Industry-Level Redesign: Will They Ever Reinvent the Dairy Aisle?
Reposted from The Next Big Design in support of the Private Brand Movement.
They claimed it was a $1 billion opportunity for dairy. That was back in October 2009. Now, 2 years later, the $1B opportunity is still there. There is renewed effort behind the initiative but can they make it happen? Without a strategic, unbiased, collaborative path to industry redesign, I’m not so sure.
It’s not surprising that Kraft Foods teamed up with Dairy Management, Inc. and Dannon to consider dairy aisle reinvention. Cheese and dairy is a $7.0B business in the Kraft Foods portfolio, Dannon is the largest part of $26B Danone, and Dairy Management, Inc. is the leading non-profit planning and management organization serving the dairy industry in the U.S. The result was a comprehensive study that identified a $1B opportunity for the dairy industry. They teamed up in 2006 and completed the study in 2009. I saw a presentation at the 2010 Shopper Insights in Action conference in 2010 sponsored by IIR USA and again at the same conference in 2011. To their credit, Kraft was still pushing the initiative but the presentation was nearly the same. Little visible progress had been made.
Most people would agree the dairy aisle needs reinvention. From a shopper 
perspective, it’s visually unappealing, difficult to navigate, and lacks clear shopper communication. In other words, it’s often a commodity purchase with very little time or thought. From the retailer perspective, dairy provides the most net profit per foot and the second best return on inventory investment offering more than enough incentive, it would seem, to invest in bettering the shopper experience. In fact, the model of a reinvented dairy aisle moves it more center-store and is much more appealing. You can take a look here.
But, there’s no doubt that even the incentive of a $1B opportunity has not rushed in a new era of dairy aisle reinvention. What’s slowing the effort? Well, there’s no doubt there are lots of obstacles in bringing any idea to market. But likely as not, the issues are more systemic. With Kraft as the leader of the effort, it’s likely Kraft’s competitors aren’t automatically lining up. One would wonder if retailers might consider the possibility of differentiating with dairy, but will they? And retailers are understandably cautious given the capital, floor space and operating cost issues, not to mention the implications for their private brands. That leaves the dairy industry trade associations as the likely leaders of the effort, but that doesn’t seem to be happening either.
Redesigning an industry’s go-to-market approach is a huge undertaking. It requires strategic business design skills, unbiased and facilitative project guidance, and industry association leadership. The strategic design skills are rare, it’s unlikely someone inside the industry can be unbiased, retailers aren’t apparently seeing the dairy aisle as a competitive differentiator and the associations aren’t currently stepping up. So, my bet is the dairy aisle will look pretty much the same next year, the year after and for more years to come. If you think differently, why? Leave your comments here.
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ThinkWay Strategies
EZFace allows customers to virtually try on cosmetics in-store
Customers looking to try a new shade of lipstick are now able to try on any shade in the store before they make their purchase. Boots stores in the U.K. and a handful of Walmarts in the United States have unveiled EZFace that allows shoppers to take a picture of themselves and then virtually try cosmetics before they decide to purchase, reports CNET.
What other ways could retailers use this technology to help their customers with in store purchases? Will we see this technology expand through European and North American stores?
Best Buy taps promotions into smartphones
Best Buy is testing an innovative location-based tool to connect with customers via smartphones. The company has started to use a tool developed by Shopkick, a California-based start-up. According to FT.com, customers who activate the Shopkick application on their phones will automatically receive “kickbucks” credits just for entering the store that can be traded for benefits including gift cards, computer gaming credits or music downloads from Best Buy’s Napster service. They will also receive special in-store offers from the retailer.
Best Buy will eventually also be able to use the system to send participants in its loyalty scheme promotional offers that can be customized to reflect their shopping history and interests.
According to FT.com‘s Jonathan Birchall, in-store mobile shopping applications are likely to become increasingly important to retailers as they seek to close deals with shoppers equipped with smartphones that can search and compare prices at rival stores and online.
Office Depot Opens First LEED for Commercial Interiors Registered Retail Store
Office Depot has lead the way for green and LEED technology with the opening of the first LEED registered commercial interiors store. According to CSEMag.com, Office Depot expects the store to be certified a few months after opening. LEED CI is the U.S. Green Building Council’s recognized system for certifying high performance green interiors that are healthy, productive places to work; are less costly to operate and maintain; and have a reduced environmental footprint.
Beginning with this store, all new and relocated North American Office Depot retail locations will receive LEED CI certification, including 14 stores planned for 2010.
What do you think about Office Depot’s move to LEED CI certification? Will we see other retailers doing the same?
Fancy a Snack? Try Some Ice Cream!
As I said in my previous post, just because it’s the last day of the conference doesn’t mean the content and questions aren’t thought provoking! And maybe hunger provoking too!
