Why bother with the Shopper? An interesting question. Back in May 2008, we conducted a survey amongst clients to understand how and why shopper insights were being used within their businesses. Since then, we have observed a growing interest in, and understanding of the importance of shopper insights – the sheer number of LinkedIn shopper focused groups that now exist; the growing number of conferences and events dedicated to shopper insights and marketing and even the mass-media is catching on e.g. Mary Portas Queen of Shops and Inside Out who have featured a report on how technologies such as eye-tracking are helping us to understand shopper behaviour etc.
Additionally other stories of innovative approaches, like the application of Biometrics or Neurometrics, are weaving their way out of the Shopper agenda, highlighting real momentum and a desire to own the shopper space.
With this in mind, we felt that 2010 was the time to revisit the topic, and repeat the 2008 survey. The results confirmed our instinct by showing that client spend in the area of shopper insight has increased, with 55 percent spending between 10-30 percent of research budget on shopper versus only 28 percent in 2008.
So why the growing interest in this area? We propose it’s due to five key drivers:
1. The recession – 71 percent of respondents said that understanding the shopper is more important in a tough economic climate. The fight for share of the decreasing pot of disposable income continues and businesses are aware that there are new shopper ’rules’ to be understood in order to win the battle.
2. Changing shopper priorities – Not only has the recession driven an increased focus on price amongst shoppers however, it has also served to accelerate the trends relating to environmental, ethical and nostalgic considerations. Extreme consumerism has not only become less possible for many, but less desirable too and the enforced changes in spending habits have come with an unexpected upside as shoppers realise that their new habits are actually good for the planet, good for them and signal a return to the simpler, ’good life’. The new shopper ’rules’ therefore go way beyond how shoppers respond to promotions and price cuts… but span their entire approach to shopping – where, when, why and how.
3. Increased retailer requests – Perhaps linked to the above, the demands placed on manufacturers for shopper insights continues to grow with 72 percent of manufacturing respondents saying that they are experiencing higher levels of customer requests for shopper evidence versus two years ago.
4. Shopper marketing has come of age – It certainly feels that shopper marketing has achieved ’buzz’ status over the last couple of years as brand owners have increasingly realised the potential of retail as a marketing medium, as well as recognised that addressing the shopper as well as the consumer entities makes for a more complete conversation with the target market. It could, in fact, be argued that there has never been a better time for shopper marketing – both in and out of store – as the ’new shopper’ is more considered in her approach, and therefore more open to communication as she progresses through her purchase journey.
The survey shows that 59 percent of respondents saw shopper marketing budgets increase over the past couple of years, and 57 percent predict further increases over the next two years. In comparative terms, this puts shopper marketing second only to digital / social network marketing as a discipline set for growth over the coming period, and of course, elements of these disciplines will increasingly contribute to shopper marketing campaigns too.
5. Changes in channel focus – It’s clear that businesses are now turning to new channels to drive growth and improve profitability. A key theme of recent conversations with FMCG businesses is that ’grocery has been done to death’ and that they are now beginning to look more carefully at alternative channels, particularly convenience. Several of them either have, or are in the process of realigning resource to reflect this new focus – spending considerable time and effort in developing channel strategies for convenience that don’t simply look like a ’mini-me’ of the grocery strategy. In evidence of this, the survey shows that one of the key areas of growth in terms of shopper insight application is channel strategy – with 47 percent of respondents now saying that shopper insights has a significant role to play here compared with just 33 percent two years ago.
Beyond the remit
Shopper insight is now impacting many areas of the business than it used to two years ago – category management, packaging design and brand extensions are notable examples of where it is playing a much stronger role.
Packaging design is of particular interest, and a subject we often talk about with clients, given that the pack has such an important role in driving and shaping shopping processes and decisions, and yet its design is so often driven solely by consumer and brand considerations. With that in mind, encouraging though the data trends are – it is still quite alarming to think that 80 percent of businesses are not using shopper insights at all to inform pack design. And it seems that many businesses share this sense of alarm, since 72 percent of respondents think that shopper insights should inform pack design versus the 19 percent who say that it already does.
In fact, the reality of the situation is that there is a strong feeling that the focus on shoppers is still not sufficient. Whilst things are definitely moving in the right direction, a full 94 percent of our respondents said that their business needs to get even closer to shoppers. Furthermore, though reduced since May 2008, the proportion of our respondents claiming that the shopper insights budget is still too small remains at over two-thirds (68 percent Vs 86 percent two years ago).
The areas where it is felt that the focus is not enough are too numerous to mention (see chart below). Suffice to say that the gaps between where shopper insights should and do influence are cavernous almost across the board.
So, where to from here?
It certainly feels that some of the barriers we identified two years ago are steadily being broken down, as levels of understanding, experience, resource and funding are all increasing. But we’re not there yet!
The research indicates that on the whole, the pace of change still feels a little sedentary, despite its acceleration of late. No doubt, the tough economic climate has limited the propensity to engage for some businesses – but for others it has been the trigger to developing a more intimate knowledge of their shoppers, and their needs today.
Our recommendation for retailers and brands are to continue with shopper research but consider each element carefully. To start small and get convincing examples of business benefits and build from there and find ways to build bridges between sales, trade and brand marketing so that shopper insights can influence the organisation more holistically. Also to work creatively to develop buy-in and ownership of the insights among key stake-holders; and sometimes we even recommend you go shopping yourselves – don the shopper hat and take any likely cynics along with you to help open their eyes!