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Can you buy loyalty - or should you earn it?

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Colin Harper, Managing Director, Storecheck
Loyalty Why getting back to basics REALLY matters 2 About Me • Colin Harper BSc MA – Run Storecheck analysing from epos data merged with geodemograpics, regionality and store size • Identify core stores and their ability to respond to demand that is becoming more localised – Was Head of Insight for the IPM delivering measured approaches into alternatives to discount – Writing a book the Path to Purchase looking at all these influences with Roddy Mullin – Making information available to brands and retailers together of smarter, shopper friendly approaches • Building data-feeds designed to be used to direct, and measure the impact of change in both supply and demand run in synergy. – Insight Consultant to the Retail Bulletin to develop a benefit to brands and retailers working together for mutual benefit. Doing the same thing over and over again and expecting a different result Einstein – definition of insanity 4 Woolworth • Had a record Christmas for many years the year they went bankrupt – When, of course, no-one would supply them • How did they achieve this? – Because their product had all been in the wrong place • At the wrong time 5 How do you perform? Scala Consulting 2009 6 There is a relationship with profit Fast.MAP 20011 – Retail Bulletin 7 Satisfying People is Vital 8 We are no better today • People really hate out of stocks 9 Loss Leaders output 2013 10 Loss Leaders output 2013 11 Loss Leaders output 2013 12 Loss Leaders output 2013 13 14 15 15 Relationship between happiness and sales R² = 0.32 (correlation coefficient = 0.57) P value = 0.00000001 (significance level = 99.999999% or, in other words, there is only a 1 in 100 million probability that this result is down to chance) Happiness emotion index Sales (£ millions) Relationship between happiness emotion and weekly sales for Waitrose: March 2011 to December 2012 Chart 1 16 16 Relationship between Emotion Quotient and sales R² = 0.43 (correlation coefficient = 0.66) p value = 0.0000003 (significance level = 99.99997%) Emotion Quotient Sales (£ millions) Relationship between Emotion Quotient and weekly sales for Waitrose: January 2012 to April 2013 Note: data for Christmas and Easter removed and smoothed using Savitzky-Golay filter Chart 2 43% of sales variance explained by shopper reported emotion Making them happy is not enough. You MUST also prevent them from being unhappy It’s not being able to find what they wanted to buy That’s all about signage and availability 19 19 Volumes for Easter, Christmas, snow and fuel crisis Volumes for ‘empty shelves’ (out of stock) • Although major peaks occur during the 2012 fuel crisis and bad weather (‘snow’) in both 2012 and 2013, these account for only 1.6% and 4.8% of consumer comments about ‘empty shelves/out of stock’, respectively • Christmas and Easter account for 1.9% and 1.6%, respectively ‘Empty shelves/out of stock’ issues are extremely common, with consumers commenting about them on a regular basis throughout the year Weekly trend for ‘out of stock’ across main UK supermarkets: Jan 2012 to April 2013 20 20 Volume of emotional content Volumes for ‘empty shelves’ (out of stock) • More than one-third (35%) of all consumer comments about ‘empty shelves/out of stock’ are emotional • Of these 41% express anger, 23% sadness, 14% fear, 11% surprise and 11% contempt/disgust ‘Empty shelves/out of stock’ issues generate strong emotions among consumers, over half of which (52%) involve anger or disgust/contempt and one-quarter (23%) sadness/disappointment Weekly trend for basic emotions and ‘out of stock’ across main UK supermarkets: Jan 2012 to April 2013 21 21 Volume by supermarket • While consumer comments about ‘empty shelves/out of stock’ are highest for Sainsbury’s (25%*) and lowest for Morrisons (14%*), they are consistently spread across all of the supermarkets ‘Empty shelves/out of stock’ issues affect all of the UK supermarkets, with no single brand standing out as significantly better or worse than any other Overall share of comments* Note: *data have been weighted to account for Twitter volumes ‘Steak & blowjo
b day’! Snow Christma
s Easter eggs Valentine’
s Day Easter Snow ‘BBQ weekend
’ ‘Fifty Shades of Grey’ Bank holiday FIFA/Xbox Hallowee
n Pancake
s Fuel crisis ‘Steak & blowjo
b day’! Bank holida
