PG Helps Retailers Connect with Consumers

By Joan Driggs and Jim Dudlicek

Retailers, suppliers and trend experts shared their insights about how to harness technology to enhance the shopper experience at Progressive Grocer’s Connected Consumer Summit, held this week in Chicago.

As consumers continue to adopt new technologies at an ever-faster pace, grocery retailers need to catch up and even exceed consumer expectations to attain any level of loyalty. PG’s exclusive, invitation-only summit, held May 5-6 at the Renaissance Chicago O’Hare Suites Hotel, guided retailers and CPG suppliers in learning about, selecting and implementing digital solutions that will help them better connect with their shoppers. Attendees learned about shopper insights, mobile marketing, digital media, Big Data and more.

Keynote presentations by such companies as Kroger, SpartanNash, Nielsen and Hershey delved into consumer trends and opportunities, how digital is changing path to purchase and harnessing digital innovation for the in-store experience.

In addition, the one-and-a-half day event included “boardroom briefings” for retailers and CPG companies presented by solution providers focused on the connected consumer, along with exceptional networking opportunities. Attendees topped 80 representatives from retailers, CPG companies and data analytics providers across the country.

“Retail is moving fast, but it’s also moving slow,” said James Russo, SVP of global consumer insights at Nielsen, who addressed the “Digital Evolution: Consumer Trends and Opportunities,” leading off Tuesday morning’s speaker lineup.

He continued: “We have a lot of new tools, technology and analytics, but unfortunately, we’re still addressing the same issues today that we were in 1985,” quoting from The New York Times 30 years ago, “In retailing, we should cater to the individual rather than the masses. Specialized by product, lifestyle, pursuit, service or convenience.”

More than half of births today are multicultural, Russo noted. Our population is 80 percent urban; more than three-quarters of consumers are connected anytime/anywhere, and yet 97 percent of CPG sales are still in-store.

Further, as demonstrated by other industries, consumers are ready to connect with retailers. A quarter of shoppers are already making CPG purchases online, but 55 percent are willing to go there. Annual online sales growth of CPG products is 40 percent year-on-year, according to Nielsen. Layer in that the No. 1 daily activity – 10 hours per day – involves a screen, and there’s a compelling case for addressing people where, when and how they want to be reached. Nearly two-thirds of shoppers want in-store handheld scanners, but just 11 percent are currently using them, because they are not widely available. Well more than half – 56 percent – of shoppers want to order online and pickup in store, but just 8 percent are currently doing this.

Grocers must acknowledge and address their “new reality,” asserted Linh Peters, VP of marketing for Grand Rapids, Mich.-based wholesaler/distributor and retailer SpartanNash, speaking on “Digital Engagement and Changing the Path to Purchase.”

That reality includes consumers shopping across multiple channels, having access to more information and depending more than ever on peer recommendations for purchasing decisions.

The new paradigm for grocers has traditional retailers competing with adjacent channels like Peapod and Amazon Fresh, as well as brick-and-mortar retailers offering click-and-collect services; as well as new business models such as home recipe services like Blue Apron, and Door-to-Door Organics. Meanwhile, innovations like Amazon Dash, which allows consumers to automatically purchase household suppliers at the touch of a wi-fi enabled button on their applicances, is taking shape.

Peters said connecting with brands requires immediacy, relevancy, ubiquity and advocacy (sharing experiences with peers), and technology is changing how people interact with groceries.

At SpartanNash, Peters said, digital traffic is up 10 to 15 percent year over year. The company’s strategy, she explained, revolves around responsive design for easy viewing on any device and reduced bounce rates, a consistent user experience and an evolving model.

To that end, SpartanNash uses its Yes Rewards loyalty program as the foundation for its digital initiatives. Launched 2011, the program has more than a million members; the company’s best customers drive 70 percent of sales, Peters noted.

