Everyone in retail says they care about their customers. But truly ‘Customer-First’ retailers act in ways that deepen their relationships with loyal Customers, making them likely to spend more. In recent studies, we’ve seen that retailers who create the greatest emotional connection, as rated by shoppers, achieved sales growth 9 times greater than their lower ranked competitors. 

The Customer-First approach is not the easy route, but it is the right route, as demonstrated by the retailer success stories in this report from those who have started on this journey. Examples of performance improvement from retailers in EMEA and North America include:

• uplift in sales and profit after implementing a Customer-centric pricing strategy
• increased revenue and market share growth, even in a highly competitive market
• successful growth of loyal Customer base and reduction in churn after embedding a Customer-First culture across their entire business
• uplift in sales and increase in reach after using Customer data to optimise weekly promotional flyers

To optimise sales and profit for your business, download the report to discover the five key areas vital to Customer-First success.

In business today, with players like Amazon and Alibaba disrupting the retail model, it’s more challenging for retailers to reach their customers. Having an omnichannel, multi-touchpoint approach to connect with consumers at any stage of the shopping journey, has never been more important. This is where a good media strategy is essential - one that reaches the right customers, at the right time, with the right message.

But how important is retail media, exactly? What are the latest trends? What role does customer data play? Joanna O’Connell, VP Analyst at Forrester, sat down with us to explore why retail media is changing the game, where the greatest opportunities lie.

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Shoppers typically look for ‘value’ - a balance of quality and price - when making a purchase. Only by understanding customers’ expectations can food retailers build an offer that strikes the right balance between the price paid and perceived value. To achieve this, retailers must adopt a pricing strategy that integrates customer perceptions into each pricing decision.

This study was done to understand how Spanish customers decide where to buy groceries, and what they valued most about their chosen retailer. We also identified and measured the main factors that influenced price perception and the implications for grocery retailers. As we’ll show, positive or ‘good’ price perception is correlated to frequency of store visits. Understanding what customers want, and how to change their perceptions, can therefore have a significant impact on business performance.

Download the report and discover which factors influence the price perception Spanish consumer have about the main grocery retailers in Spain, and how this impacts on their purchasing behaviour.

About this study:
The study was undertaken from July - August 2018. We surveyed 1,179 Spanish grocery retail customers using an online questionnaire. 11 market-leading Spanish retailers were included.

The traditional, regional U.S. grocery store—it’s the institution that has fed communities for decades and families for generations. it offers that connection to a simpler time, a time when the guy behind the meat counter would know customers by name, a time when a dad pushed his child around in a shopping cart while they “helped” him shop and a time before mobile phones invaded our lives and sped up the pace of life…

That place—the traditional grocery store—has history. Customers and the people who work there are part of a family. That kind of emotional connection is priceless. 

If this is true, then why does Aldi—which borrows a quarter per shopping cart and operates with a small crew that arranges shelves while taking care of customers—have a stronger emotional connection with shoppers than 90% of its competitors?

Yes, that’s right—Aldi, known for its cost cutting and low prices, has– an emotional connection that is stronger than nine out of 10 traditional grocery stores. 

Traditional grocers may take for granted that they have an advantage over non-traditional channels in the strength of their emotional connection with shoppers, but that doesn’t appear to be the case at all. So just how bad is it for traditional grocers?

The inconvenient truth is that the average traditional grocery store has a lower emotional connection with its shopper than the average store in any other major channel where groceries are sold. While traditional grocers have been focused on selling groceries to the same towns for decades, non-traditional grocers have been able to move into those towns and secure a stronger emotional connection in far less time.    

How? Well, it appears that emotional connection does have a price, after all. In fact, price perception is slightly more associatedwith emotional connection than perception of the quality of products and store experience: 

And, whereas traditional grocers have managed to hold their own on quality perceptions, they lose on price perception.

So, where does the traditional grocer start if they want to win back the hearts of their local constituents?  After all, there are many levers they can pull within pricing, assortment, and store experience to move perceptions. A close look at data from our 2019 Retailer Preference Index: Grocery Channel Edition offers some hints. Stores who have the strongest emotional connection separate themselves from the pack with the following:

• Private brands that customers love
• Leading prices on natural and organic items
• Fast checkout
• Staff who show they value shoppers

Translated into language customers might use, that means:

• Have products I can’t get anywhere else, at competitive prices
• Make healthy food affordable
• Don’t waste my time
• Treat me like a person

Of the 56 retailers ranked by emotional connection, 24 of the bottom 25 are traditional retailers. And while Aldi, ranked 17th for emotional connection, has been used as a stark example to illustrate traditional grocers’ emotional connection issue, many other non-traditional stores have a stronger emotional connection with their shoppers than Aldi does with theirs.