y Weekly trend for ‘out of stock’ by individual UK supermarkets: Jan 2012 to April 2013 22 22 • Most consumer comments about ‘out of stock’ products in UK supermarkets relate to confectionary followed by cakes and desserts and leisure (books, DVDs, computer games) • These three product categories alone account for almost one-third of all consumer comments about out of stock items Comparison of product types ‘out of stock’ by volume: Jan 2012 to April 2013 By volume, the top three products that attract the greatest number of ‘empty shelves/out of stock’ consumer comments are all ‘treat’ related Volume index (where ‘confectionary’ = 100) 23 23 Darker blue = high emotion Comparison of ‘out of stock’ generated consumer emotion by individual supermarket: Jan 2012 to April 2013 • Although Waitrose generates the highest volume of comments among UK supermarket consumers, Morrisons attracts by far the greatest negative emotional response • The (negative) emotion quotient* for Morrisons is greater than for any other UK supermarket Emotion quotient* * The ‘emotion quotient’ divides overall emotions into seven basic categories (happiness, anger, disgust, contempt, fear, sadness and surprise) and then sums them to give an overall response. A negative emotion quotient signals that negative emotions exceed positive emotions It is highly significant that Morrisons generates the greatest negative emotional response even though it does not generate the highest volume of comments This strongly suggests that Morrisons consumers are far from satisfied with the brand and is likely to explain at least part of the reason why its sales continue to disappoint 24 New for Old as a strategy? • 63 per cent of UK retailers achieve a higher profit margin from an existing customer 19 per cent say it is significantly higher)* –
But by 2015 63% expect to spend more on gaining new customers than retaining old ones SMG research by Retail Week 25 You can Track, Predict and Impact your Loyalty • Loss Leaders – monthly in the Retail Bulletin has tracked performance for 12 months in all the key fmcg manufacturers – Build loyalty AND profits together by knowing in advance where to major • Talk to us about other retail areas Managing YOUR loyalty Get your basic real and virtual availability right – especially promotionally 27 Promotional Stats • Over 60% of all fmcg product is sold at a discount • Only 30% of space is flexed to take this into account • 70% of people report they have visited a supermarket for an advertised promotion and are not able to find it • The IGD say that there is 98% availability – BUT also that 17% of people are not satisfied with the frequency that promoted products are in stock* *Published figures and Shoppertrack Why force people to suffer When with a little extra effort you can make them happy AND money at the same time 29 Retailer Stats Analysis • EPOS data merged with other information lets you know your demand pattern across the country – As well as the additional supply you need to manage demand properly 30 South focused demand 31 Upmarket Appeal 32 Smaller Stores more important than average 33 18% outlets are key… They overperform with Low stock and typically OOS issues 34 But 45% of average sales (smaller stores in the right area also dominate) 35 Not many stores do well.. 8 times a standard weeks sales to be here But you can get here with just your standard stock cover 36 What do B&M Retailers Need • More Flexible, targeted space – or fewer promotions – Flex 60% of space – Add off shelf additional units – Reduce sku count • Better demand forecasting down to at least region level – Store level is also attainable • A measure that tells them how to focus on what is important – Vital Statistics for retaining loyalty 37 PLUS… • Other types of promotion that build traffic and increase contact between the store and the shopper – but do not stress systems so much – Direct contact – e-mail, coupon – On pack such as coupon for other products claimable on-line 38 What do brands and retailers need? • In Place of Price – The sub site within the Retail Bulletin giving you information, articles and resources allowing you to spread your budget into loyalty and sustainable promotions. • In Place of Price – the seminar – October 23
2013 – Growing your brand when the rush to discount dictates retailers will inevitably disappoint people more over time unless they grasp the nettle now 
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