It wasn’t so long ago that grocery brand managers lived – and died – by the Nielsens: market share figures that arrived every two months or so and decreed whether or not your marketing was working.
Tesco’s decision this month to market its own named account trading data (through Nielsen, IRI and Topline) means that era has gone forever. From now on, trading data will be the information currency of the grocery industry, and every player – manufacturer, retailer and information service – will have to adjust.
The sale of trading data – line-by-line information on sales, including suppliers brands, rival brands and own label as picked up by each retailer’s Epos system at the checkout – is hardly new. Asda has made its data available for ages. And recently other retailers have done the same, they include Safeway and Somerfield in groceries and Menzies, Martins, Victoria Wine, Thresher and First Leisure elsewhere. But as long as Tesco and Sainsbury’s refused to play ball, it remained a side-show. Not any more.
The information companies need the most urgent rethink. The future of the traditional Nielsen-style total market audit now looks in doubt: getting a total market overview could soon be a byproduct of data from many different trading accounts. Or, if manufacturers are already buying trading data, they may rest content with top-line panel data for market share overviews while using trading data for detailed marketing analysis and account management. After all, trading data is a decision driver. It is not historic and averaged, but is effectively real-time, and can be analysed and acted on.
Manufacturers have different challenges, dep-ending who they are. Trading data on non-food items such as magazines, books and videos is catapulting these markets from the information stone age to cutting edge: non-food marketers will be hard-pressed to get their heads round this transformation.
Grocery manufacturers, meanwhile, will have to rethink budgets as pressure grows to buy trading data for each account. Tesco buyers are mainly interested in the brand’s performance in their stores, not some averaged performance. So no self-respecting national account manager will want to go into talks with Tesco without this data.
But just how much is this information going to cost, and how is the budget to be divided between market research, brand management, and account management? After all, trading data is not the only aspect of the continuing information revolution. There are other new systems such as Tesco’s Trading Information Exchange (which uses trading data mainly for supply chain purposes) and Safeway/AGB’s Asset (which is, in effect, a sort of super Superpanel made up of Safeway ABC loyalty card-holders). Few companies have pockets deep enough to buy them all.
A more subtle shift for brand manufacturers is the effect of trading data on their market mind-set. Traditionally, marketers have simply assumed that there is a single market for their brands. But the existence of trading data drives them to think of multiple markets: the market for my brand in Tesco, in Sainsbury’s and so on. Being able to tackle questions such as: “Why does this promotional mechanic work well in chain A, but badly in chain B”, or “Why are we gaining share versus our rival brands in chain A, but losing share in chain B?” is bound to have this effect. And there’s more where that came from.
Trading data shows, for example, that brands are in different markets in different outlets: companies’ decisions as to where to sell their products mean they will come up against different competitors, own-label and branded, in different environments. Pricing strategies differ too. So, logically, marketing tactics should also differ, chain by chain. Account-specific promotions are already common (trading data helps audit them: did those gondola ends in Asda really drive sales as we expected?) But why not go further and ask, for example, how this or that new product development or advertising idea will go down with Tesco shoppers as opposed to Asda shoppers?
Retailers, of course, love such developments because they chime perfectly with their drive towards category management. But they still have some delicate questions to answer as they wrestle with three very different information propositions. The first is that information is power: to be used in negotiations, and therefore held closely to your chest. The second is information as product: a potential revenue stream whose profits should be maximised. The third is information as marketing resource: to be shared with suppliers to help build categories.
Which proposition they opt for is fast becoming the acid test of retailers’ commitment to supplier partnerships. Tesco’s official reason for selling the data is “to form a closer partnership with our suppliers”. And, in true ECR fashion, its original decision was that its data should be more widely available and cheaper than any of its rivals. However, speculation is rife that rearguard action by unreconstructed buyers, who still see information in terms of power and money, forced Tesco to compromise: Tesco’s data will be more expensive than Asda’s.
At the same time, Tesco has put Sainsbury’s on the spot. The latter has long been the most coy of the grocery multiples, its dominant attitude being that of a poker player rather than category partner. At one stage it even threatened to stop supplying Nielsen with data unless the latter redefined the market to make it impossible to strip out Sainsbury’s-specific sales trends.
Tesco’s decision to reveal its data makes a mockery of that stance. Either Sainsbury’s carries out its old threats and refuses to release any data at all, or it joins the trading data bandwagon. Unless, that is, it can forge a viable third alternative of giving data away free – but only to suppliers which work with it in close partnership. Whatever it does – or fails to do – will speak volumes about the state of its corporate culture. Sainsbury’s says it won’t change anything, but everybody is watching. Once again, Tesco has seized the initiative.