brandcentric blog

Hard to believe, but it’s been a year plus since I launched the brandcentric blog.  Many lessons learned about the art and science of blogging (mostly positive), and still a lot more to discover.

On the content front, this has been a fantastic opportunity to refine my focus in this bold, new era of CPG marketing.  A few of the more meaningful themes from the past year include:

• The expanding share-of-wallet that digital media has claimed from traditional media vehicles.  CPG was slow to adopt, but quick to catch up to (and potentially surpass) other industries.
• The coming-of-age of social media and marketing for CPG brands.  Word-of-mouth makes a lot of sense for considered purchases, even in the world of fast-moving consumer goods.
• Leveraging applied math and modeling techniques to achieve superior merchandising strategies.  The data is available, the science is mature and business-user applications are available through a browser.
• The relentless pursuit of developing, nurturing and monetizing direct-to-consumer relationships.  Alice.com was unexpected, but is exciting to watch.

As I look forward to 2010, a few early focus areas bubble to the top:

• Shopper centricity.   This will be huge across several fronts, including in-store marketing, trade planning, and broader merchandising strategic planning.   Retailers are ready to unleash the data and shopper segmentation, and manufacturers need to step up to the plate.  Collaborative planning has made a comeback.
• Pricing.  Commodity and ingredient cost volatility is expected to rear its ugly head once again.  The focus on promoted shelf price is more important than ever, especially when considering issues like gap to private label and the incredibly elusive consumer.  Expect manufacturers to funnel more marketing dollars to price as a strategic marketing lever.
• Digital integration.  Will this be the year that digital media and marketing shifts from a “center of excellence” service to a brand-driven strategic capability?  For some brands not quite yet, but for others absolutely.

There are many more themes that are percolating.  I’d love to hear what’s on your mind as you look forward to the coming year.

This is a follow-up to Part I on the same topic, which you can find here.

Earlier this month I had the opportunity to catch a live presentation by the founder and CEO of Alice.com, Brian Wiegand, at the Consumer Goods conference in Orlando.  This was a learning experience on many fronts, as my earlier views were based on partial information.

In a word, the best way to summarize Alice.com is PLATFORM.  What Wiegand and team have done is to offer CPG brands the tools and forum with which to sell direct to consumers.  Alice takes no ownership of the product, the data or the consumer.  They have built a nifty e-commerce platform that allows a brand, and really a community of brands, to easily merchandise themselves to a set of engaged shoppers.  Alice does take the burden of financial transaction processing, fulfillment, customer service and data management off the hands of the brands — a welcome proposition for most CPG companies so they can focus on building and marketing their goods.  Their fees are based on the services they provide, not how much volume they move.

This business model puts Alice in a unique position.  Unlike the first generation of selling consumer packaged goods direct to consumers (Webvan, Netgrocer, etc.), Alice can put their focus on three things: building the platform, ensuring excellent service, and working closely with the brands to mine the data.

So while my earlier analysis concluded that this channel may not move tonnage for many brands, it does offer a quick, easy and value-added way to reach a set of high value consumers…efficiently.  And since Alice isn’t directly taking a piece of each transaction, the full retail margin is passed directly to the brand helping to support Alice’s promise of free shipping.  But the real potential boon here for CPG brands are the valuable insights that can be gleaned by interacting with and marketing directly to consumers.   Alice intends to drive a lot of value with this part of the proposition, and rightfully so.

From a CPG manufacturer perspective, Wegman’s has consistently held an open and progressive approach to working with the vendor community.  Specifically in the area of pricing and promotion strategy, the upstate New York retailer has been a leader in adopting new approaches that eventually extend out to the mainstream retailers.

In 2007 Wegman’s shifted from a Hi/Lo (higher base price with frequent promoted price points) pricing model to EDLP (everyday low price) program throughout the store.   Danny Wegman, CEO of the independent grocery chain, did a little preemptive damage control and had this video posted to YouTube outlining the strategy shift rationale.

His audience is clearly the consumer base and the script is somewhat forced, but I thought Mr. Wegman did a decent job of explaining why the shift is ultimately good for consumers.  As added entertainment, pay attention to the Ross Perot-like charts that Wegman creates to drive his points home.

Getting a read on in-store merchandising is one of the more confounding activities for CPG brand marketers.   Answers to questions such as “was my promotional display put up or not?”, to “did they cut in my new item on the day and time promised?”, or even “was the promoted price point that I funded actually reflected at the shelf?” are hard to pinpoint.  Your choices today are not so great – either pay a retail merchandising crew to walk a set of stores and capture data in a handheld device (expensive and error prone), or interpret a feed of syndicated data (delayed by 4 weeks and projected from a limited sample with few causal variables).  Either way, you can’t get answers to these critical questions in the way you want it, when you need it.  And the data you get certainly won’t allow you to “see” what’s happening in the store.

Enter Store Eyes.  The vision for this early stage company is pretty cool, and very ambitious: Arm retail stores with a “Mobile Capture Unit”, or MCU, that is walked down every aisle once a day.  As the MCU makes its way throughout the store, a set of cameras builds a 360 photographic image of all shelf settings.  Think Google Street View, but in a grocery store.  These images are then searchable and viewable by end-user subscribers to the Store Eyes service.  In addition, the MCU has a handheld scanner that the operator uses to overlay pricing on promotional displays, shippers, and perhaps even a set of predefined staple items.  Data is fed into an on-board PC, sent via Wi-fi to a server in the back of the store, then aggregated across all stores in a central data warehouse.

If the Store Eyes team is able to execute against their plan, the business implications are pretty compelling.  For retailers, a new, potentially valuable revenue stream of “digital gold” will flow out to the vendor community.   Brand and sales folks will have daily views into detailed merchandising and compliance data and images.  Any mystery surrounding display, pricing, or merchandising commitments will be a thing of the past.

I see a few issues that the Store Eyes team will need to iron out before this business really takes off:

1. Business model — the unit cost for each MCU has got to be pretty substantial, and someone has to finance it.  If retailers are expected to invest in or lease the systems, that could present a pretty big drain on cash flow.  To counter that, if manufacturers are lined up to subscribe to the service, then the business case becomes a lot more appealing.

2. Legacy behavior — Store Eyes exposes all the good and the bad that is going on inside the four walls of the store.  Some retailers benefit from ambiguity by not complying with promotional and merchandising plans.  Exposing non-compliance may be somewhat threatening to the old-guard retailers.  In this case, TMI (too much information) may be bad business.

3. Network scale — as with any in-store measurement program, the economic value is a byproduct of the network.  The more retailers and stores that are capturing Store Eyes data, the more valuable the service is to subscribers of the service.  The reverse of this is true as well.

That all said, I really like the vision and innovation that Store Eyes is founded on.  I hope to see these guys succeed and bring a new, potentially disruptive technology to the industry.