He may have been on to something. Take a look at the number of new products that roll out in a given year. In 2013, there were 9,500 new brand launches, according to the 2013 IRI New Product Pacesetters report. Some of those new products are line extensions–consumer packaged goods (CPG) companies were just keeping up with consumer demand by rolling out the next flavor, the next container size, the next new version that improved upon the old one as consumers voiced their opinions. (Can you say Greek yogurt bonanza?)
But a healthy number of those new products came out of companies that weren't looking at the game in front of them, but rather at tomorrow's competition. Those companies that are looking at the surrounding factors that could indicate what consumers will want next week are gleaning valuable insights as to what their own next steps should be to capture and keep that consumer.
Consumers today are much more in tune with their shopping experience than ever before. They are sophisticated and shrewd, and have a wealth of knowledge at their fingertips, which means that retailers must be savvy in their approach and be able to truly understand and apply in a meaningful way any information they gain about their customer base.
Getting Healthy, Going Digital
The insights retailers seek and depend upon to gauge consumer needs come from a variety of sources, but for a solid foundation on insight into consumers' minds look no further than what's in their shopping baskets.
Healthier-for-you products, for example, are showing up in just about every aisle. "Consumers are now taking a much more proactive approach to health and wellness, seeking to minimize chronic disease and medical expenses today and down the road," says Joy Joseph, principal of Advanced Analytics for Chicago-based IRI.
Thus, the population of health and wellness products has increased on store shelves (and on consumers' bathroom shelves), particularly with products that are preventative in nature, as manufacturers provide what consumers need now and anticipate what they'll need in the future to stay healthy. Using this insight about consumers has proved incredibly profitable, as the 2013 IRI New Product Pacesetters showed that the top 2013 healthier-for-you product launches brought in more than $4.6 billion cumulative year-one sales across a multi-outlet geography.
Not to be left out of the fun, retailers, too, are active in health and wellness and marketing themselves not just as the spot to buy these healthier-for-you products, but also as a source of value-added services to help you live longer. Walgreens, for one, recently partnered with GlaxoSmithKline to launch "Sponsorship to Quit," a free online smoking cessation program. And Texas-based H-E-B and Rediclinic also added an online component to the Weigh Forward weight loss program.
Beyond a consumer's basket, retailers are also looking at digital engagement for insight to better serve their base.
E-commerce, according to IRI statistics, currently accounts for 1 to 2 percent of CPG sales, but annual growth of the channel is expected at 15 to 20 percent. That's a lot of potential expansion for retailers to anticipate how to best meet consumer needs via e-commerce in addition to traditional brick-and-mortar stores.
The challenge is breaking through the consumer's "continuously divided attention," says Tricia Garrett, management consultant of The Parker Avery Group, Atlanta, Ga. Add in the fact that mobile technology is a key driver behind consumer demands like obtaining information about products and services, and the need for instant gratification, and retailers are struggling to figure out how best to use digital engagement.
The retailer that is able to cut through the clutter and not have their promotional efforts ignored, Garrett notes, is the one that is able to provide the right product with the right messaging, at the right time, with the right delivery method. Oh, and in today's "I want it now" world, the product has to be in consumers' hands right away.
The Personalization Prospect
Providing a more personalized experience for shoppers has been on the radar for many, if not most, retailers in recent years. Consumers are bombarded by more and more advertising through multiple platforms, so it's no surprise that eventually all marketing becomes one big blur. Differentiating yourself as the retailer of choice for consumers is getting harder.
But it's not impossible.
For years, retailers have been collecting data on their consumers, predominantly from entities like shopper loyalty programs. And while that data has proven useful, myriad data remain that aren't being harnessed as effectively to provide retailers with the insights they desire.
Going forward, retailers must explore how to best use unstructured data that is streaming by untouched. Bryan Gildenberg, chief knowledge officer of Boston-based Kantar Retail, gives the example of a consumer purchasing sunscreen.
"If I'm CVS or Kroger, I know sixteen different ways my shopper is going to choose between Coppertone and Banana Boat. I know their brand preferences, which ones are price sensitive, which ones are switchers."