However, 3 traditional grocery stores buck the trend and join non-traditional retailers in the top 10:  Market Basket (4th), H-E-B (5th) and Publix (6th). They each check more than one of the boxes on the core ingredients of emotional connection.

These retailers, more than any other traditional, regional grocer,have established with their emotional connection an insurance policy for an uncertain grocery industry future. And the prevalence of non-traditional grocers with superior emotional connection proves the point that this insurance policy is more a product of “what have you done for me lately” than a product of consumer nostalgia. Non-traditional grocers are buying emotional connection with better prices while delivering on some combination of a superior private label, offering the best natural and organic prices and having staff who show they value customers.

With disruptive pressures on the retail industry mounting, and advertising revenues playing a greater role in driving market dominance for players like Amazon, retail media is fast becoming an essential component of retail strategy. This month for our 3-minute interview, we talked to Jérôme Cochet, Global Managing Director for dunnhumby media to get the expert view on the untapped opportunities for retailers and brands to create meaningful engagements and build long term financial success...

With rapid and constant change in the media landscape, what should be the main priorities for retailers and brands?

Margins in retail, particularly grocery, are very thin and being continually eroded by pressures from discounters, pureplay and proliferation of channels brought about by digital. Everyone is focused on implementing efficiencies to realise savings where they can, but there is only so much you can cut. Finding new revenue streams is key to securing the future health of your business. Establishing a retail media eco-system utilising your owned media (in-store, point-of-sale and online) and customer data, is one way to monetise existing assets with a brand audience who are eager to extract better value from their advertising budgets and connect directly with those buying their products.

The opportunity is potentially huge – with retailers able to monetise 1% of their retail sales through advertising, which could translate into a profit contribution of 10-30%. Rather than battle with short-term tactics to boost numbers, retail media presents a real and viable option to secure sustainable growth for the longer term.

Brands may be facing slightly different challenges, but their priorities will be the same – to grow sales, loyalty and market share. The key to achieving this is for them to truly understanding their shoppers, how they behave, how they think, where, when and how they buy. Being able to personalise engagement and better measure the effect of marketing activities will have a noticeable impact on sales. Getting access to insights from first-party data will enable activation of more sophisticated communications strategies to consumers at the point of purchase or consideration. 

What do you see as the biggest opportunity and the biggest barrier for retailers wanting to monetise their retail media assets?

The opportunity for revenue from retail media is enormous. I would encourage retailers reading this article to visit our media revenue calculator to see what the size of the prize could be for their business.

In terms of barriers, some of the greatest challenges for retailers wanting to monetise their retail assets are around the media operating model.

Firstly, they will need customer data to create shopper insights, as modern media planning is built on shopper insights. They’ll need a robust customer strategy in place to fuel the communications planning. Secondly, they’ll need the right tech and customer data insights to deliver the media through in-store and digital properties For some, this may best be handled through a partner agency who has the tech, systems and expertise in place, otherwise it can be a potentially costly and timely investment for a retailer, whose infrastructure is more focused on core services of buying and selling food and general merchandise. Thirdly, there is operational function - who will run the day-to-day campaign management to support the activity? And then finally, the sales and partnerships aspect – establishing operations for running the monetisation program and selling the media to a CPG and brand audience.

Ensuring your monetisation activity adheres to a Customer-First approach is key to creating a sustainable venture. If the customer experience is impacted negatively, your data asset could be at risk.

Tell us a little bit about how the media solutions at dunnhumby differ from the rest of market offerings.

If I had to pick one thing, I’d say our unique position intersecting the retail and media worlds, sets us firmly apart from others in this space. On one front weve been optimising the economics of retailers & CPGs relationships for a long time – nearly 30 years. On the other we understand the fast moving media ecosystem very well. Our technology, from real-time bidding, to the ability to ingest data at petabyte level, combined with unrivalled expertise in data management and personalisation is the secret weapon of the retail media industry that companies are only just discovering. 

What are your media trend predictions for the next 12 months?

Despite concerns about ad fraud, we’ll undoubtedly see an increase in brands’ investment in digital media, as more entertainment is consumed on mobile devices. eMarketer predicts that 2019 will be the year that digital ad spend overtakes traditional ad spend for the first time.

As part of this trend, we’ll see the duopoly of Facebook and Google continue, but Amazon will be keeping pace, as its advertising business grows, with brands becoming more interested in the behavioural targeting capabilities available through the Amazon platform.