Loyalty at SpartanNash has evolved away from a points-based system to one focused on “personalization, relevancy and engagement.” A key component is digital couponing – on any given day, Yes Rewards offers 200 digital coupons, and last year, the company enjoyed a 70 percent redemption rate.

The program, which allows coupons to be loaded directly onto rewards cards, is supported by weekly e-mails featuring targeted offers and a rewards app that’s available for iPhone and Android devices.

The result: 72 percent of Yes Rewards shoppers are enrolled in digital coupons, and Peters said the company is reaching those historically unresponsive to promotions. Response overall has been positive; 84 percent say the coupons save them money, though 73 percent admit they often forget to use coupons after clipping them.

Peters noted that digital coupon users are mostly younger males, have higher incomes and live in smaller households.

SpartanNash’s future, Peters said, includes greater connectivity between digital coupons, weekly ads and shopping lists; a continued expansion of omni-channel initiatives; and experimentation with i-beacons, not only for customer experience but for supply chain and whole-store operations.

Meanwhile, while grocery retail is ramping up its ability to address and connect with shoppers, the industry should also consider major disruptive trends, including health and wellness, the No. 1 concern after the economy; grocery retail is the best industry to address “food as medicine.”

Further, 47 percent of consumers eat snacks rather than traditional meals, and there’s still a good bit of untapped opportunity for products that can deliver against accessible, portable, nutritious and tasteful. Hyper-localization encourages retailers to find the right level of segmentation to connect with consumers wherever they are – it’s another step in the path to personalization.

Finally, just 6 percent of the population is using “smart” home technology, such as sensors for appliances, electricity and water. But as Bob Goodpaster, chief global knowledge officer at The Hershey Co. indicated, the current pace of change is as slow as it will ever be.

Goodpaster, along with colleague Josh O’Kane, Hershey’s director of precision, shared how the company is “Activating Precision for Growth.” Their presentation brought to life much of the data and trends presented by Russo, but also worked to explain Hershey is now a knowledge company that happens to sell confections.

The company has invested extensively in analytics, business skills and consulting skills to address distribution, promotion, advertising and innovation. Precision has helped the company determine the right on-shelf assortments for a given area and deploy strategic merchandising designs. Further, the company advertises against what its analysis determines to be the best mix for a given audience. For the future, said Goodpaster, there will be much more work on innovation down to the regional level as well, since the company can now determine what products are most likely to be desired in a given area.

As O’Kane explained, the company isolates consumer-driven data, and layers it over geographic-driven data to create a well-defined targeted microcluster. 

Rounding out the speakers’ presentations on Wednesday morning was Brett Bonner, senior director of R&D at The Kroger Co.

Bonner explained how Kroger, as part of the 400-company ZigBee Alliance, is developing in-store digital innovations for customer experience, through the work of its R&D and operations review groups.

The alliance, whose members also include GE, Samsung and Philips, focuses on tech applications for automation, personal health care, industrial control, energy management, telecom services, consumer electronics and home automation. Additionally, the group is concentrating on mobile applications for retail, viewing “retail services as an ecosystem.”

The alliance’s retail services “cluster” includes shipping and receiving, video monitoring, alerts, scan and shop, customer service, and payment services.

Bonner demonstrated how a ZigBee network layout would be arranged in a grid throughout a typical grocery store, including tracking, scanning and customer touchpoints.

At the forefront of Kroger’s efforts is food safety, leading the nation’s largest traditional grocer to develop FAST Alerts (Food At Safe Temperatures), an all-digital system that replaces obsolete and less timely manual temperature logs by providing real-time notification of deviations from optimum conditions in grocery store cases. FAST Alerts, which Bonner said can record a million temperature readings every hour, is already in use by 2,000 Kroger stores across the country, closing in on a full company rollout.

Meanwhile, other systems -- such as high-quality digital surveillance cameras for security and loss prevention -- are gradually being deployed following store testing. Additional applications include business intelligence (customer patterns, people counting), site operations (queue management, customer occupancy, workforce optimization), and shelf monitoring to reduce out of stocks.