"If I'm CVS or Kroger, I know sixteen different ways my shopper is going to choose between Coppertone and Banana Boat. I know their brand preferences, which ones are price sensitive, which ones are switchers," he says. "But you know what I don't know? When the sun is going to come out. You know who does know that? My iPhone."
At its simplest, Gildenberg continues, using big data properly is about finding patterns in unstructured data that streams by and then tying that to collected data to draw meaningful conclusions that will drive commercial results.
Additionally, retailers want to be able to use this data to figure out where consumers are hanging out online when not on a retailer's site, as well as how they can move them from an online environment where the consumer has shown interest in a product and straight to the retailer's purchase site.
"The minute you go off their site to start searching for a product online, the likelihood that you'll buy it from that retailer will go way down," Gildenberg explains. "They know you can find the product most anywhere, and most likely you can find it cheaper somewhere else."
That in mind, using online consumer data to determine the likelihood of purchase brings up a new set of considerations for retailers, such as where they can be a price leader, if that's even possible, or whether there is price parity.
"One of the big areas of data utilization is going to be around pricing," Gildenberg says. "So many consumers today have locked into the idea that they don't have to spend more."
While data insights can provide useful strategies for retailers here and now as well as in the short-term future, in the long term the challenge surrounding data and digital engagement is that retailers must be able to provide filtered information, Gildenberg explains.
"Retailers that can act as filters have a really powerful position," he says. "The people who are going to win on precision are the ones who choose what data you see and what data you don't." Being able to curate information and help consumers navigate a data-overloaded world is and will continue to be increasingly meaningful to consumers.
Peering into consumers' minds to anticipate their needs can be a tricky proposition, but retailers have a collection of sources from which they can pull insights to better serve their base. And with any luck, taking a cue from Mr. Jobs, they'll be one step ahead.
Loyal to the End
In December 2013, online retailer eBay announced that it would be scaling back its eBay Bucks loyalty program, much to the chagrin of eBay frequenters. The scale-back came at the end of a year that saw many retailer loyalty programs dropped altogether. Boise, Idaho-based retailer Albertsons, for example, ended its shopper loyalty program, as well as the programs for the stores under its umbrella, including Shaw's, Jewel-Osco, Star Market and Acme.
There are a host of reasons many retailers choose to discontinue shopper loyalty programs. For some, the programs just aren't all that profitable, and aren't worth the marketing effort. For others, notes a Feb. 24 article on Forbes.com, unintended consequences do the program in, such as negatively influencing a consumer's price perception of a retailer. Loyalty programs, the article states, "end up creating different realities for the most loyal and less loyal shoppers, emphasizing the different reasons for why customers shop at a particular store."
"There's too much value for the retailer that wants to use data in terms of understanding transactionally what consumers are buying now," says Bryan Gildenberg, chief knowledge officer of Boston-based Kantar Retail.
Loyalty cards can determine patterns of purchase, he adds, which can lend itself to better category purchasing for retailers. He notes that grocery giant Kroger used its loyalty shopper data to determine that they don't want or need to be the cheapest retailer in the marketplace, they just want to be comparable to Walmart, and then win on better experience. Loyalty card data, he says, provides just this sort of insight.
Shopper loyalty programs are ubiquitous and inundate consumers with e-mails, information and review requests, says Tricia Garrett, management consultant of The Parker Avery Group, Atlanta, Ga. A downfall of these programs, for sure. But the retailer that can really offer value to a customer and not just perceived discounts has good reasons to keep a loyalty program on board.
"Lowe's does a great job with its MyLowe's program," Garrett explains. "This enables the shopper to keep receipts digitally, which helps with purchases–remembering what paint color you bought last year, for example–product warranties, suggested items and reviews." She adds that another application of the program is suggested routine home maintenance tasks. If a customer buys an air filter, "a value-added service would be to remind the customer 30 to 90 days after the purchase that they should consider changing air filters again," Garrett says.
In the end, data or added services can strengthen a loyalty program to the point of being a blessing for a retailer rather than a burden. But ultimately, says Jon Weber, managing director and partner at Boston-based L.E.K. Consulting, and leader of the company's retail and consumer products practices, "Loyalty is more than a card and points. You need to earn [it] by being a great retailer and delivering great value to your customer."