And one of the biggest shifts will be retailers increasingly moving into the publishing world, as the opportunity for creating new revenue streams from their retail assets and customer data will start to take off. It’s going to be a very exciting time for advertisers with so many new opportunities to reach consumers in more targeted ways than ever before.

Treueprogramme sind eines der wichtigsten Werkzeuge, um nachhaltige Kundenbeziehungen aufzubauen. Aber in Wirklichkeit ist ihre Bedeutung noch viel größer: Sie sind die zentrale Quelle für Einsichten in das Konsumverhalten unterschiedlicher Käufergruppen. Das gilt für Deutschland sogar noch mehr als für andere Länder, denn Barzahlungen sind hierzulande noch wesentlich verbreiteter als anderswo. Zahlungsdienstleister eignen sich deshalb weniger gut als mögliche Datenquelle. Es gibt unterschiedliche Ansätze, Treueprogramme aufzubauen – von pauschalen Rabatten bis hin zu individuellen Sonderangeboten und Coupon-Systemen. Worauf es aber vor allem ankommt, ist die strategische Nutzung der gewonnenen Daten.

Den Datenschatz heben

Händler müssen Strukturen schaffen, um neue Daten zu sammeln und das vorhandene Material auszuwerten. Zu oft verbleiben Daten in ihren Silos und werden allenfalls für isolierte Anwendungen genutzt. Die Schaffung einer breiten Kundendatenbasis ist jedoch wichtig, denn sie ermöglicht informierte Entscheidungen – egal ob es um die Erweiterung des Sortiments oder die Gestaltung der Ladenfläche geht. Zwei Aspekte sind dabei entscheidend: Erstens geht es darum, zwischen Erhebung der Daten und deren Auswertung möglichst wenig Zeit verstreichen zu lassen. Nur so wird die datengestützte Entscheidungsfindung wirklich flexibel und lässt sich verzögerungsfrei nachvollziehen, ob eine strategische Entscheidung richtig war oder an welcher Stelle noch Optimierungsbedarf besteht. Zweitens sollten Händler nach einer maximalen Analysetiefe streben – bis hinab in den einzelnen Warenkorb.

Was tun mit den Daten?

Egal wie gut das Treueprogramm und die Datensammlung am Ende funktionieren – wer Kunden wirklich an sich binden will, der muss noch einen Schritt weitergehen und aus den gesammelten Daten wertvolle Einsichten extrahieren, um wirkliche Mehrwerte zu generieren. Spannende Anwendungsfälle existieren zum Beispiel im Category Management. Hier gibt es etwa häufig lokale Unterschiede – in München, Frankfurt oder Berlin sind jeweils völlig andere Produkte beliebt, ein großer Unterschied besteht auch zwischen ländlichen und urbanen Gegenden.

Der wichtigste Einsatzbereich ist aber die Personalisierung von Sonderangeboten und Werbebotschaften. Ein breites Spektrum an Maßnahmen ist denkbar, angefangen bei Programmatic Advertising über Customized Newsletter bis hin zur Personalisierung von Printmaterialien. Personalisierung bedeutet dabei nicht zwangsläufig, dass Inhalte auf den einzelnen Konsumenten zugeschnitten werden. Viel öfter geht es darum, passende Angebote und Ansprachen für bestimmte Käufergruppen oder -segmente zu entwickeln. Auch der passgenaue Zuschnitt auf einzelne Regionen wird aufgrund der gewonnenen Erkenntnisse möglich.

Datenschutz ernst nehmen

Ein bedeutsamer Aspekt aller datengestützten Initiativen ist der Datenschutz. Händler haben einen doppelten Anreiz, hier einen Fokus zu setzen. Erstens vor dem Hintergrund neuer gesetzlicher Vorgaben wie der vieldiskutierten europäischen Datenschutzgrundverordnung (DSGVO). Verstöße können enorme Strafzahlungen nach sich ziehen, die Unternehmen unbedingt vermeiden müssen. Zweitens geht es aber auch um das Vertrauen der eigenen Kunden: Verbraucher teilen ihre Daten nicht mit jedem – zumindest nicht freiwillig. Sie erwarten eine transparente Verarbeitung und vor allem ein Höchstmaß an Sicherheit. Machen Händler hier Fehler, kann das einen immensen Reputationsschaden nach sich ziehen. Datenschutz ist also nicht nur eine Frage von Compliance, sondern auch eine Frage des Vertrauens.

