Retailers, CPGS Team Up on Shopper Marketing

When Milwaukee-based Roundy's Supermarkets wanted to turn around declining sales of health and wellness products, the retailer did its homework.

Using market research from AMG Strategic Advisors, Roundy's learned that shoppers looked for health and wellness products in the pharmacy section of the supermarket instead of the center store, where many items had been stocked. Consumer insights also indicated 80 percent of shoppers would buy more health and wellness items if they could be easily found in a designated section.

The retailer collaborated with several major health and wellness brands on a shopper marketing program that involved connecting the center store with the pharmacy, said Colin Stewart, senior vice president at AMG Strategic Advisors in Jacksonville, Fla.

Lifting sales
Using the theme "Prevent, Protect & Soothe," marketers bundled several products, such as Kellogg's Special K, Campbell's Soup, Burt's Bees Lip Balm and Clorox Disinfecting Wipes, in a one-stop-shop section of the supermarket. The team approach paid off: Sales of the products rose, and overall store sales also saw a lift. For example, sales of Clorox Disinfecting Wipes climbed 154 percent, according to a Booz & Company analysis.

Results like that are encouraging more shopper marketing programs. New research indicates three out of five CPG companies currently use shopper marketing tactics, Stewart said, citing AMG's new "Trend Behind the Spend" study, which draws on research from 235 CPG companies selling products in 110 categories in 55 retailers. Large CPG companies are out in front, with 72 percent of them relying on shopper marketing programs compared with 40 percent of small CPG firms. In addition, more than half of the companies surveyed said they expect to boost their shopper marketing programs next year.

Tailoring strategies
"Manufacturers are just starting to become more deliberate with strategies that are more retailer-specific," Stewart said. Overall, two out of three CPG companies use retailer-specific marketing programs, the study said, with 80 percent of large CPG companies using the approach. In addition, one-third of those manufacturers who haven't yet tried a retailer-specific shopper marketing program said they plan to this year.

Increasingly, collaborative shopper marketing programs involve multiproduct themes and several different platforms. They're also integrating digital marketing. About 60 percent of CPG companies currently use digital marketing, such as Facebook and other social media, and more than half said they planned to do more of it in the future. While some retailers are trying smart phone apps for couponing, they're in the minority right now, Stewart said.

Overlapping budgets
The rise of shopper marketing is blurring the lines between marketing budgets and trade funds, Stewart said. "Manufacturers' traditional consumer funds are starting to be thought of differently and are being allocated to trade funds" for shopper marketing programs, he said.

With profits under pressure, many CPG companies have cut their traditional trade funds and will likely boost their prices. "That's going to soften their volume. Are they going to come back with heavy trade [funds] again is the question that's out there right now," Stewart said.

Retailers are likely to benefit from an increase in performance-based, retailer-specific shopper marketing programs, he said. "They work better, and there's been a move in that direction from just blanket promotions."