Shopper Insights: Red Lines and Green Threads

Most of us in shopper marketing spend time every day trying to get shoppers to do something different. But we are measured by short-term brand or retail sales goals. So we ramp up offers, discounts, promotional prices and extend them via endcaps and displays.  We sign up for Groupon or Living Social programs to extend our discount reach beyond the TV and the shelf. Shopper behavior changes with the use of those tools.  But, sustained and profitable growth rarely emerges from this practice. Cases go up but profit goes down.

And we are left staring at the red line on the balance sheet.

Can insights help us get to green? Yes. But, in order to start the process of insights discovery that can tie to profit, it helps to examine our cultural and economic roots. From a cultural perspective, we need to explore anthropological roots and shifting tides of consumer behavior, so we understand why big shifts are happening.

From an economic insights perspective, it’s wise to explore the underlying nature of influence when it comes to shopping behaviors. That means we must understand how people feel about spending. I like to watch and try to understand that red line in the Consumer Confidence Index chart, which tracks the Present Situation Index.

The Present Situation Index is the one that most directly connects to retail sales.  And while it correlates to the overall confidence index, it dove and now lingers below the other lines, a sure indicator that shopper are not quite ready to bust out the green in a way that matches their long term expectations for the economy. The spending today is more about trade-offs than it is about accumulation of stuff.

That red line of the consumer present situation index is rather scary.  Especially if you’re in shopper marketing and charged with profitable growth at retail for a national brand.

If we want to drive profitable growth as marketers, we’ve got to get beyond promotions that revolve around discounted price. We need to stop tracking what shoppers tell us they’re going to do and start shopping with them to understand when and why the wallet opens up for a full price purchase. And why it doesn’t.

I’m calling that knowledge the green thread. As creative marketers, we can make something with green threads. We can offer a reason to buy that resonates beyond price. In this precarious climate of growth, we can indeed find the green thread though insights. But we need to change the question from what to why.

Meet Tommy. He’s 22 and just out of college. Why does he break the budget and buy a new iPad? What happens down the line when he steps outside the budget? Does he prefer the iPad over healthy food to eat?  Does he forgo the J.Crew trip for new jeans and shirts? Maybe he stops paying his student loan. What he does is one thing. Why does he do what he does? How does he decide what drops off?

Meet Caitlin. She’s 34, with three kids and a big house she can’t really afford. Why does she buy that luxurious Kate Spade handbag? Does it mean she skips fresh produce and buys more frozen pizza for the family meals? Or is it not a trade-off at retail at all? Does she just defer by making a smaller payment on her credit card balance?  Or is she just not saving for the kid’s college this quarter? When and why is your brand worth the trade off? Do you know? How do you get her back in the produce aisle? Or do you just give her more frozen pizza coupons?

Meet Janet. She’s 57 and just spent $3,000 on a trip to Costa Rica. That doesn’t include all the fine dining, bathing suits and hiking shoes. She hasn’t bought a national brand in the grocery store for years. Private brands are good enough and she figures the savings over time more than paid for her trip. Why does she do this? Food brands just don’t satisfy her quest for adventure. Does your laundry soap brand stand a snowball’s chance in he** of getting back in her cart? Perhaps not.

Back in 2007,  when the Present Situation red line was above the other Confidence indices, we knew it was all about leverage. We could market to the consumer desire and not worry about the “value equation” so much. The “banked investments” could cover the backside. Tommy could get Dad to cover the tech, Caitlin could flip the house and buy Kate Spade luggage to match her bag and Janet could sell her Ford stock to cover the trip. Marketing was fun. But that’s over.

How do we understand shopper behavior today in a way that helps us get to profitable growth? Today we need to walk the line to the CFO and explain how we’re going to drive profit, not just volume. He hates that red line on your marketing ROI balance sheet more than you do.

Insights are the green thread. Without them we are dead in the water. Insights that uncover the “why” can provide inspiration for innovation that allows us to sew together integrated and effective action plans to help shoppers to make full price value decisions on our products and services. Think EDLP (the new Walmart price strategy, btw) and then: what else can you offer the shopper?

Insights allow us to understand consumer problems and shopper mindsets. We all need to focus on gaining deeper insights, using the green threads as a critical element when we sew up our story and decide what it is we might do to change shopper behavior in a way that serves the shopper, the retailer and the brand in ways that are profitable for all of us.

Anne Howe is founder of Anne Howe Associates, LLC, a consultancy that specializes in shopper marketing capability, innovation, positioning and communication strategies. She blogs as ShopperAnnie.