Durchdacht personalisieren

Entscheidend ist für Händler überdies, das individuell richtige Maß an Personalisierung zu finden. Übertriebene Personalisierung nehmen Konsumenten oftmals als unangemessenen Eingriff in ihre Privatsphäre wahr. Auch misslungene Personalisierung schadet der Shopper Experience und schreckt Konsumenten ab, etwa wenn der Käufer einer Kaffeekanne anschließend ständig weitere Kaffeekannen empfohlen bekommt. Darüber hinaus muss der Grad an Personalisierung zum Markenversprechen passen. Von einem Premiumanbieter erwarten sich Kunden durchaus eine persönliche Ansprache, von einem Discounter hingegen vor allem günstige Preise und ein funktionales Einkaufserlebnis. Personalisierung kann in einem solchen Fall unter Umständen für Irritationen sorgen, weil die spezifischen Erwartungen des Konsumenten nicht erfüllt werden.

Von der Gestaltung eines Treueprogramms über die Aufbereitung und Auswertung der Daten bis hin zu konkreten, datengestützten Maßnahmen wie der Personalisierung von Inhalten stoßen Händler also auf viele Herausforderungen und Hürden. Mit unseren Lösungen und unserer Expertise können wir helfen, sie zu überwinden.

In business today, with players like Amazon and Alibaba disrupting the retail model, it’s more challenging for retailers to reach their customers. Having an omnichannel, multi-touchpoint approach to connect with consumers at any stage of the shopping journey, has never been more important. This is where a good media strategy is essential - one that reaches the right customers, at the right time, with the right message.

Joanna O’Connell, VP Analyst at Forrester, sat down with us to explore why retail media is changing the game and where the greatest opportunities lie. We published the first part of our interview with her recently, and in this second and final part of our interview she focuses on how data use in marketing is changing, and how brands can take advantage.

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Le secteur de la distribution est actuellement confronté à des changements majeurs. L’arrivée de nouveaux acteurs tels qu'Alibaba mais aussi le rachat de Wholefoods par Amazon change la donne. Cependant, les distributeurs traditionnels disposent d’un important actif de données qui, s’il est exploité correctement, peut être utilisé comme avantage concurrentiel.

Comment rester compétitif ?

Notre rapport présente les 6 règles d’or pour une stratégie gagnante axée sur les données :

1. Mettre le client au centre de vos décisions
2. Transformer vos décisions stratégiques et les implémenter en magasin
3. Chaque interaction avec le client doit prendre en compte ses données
4. Développer votre propre écosystème source de revenus
5. Saisir l'opportunité des nouvelles technologies
6. Être conforme aux nouvelles législations

Télécharger notre rapport pour savoir comment transformer les enjeux de cette nouvelle économie en atouts

Knowing what your customers are doing and why they are doing it is the difference between having a business strategy and having a business strategy that you know will grow market share. And in this increasingly crowded retail market, competitive advantage in the form of deep customer insight is key. This month for our 3-minute interview, we talked to Brendan Light, Global Head of Customer Knowledge and Engagement to better understand the opportunities and challenges to building an emotional connection with your customers...

With the retail landscape constantly evolving, and customer loyalty under the microscope, what priorities do you think retailers and brands should focus on?

In the era of the customer, experience is everything. People are born with a psychological phenomenon of loss aversion - we simply feel stronger about loss than we do an equivalent amount of gain. This means bad experiences hurt more than good experiences feel good. So how does this translate for retailers and brands? It takes a lot of hard work and focus to genuinely delight your customers by exceeding expectations, but failure to get the fundamentals right provides an easy excuse to be disloyal and take their shopping dollars elsewhere. Retailers and brands should of course aim high to delight customers, but not at the expense of delivering the basics consistently well. Make it your purpose to understand what is painful or problematic for shoppers and work to remove it.

What do you see as the greatest challenge that retailers and brands face in truly understanding their customers?

Two things immediately strike me as especially challenging in the current climate:

1. Legacy systems, tools and approaches all assume people are rational actors, but we are anything but. The good news is that being creatures of habit, we have a conscious drive to appear rational which enables significant learnings from past behaviors and words. But they don’t always tell the full story. The inherent challenge is that people regularly do seemingly irrational things that break those standard models. Humans are very complex animals and there is a lazy arrogance or perhaps a naivety in some parts of the industry that they’ve got people figured out. They don’t. The science of understanding customers is evolving all the time. Building  awareness of this apparently irrational behaviour into our models is key to helping better explain why people do what they do.

