Apr 17

Written by: IRI Blog
4/17/2009 10:43 AM

LAS VEGAS -- Random notes and comments from “Content Guy” Kevin Coupe from the annual summit sponsored by Information Resources Inc., currently taking place at the Wynn Las Vegas…

• One would think that in these economic times, when so many budgets are being scrutinized an even eviscerated, it might be hard to get retailers and CPG companies to send folks to an event like this. Looking around the room, though, there seems to be a palpable energy…maybe it is desperation, maybe it is sensing opportunity…maybe it doesn’t matter.


• During the two-day summit, Americans will go to the store 66 million times, said Thom Blishock, president of consulting and innovation at IRI, in welcoming the audience. “That means 66 million chances to touch the shopper, to make a sale, to increase the relevance of your brand.” He went on, “There are 270 million shoppers in America, and the question is, how well do you know them? More important, how well should you know them?”

“It’s tough out there,” Blishock said. “And things are only going to get tougher…it is time to reinvent, rethink, redesign and rewire” organizations so that they are more responsive to shoppers with changing habits and priorities.

• Dr. Romesh Wadhwani, chairman of IRI, expanded on this notion of consumer change, saying that the shopper cannot help be confused by the messages being sent by the government. “Six months ago, we were being told that we wee spending too much and should be saving more. Now, we’re being told that we are saving too much and should be spending more.”


• Wadhwani made an excellent point about the competitive pressures out there these days, noting that in an environment where revenues at major chains like Kroger are up and industry revenues are down because of the economic pressures on customers, it is no wonder that smaller, more vulnerable companies are being driven to the edge. The story this week that Bi-Lo has filed for bankruptcy seemed to drive the point home.


• Wadhwani also addressed the five big trends that he said were affecting fundamental market change:

1) the first “moment of truth” is now in the home rather than in the store, because 65 percent of all shoppers are creating lists and making decisions before they ever leave the house…”if you are not on the last, you’re toast,” he said;

2) “shopper loyalty is rapidly becoming an oxymoron,” he said, as the economy encourages ever more fragmented behavior…he also hit the nail on the head when he said that most loyalty programs weren’t really loyalty programs, anyway;

3) “manufacturers are rapidly losing pricing power,” Wadhwani said, referring to current tensions between retailers and manufacturers in which ‘retailers are turning the screws on manufacturers and promoting private label”;

4) Wadhwani suggested that private label penetration in the US is likely to get to European levels, where it currently tends to be 30 percent or more at retail, with some retailers pushing to get it to 50 percent…in the US, he said, retailers are pushing it up to 20-25 percent in certain categories with “the right products with the right attributes at he right prices”; and

5) channel dislocation is rampant, with “attention to detail and insights down to the store level” being the key to survival.

• Big idea from Wadhwani, who just said that part of the problem with traditional insights is that they tend to be slow and not transformational. “All insights are not born equal,” he said. Wadhwani pushed for faster, actionable more accessible insights … if it takes a 90-day study to reach an insight, he said, that insight will be useless. “We live in a real time world,” he said, pointing out how many people get real information via various Internet services…and said that anything less that “real time insights” are irrelevant and useless.


• Following up on this was Jaya Kumar, chief marketing officer at Frito Lay, who said that over the past year the most important lesson learned by his organization was the critical nature of speed. “Speed is a strategic competitive advantage,” he said. “You can copy the strategies of any company, but what you can’t copy is speed. Speed is so cultural and so dynamically connected to how an organization responds,” he said, that it becomes an enormous differentiator.
  

  On the simplicity front, Kumar noted that most analysis is too complicated and therefore too slow. “Simplicity is becoming paramount for success,” he said, and we need tools that allow us to iterate in simple fashion.” He pointed to the company’s latest campaign for Lay’s potato chips, which emphasizes simple ingredients “potatoes, natural oil and a dash of salt” as an example of simplifying the message in a way that makes it easy for shoppers to understand.

• Kumar also said pointed to the importance of establishing trust with trading partners and consumers, especially in a difficult economic environment. “Competence and character intersect to create trust,” he said, noting that “you can react at remarkable speed when you trust your partner.” When trust declines, on the other hand, speed goes down and costs go up.


• Much of what was described by Wadhwani and Kumar was brought together in a presentation by author and management consultant Ram Charan, who urged attendees to demonstrate transformative leadership in their organizations…to listen to anxious employees, to protect the talent, and to nurture the credibility that allows people and companies to prosper.
  

  Charan also made his own argument for simplicity, noting that when Steve Jobs returned to Apple Computer as CEO, at the first board meeting he looked at the 26 projects being worked on by the company and instantly whittled the list down to four. “In tough times, there is no luxury to do peripheral things,” Charan said.

• There were also a couple of interesting presentations by retailers from the convenience store and drug store channels, looking at how they are repositioning themselves to grapple with tough times.
  

  Joe DePinto, president/CEO of 7-Eleven, noted that his c-store chain has found a strong niche with a newly developed private label line of 180 SKUs, with own label water and chips being embraced by shoppers. DePinto also said that his company is reorganizing its supply chain, where high costs – compared with the grocery, drug and mass merchandiser channels – have put c-stores at a competitive disadvantage. 7-Eleven, he said, is moving into a consolidated delivery model, which it already was doing in fresh foods, for heavy liquids and frozen foods.

  Kim Feil, VP/chief marketing officer at Walgreen Co., said that her company was working to differentiate itself in a crowded marketplace; for a lot of people, “we’re a convenience store with a pharmacy in it.”

  One of the things that Walgreen is doing, Feil said, is reorganizing its stores around customer purchasing needs, bringing together, for example, items that people might need if they have a cold, rather than having them scattered around the store. In addition, she said. Walgreen is looking to break down the barriers between the various ways that people can buy – online, phone, mail and in the store. And, Feil said, the company is looking to examine and justify every SKU: “It was a revelation to find out that we had nine SKUs of flashlights,” she said by way of example. “If you’re in Walgreen’s and you need a flashlight, you’ll buy the one we have. You want a choice, you’ll go to Lowe’s.”

• On day one, the Summit’s theme is about active leadership, active innovation, active interaction with shoppers, and an active approach to sustainable growth. Retailers and manufacturers have a choice…hunker down, which only leaves them vulnerable to attack and irrelevance, or embracing the moment as an opportunity.

Doesn’t seem like a hard choice to me.

More tomorrow…

Kevin Coupe
MorningNewsBeat.com

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