I had the chance to sit in on the Nestle’s New Merchandising Location Strategy preso specifically covering ice cream cups presented by Russ Onish and Alex Sodek. The added bonus for sitting in? A chance to sample some of the great ice cream. Talk about a delicious multi sensory experience!
Nestle’s ice cream brands include Haagen Dazs, Dreyer’s, Edy’s as well as Skinny Cow. All of these brands have cup options for a total of 30. Cups are an interesting concept because ice cream can be an intensely personal experience. Everyone has their own favorite brand or likes to eat ice cream in a certain way. Cups also let you be a little more adventurous. You can try a new flavor without committing to a whole tub. And, for us permanent dieters, cups are great for portion control.
For the retailer and manufacturer, cups are a huge revenue opportunity to expand ice cream to be more than ice cream, like desserts or snacks. Here’s an interesting ratio to give a sense of scale $10 Ice Cream : $40 Dessert :$100 Snack. So, if these cups are crucial to expand into “snack” then the question becomes how to merchandise these cups properly: either with the parent brand or within a separate case? And how do you learn the answer quickly and reliably?
The answer lies in virtual shopping research! There were two questions:
- Should the cups be in a dedicated case or with the brand family?
- How should promotional pricing be communicated: 99 cents or 10 for $10?
I wish I could show you the virtual shopper research demo! We saw a video of how the shopper traversed the virtual grocery store and arrived at the ice cream aisle. The shopper could stop at any case and make any amount of purchase they desired. Here’s a little of what they learned:
- The Skinny Cow branded cups performed better when placed with their parent brand and the 10 for $10 offer resonated more than the 99 cent each offer.
- The other branded cups performed better in a dedicated case. When placed in the dedicated area, people bought more within the category, they bought in multiple, they bought in variety yielding more dollar sales. People also traded up to more cups versus tubs ($1/serving versus $.31/serving).
- In terms of pricing the 10 for $10 offer yielded 21% sales penetration versus 18% for the 99 cent each offer. Also, people bought more cups when offered at 10 for $10.
Nestle made recommendations for retail implementation. Here are some of the results:
- 90% of stores now stock the cups together. These stores have sales 53% higher than the 10% that did not stock the cups together.
- 85% of the stores keep the Skinny Cow cups with the parent brand. These stores have sales 136% higher than the 15% that did not stock the cups with the parent brand.
- Sales are currently at $50MM which is up 45% over one year ago. 2011 Forecast shows $300MM in sales.
All in all, these are delicious results for Nestle. I really enjoyed this preso – what about you?
Parissa Behnia
Idea Chef
678 Partners
Listen to the changing shopper
Just heard a great presentation from Lois Seidl, Meyers Research Center where she discussed the myriad of options available for retailers and marketers to fully connect with their shoppers and understand purchase behavior. Seidl discussed that by doing research in-store, both retailers and marketers can understand exactly why customers choose one product over another. Sometimes there is absolutely nothing wrong with the product, the customer simply has a coupon for another product or they are tight on money during this shopping trip. Of course, having a nice presentation of a brand and a great store experience does help, Seidl says that so much more of the purchase behavior is within the shopper. So what can retailers and marketers do? Listen and research.
Meyers Research has found that shoppers increasingly want a small, artisanal market experience when shopping. By listening to the shoppers needs, stores have undergone changes to suit the customer’s desires. Even large retailers like Walmart and Target have followed suit, creating a more intimate shopping experience.
Seidl also showcased many of the in store marketing signage that’s available for stores and manufacturers, highlighting digital signage.
Highlighting the store experience and the items available are important, but the overall theme of Seidl’s speech was to listen and to research your shoppers. Our thanks to Meyers Research Group for their presentation.
Where Do Your Eyes Go?
Are you enjoying these sessions as much as I am? I’ve learned quite a bit so again, a big thanks to IIR and Shopper Insights in Action!
After lunch, I listened to Herb Sorenson and Jacob Suher present The Path of the Eye in Shopping and Purchasing. It was a fascinating discussion of how our biological framework can be a help and a hindrance to our shopping. As I was listening to their comments, I remembered yesterday’s keynote by Mark Changizi so I will try to bring in some of his comments here as well.
This presentation showed us through a practical video example that the current aisle setup and merchandising creates clutter which forces the shopper to filter through the choices to eliminate what they don’t want in order to focus on and select what they do want. The video showed us that while our torso and our feet move, our point of focus does not move. This rather reminded me of the hand exercise in yesterday’s keynote. If you recall, when we blocked one open eye with a hand, that hand became semi transparent.
