 2010
  43. 43. Better: 1.  User-friendly 2.  Brand love 3.  System value 4.  Glocal 5.  Sustainable Design makes stuff better. COCA-COLA / Global Design / CONFIDENTIAL / 2010
  44. 44. Global Design Agenda: 1.  2.  3.  4.  5.  Define strategic value Create clear standards Design modular systems Develop our capability Measure effectiveness COCA-COLA / Global Design / CONFIDENTIAL / 2010
  45. 45. Four factors influence shopper behavior in any type of store design 1.  Offer&the&Variety&Shoppers&Seek& 2.  Connect&With&the&Right&Occasions& OCCASIONS 3.  Deliver&Shop*Ability&Through& Points&of& Inspira=on &In&Store& POINTS OF INSPIRATION 4.  Influence&and&Inspire&Purchase&Behavior& MESSAGING VARIETY 45"
  46. 46. Inspiration Is Created By Providing Relevant Shopper Solutions Based On How They Shop Salty Snacks Source: 2008 PRISM Study Beverage Aisle 29% Teas/Juices/Energy = POINTS OF INSPIRATION Water Bread & Bakery 55% Sparkling Frozen Fo ods Frozen F oods Frozen 35% Deli 50% Produce 70% Promotion Zone 95% % of Shoppers Who Visit Specific area Of Store Classified"R"Internal"use" 46"
  47. 47. Water Sparkling Frozen Food s Frozen Food s Salt y Teas/Juices/Energy Sna cks Effectively Leveraging Beverages Across The Store Opens Opportunities To Connect With Shoppers And Drive Sales Deli Occasion Based Approach Segmented Merchandising Packaging Solutions Strategic Bundling & Adjacencies Identifies highest value investment opportunity based on consumption occasion Maximizes shopper relevant assortment for each store Provides occasion relevant & shopper need based packages to drive consumption Cross-category, shopper based solutions through alliances with national brands; Insights-Driven Category Adjacencies Sustainability Providing leadership in Corporate Responsibility & Sustainability Irresistible Shopper Experiences A jointly developed, customer specific framework for clarifying priorities and providing direction for in-store execution To drive larger baskets, higher dollar ring and greater penny profit 47"
  48. 48. We win when we think big about design.
  49. 49. North America Roadmap for Growth Profit & Productivity Leader&in&Total&Beverage& Volume&&&Profit&Growth& $& People A&Great&Place&to&Work& Where&People&Are& Inspired&to&Be&Their&Best& Partners Portfolio Our&Customers && #1&Most&Valued&Supplier& #1&Consumer&Preferred& Brands&in&North&America& Planet Undisputed&Social& License&to&Operate&& 50"
  50. 50. Embedding Sustainability Into Our Culture Define& Sustainability& Long*&Term& Vision&of&the& Future& Internal&Focus&on& Execu=on& & External&Focus:& Collabora=on&& & 51"
  51. 51. Case for Action: Environmentally Conscious Insights 52"
  52. 52. Shopper Insights 70%&& OF SHOPPERS THINK"SUSTAINABILITY"&""THE"INRSTORE"" SHOPPING"EXPERIENCE"ARE"IMPORTANT" *Hartman"Research:"2009,"ShopperChat"Theme"Report,"2010:"ConnecMng"with"Shoppers"On"Sustainability"&"Living"PosiMvely" 53"
  53. 53. Vision:"CocaRCola"GIVE"IT"BACK™"Merchandising"SoluMons""
  54. 54. Materials: Line to Loop rPET Recyclable Steel Corrugate Recyclable 55"
  55. 55. Materials: Corrugate Solution •  Made"of"100%"recyclable"materials" " •  100%"of"virgin"paper"from"renewable" resources" •  Costs"the"same"or"less"than"current" """""displays"used"in"similar"capacity" 56"
  56. 56. Shopper Input I"think"it s"an"excellent"step"and"I"hope"more" companies"do"the"same. " " I"think"it"is"a"simple"idea,"using"a"cool"design" to"actually"do"good"for"the"environment. " It s"a"fantasMc"program"to"show"that"CocaRCola" is"commi4ed"to"a"sustainable"business"model. " " Cardboard"or"recycled"materials"stand"out," appealing"design. " 57"
  57. 57. 5 questions …to keys to effective supplier/retailer partnerships How does my Retail partner generate profits and what is my role in making that happen? What elements define the retail experience? Who is the Shopper and what is important to them? How do we create solutions jointly to unlock value with shoppers? What are the Execution Capabilities and Limitations? 58"
  58. 58. Taking it OffStage! •  About&Coca*Cola& •  Understanding&the&Retailer& •  Understanding&the&Shopper& •  Designing&the&Experience& •  Best&Prac=ce&Round&Table& 59"
  59. 59. Customizing the In-Store Experience to Meet Shopper Preference Claire Quinn, National Shopper Insights Initiatives Michael La Kier, Shopper Marketing Strategy and Capability Justin Honaman, National Retail Sales