CPG Brand Relevance In A Post Supermarket World

A couple of weeks ago, Macy’s finally threw in the towel on their downtown department store in my hometown. Originally a Kaufmann’s, where our mothers and grandmothers actually dressed up to go shopping, we’d celebrated Macy’s takeover a decade ago and then watched as Macy’s repeatedly contracted the store’s retail floors until there was none.

If the department store has largely become an anachronism in modern retailing, what does that suggest for the future of the supermarket? And what does it mean for CPG brands whose primary channel has been the supermarket for the last 80 years? Just as the department store hasn’t disappeared after 150 years of duty, the supermarket, whose early practitioners appeared in the 1930’s, won’t disappear overnight. But we can certainly see the beginning of seismic shifts:

Smaller Stores Sure, you still see some super sizing, but the big recent winners in grocery retailing — Whole Foods, Aldi and even dollar stores — are all smaller formats. Shoppers are using multiple channels — traditional grocery, big box, specialty grocery, ecommerce, etc. — to custom fit to their needs. Since one-size-doesn’t-fit-all, there’s no point in building a store that attempts to do so, and only lessens — and lengthens — the shopping experience.

Division of Fresh, Prepared and Pantry Shopping experiences are typically a mix of the mundane and sublime. My grandmother’s shopping experience at Kaufmann’s was made delightful by a stop at the Tic Toc Restaurant inside the department store. I’m sure she carried many fond memories of the Tic Toc and not so many of buying my grandfather some new socks. Shopping for fresh and prepared foods are today’s equivalent of sublime experiences, where one’s senses and imagination can be fully engaged. And retailers like Whole Foods have made the restaurant in the store a destination. Spending time shopping at brick and mortar for well-known consumables is at best, mundane, and in an age of ecommerce, borders on the senseless.

Mobile In addition to online ordering frequently used pantry items, almost three-quarters of adults say they engage in activity on the internet related to grocery shopping, led by reading circulars online (42%), looking for coupons (42%) and looking up a recipe (41%). Technology will accelerate the integration of these practices with other information about your lifestyle and will increasingly make this the channel of choice.
What does a CPG brand do to better align with the shift in consumer shopping? One thing that never changes for any brand is the imperative to innovate. The seismic shifts in consumer grocery shopping behavior suggest the need to accelerate the customization of offerings for the multiple channels that meet consumer needs. And accelerated innovation in upping the value added to brands, moving them closer to fully prepared for a time-starved consumer. Finally, and probably the easiest win, is simply to better align your marketing with the media habits of consumers.

Back in 2013, the IAB identified the huge gap/opportunity between where consumers spent time with media and where ad spending was going. TV and, particularly, print each received ad spending well over the time spent with those media by consumers. Internet and, particularly, mobile each received ad spending well under the time spent with each of those by consumers. The value of aligning ad spend with time spent was identified as a $30 billion dollar opportunity.

In 2014, that gap had narrowed to a $25 billion opportunity due to some advertisers better aligning ad spend with where their target consumers were spending time with media. But mobile was still only getting 8% of the ad spend when consumers were spending 24% of their media time on mobile. Strange that the one medium consumers carry with them on the way to the store — and while in the store — would be the most underspent media by far. Ever wonder how an anachronism becomes one?

By Michael Bollinger Wednesday, Aug. 12, 2015
About the author: Michael Bollinger, president, Smith Brothers Agency
Courtesy of mediapost