Sorenson and Suher’s research showed that if the shopping times were quicker, then the basket sizes grow larger. A few approaches to minimizing shopping time include reducing the number of SKUs and also laying out products horizonally instead of vertically. In other words, if you maximize shopper efficiency, the time you give back to the shopper will be rewarded with larger baskets and increased loyalty.
What’s interesting here (and what I couldn’t ask because Q&A time was over) was that WalMart lost sales and customers because they minimized SKUs. I wish I could understand how and why WalMart’s practical example differs from the research findings. Furthermore, Changizi’s comments yesterday suggested more depth than breadth when it comes to displays/merchandising which is also different from the recommendation here. It would be good to know where and how these findings fit in with one another.
Another question I had was typical big box/warehouse stores typically are longer shopper times (not shorter) with inefficient layouts. Why and how is it that it’s impossible to walk out of Costco, Target or WalMart having spent more than you intended if the trip is long (especially taking checkout into consideration)?
I know there are good answers to these basic question? Were you in the session with me? What would you add?
Parissa Behnia
Idea Chef
678 Partners
Mark Changizi’s Alien Vision Revolution
Hello!
This is my first post for Shopper Insights in Action! It’s a pleasure to share my takeaways with you!
This morning, Mark Changizi’s keynote blew me away and I’m sure those in the audience would agree with me! He told us at the outset that once we understand what our perceptions are about, it can change applications of how we package and present product to the consumer. In effect, we can better steer the consumer once we understand how they “see” items in a retail environment.
Changizi’s comments covered three things: color, forward facing eyes and illusion and gave us implications for packaging and display based on what he’s discovered in his research as a cognitive neuroscientist.
Color: Interestingly, we learned today that as our sense of smell diminished during evolution, our sense of discerning color has improved. Color affects our emotions, our moods and our health. Consequently, color has significant impact on how we perceive packaging, displays, marketing — basically anything with color that touches a product will impact our perceptions of it. So, it’s not something that we can take lightly.
Forward Facing Eyes. Humans have forward facing eyes whereas many other mammals don’t. The audience went through an interesting exercise of covering one eye (while still open) with one hand. What happened wasn’t half sight. Rather, it was the “perception” that the hand covering our eye was semi transparent so that we could still “see” with both eyes. Hard to believe at first but wildly interesting concept. What this means is that we can handle depth of what Changizi calls “clutter” versus breadth of clutter. If we consider how our grocery aisles are set up today, they are not set up for forward facing eyes… Maybe this calls for a shift for how aisles and shelves are build and products are displayed?
Illusion. We learned today that our vision isn’t bad so much as our brains are slow in processing certain types of graphics. We saw a number of different graphic designs that “appeared’ curved or even bulging but actually weren’t. These type of graphical stimuli are ideal objects to put on our packaging and our displays. Though they are static images, they will be dynamically perceived. Our eyes will be attracted to it and because our brains are slow in processing what we see, we’ll become even more attracted — almost like a loop of sorts.
All in all – very positive, thought provoking approach to how we can use our unique qualities and apply them to packaging and display. I’d like to hear your thoughts? Please send me an email at
678Partners@gmail.com or let’s tweet chat. I’m @parissab! I’ll be writing more posts about the other sessions I attended today. Stay tuned!
Best,
Parissa Behnia
Idea Chef
678 Partners
Australia’s changing retail landscape
Australia is behind the US and Europe with retail and customer-centric innovations; however, they might not be for long. Inside Retailing offers a look into the Australian retail market and how they can connect deeply with their customers through in-store marketing and sustainable retailing. But, according to the article, Australia needs to focus first on customer-centric marketing before thinking about in-store innovations and green innovation. POPAI Australia and New Zealand GM, Karen Spear said, “The economic climate has made consumers not just cost-conscious but also focused on every aspect of the shopping experience. The world‟s strongest retailers are responding by becoming more customer-focused in order to deliver a better retail experience for the shopper.”
Australia must take baby-steps to achieve that kind of shopper engagement and focus with their retail stores.
When and how do you think Australia will catch up with Europe and US as far as shopper insights, shopper marketing, in-store marketing and green innovation?
Retail marketing to excite shoppers
Kmart to Debut Self-Service Laundry
Attention Kmart shoppers, there’s a blue light special in the self-service laundry department, Kwash. The customers of Kmart’s Iowa City, Iowa store will now be able to do a load of laundry while they shop. According to American Coin-Op, the Laundromat, which will be located in the store’s former auto-center space, will have its own storefront and access to the store. Customers can shop online during their wait by using a website set up in Kwash. Online orders can be picked up in the store an hour after the purchase. There will also be a full-service Kmart register in the Laundromat.
This is certainly a new move for the venerable retailer, will we see Target and Walmart adding this amenity to their shopping experience?
Learn more: Attention Shoppers: Kmart to Debut Self-Service Laundry