2. A lot of what is known about customers and their behaviour is generalised. Transactional analysis can tell us what someone bought, but not why. Surveys go some way to deciphering attitudes but don’t tell the full story either. The holy grail for marketers is situational understanding - knowing what motivated a customer to buy that certain product, on that day, at that particular time, in that pack size, and so forth. Having timely and relevant information is what’s needed but rarely is on hand. The generalized information is great but not always actionable. Having a 360 degree view of the customer – linking what they do with what they think and feel is an essential component of brands and retailers being able to address customer needs – through their entire offering from in-store experience to promotions and personalised offers.  The more context you have, the better you can understand customers when you need to.   

Tell us a little bit about how the Customer Knowledge and Engagement solutions at dunnhumby differ to others in the market.

It comes down to our focus on being Customer-First and our history of superior sales science. Our ability to describe purchase behaviours and mindsets and our experience in influencing shopper behaviour based on that science makes a powerful combination.  We simply have a better ability to target the right shopper with the right offer at the right time. It’s at once simple and yet incredibly powerful.

What are your retail trend predictions for the next 12 months?

As the benefits of AI and Machine Learning become more apparent to retailers, we’ll see them both take on a greater role both in the backoffice store operations and the customer experience. Shopping will be a more dynamic experience as a result, but it should all be seamless to the customers. The math will be invisible to the end user.

One aspect of the migration from online to offline and vice versa, will be the continued proliferation of Pop-up stores, enabling customers to touch, smell, try and buy products from their favourite online retailers. As well as driving buzz and excitement, and providing a new shopping experience for customers, these physical outlets will generate new data sources, and we’ll see brand new verticals trialling this format.

Amazon’s push for 1-day delivery for Prime members is another significant step toward erasing the line between online and offline shopping. This increases the pressure not only for online retailers to up their delivery game but presents a clear challenge to brick & mortar retailers to match the convenience provided by Amazon. The industry is likely to see reactions in the form of significant investments from major retailers to match Amazon’s moves.

And finally, private label will continue to ruffle feathers in the CPG world by making inroads into the branded goods space. Private label’s growth is not new news, but will again make headlines this year. As consumers become more comfortable buying own label products, it’s likely that private label developments will focus on upmarket versions (no longer the strong association with the lowest price, appealing only to the most price sensitive) as well as moving into more categories and channels. CPGs will need to lean heavily on innovation to ensure differentiation and having a good understanding of the Customer will play an important role here.

Today’s blog is co-authored with guest contributor Todd McCourtie, Global Accounts Director – Category Management, at JDA Software. Together, dunnhumby and JDA are working to provide companies with prescriptive, consumer-based insights to improve their merchandising strategy decisions.

Increasingly retailers are looking at ways to deliver hyper-localization of assortment for their customers. We teamed up to provide an in-depth look at hyper-localization and how companies are leveraging it to drive value in their organizations.

In-store personalization today means offering the products that are most relevant for the customers of that store. That doesn’t have to mean a unique set of products at every store; a large section of what’s offered can be standard across all stores and is often referred to as a core minimum assortment (CMA). Over and above the CMA, products can be selected for an assortment because of local relevance or an established customer preference. We call this hyper-localization.

Personalizing the customer experience via hyper-localization is increasingly important. Digital commerce has transformed the retail environment, adding a new layer of complexity to the path to purchase. With customer behavior changing more frequently, many retailers are adapting their merchandising strategies and processes to increase engagement with these always-on customers.

When evaluating whether your organization is ready to embrace hyper-localization, it’s important to understand the benefits to this approach, as well as the resources and process change required.

What are you trying to achieve?

Retailers that want to win in today’s hyper-competitive environment need to focus on personalizing the customer experience. Many retailers now have access to data about their core customer base – such as whether their customers are highly affluent or price sensitive, whether they have specific ethnic needs to be filled, etc. – that influence their shopping decisions across various store locations.

Using this data to establish exactly who your customers are will help you identify the types of product you should be selling. These valuable insights can then be used to inform your hyper-localization strategy, so you can deliver a better customer experience. Not only will this increase customer loyalty but will lead to more successful category plans that drive profitable sales growth.

Understand the barriers and enablers

Your hyper-localization approach needs to align with your overarching corporate strategy, so you can ensure that your head office, store operations and supply chain systems are in sync.

With hyper-localization, planners will need to switch out assortments more regularly to address customers’ changing needs. This is not something that can be handled manually; it would require retailers to substantially expand the size of their planning staff, a prospect that is often too expensive.

Instead, many retailers are using advanced assortment optimization technology, infused with customer data science, to automate their assortment planning processes. Not only are they able to deliver a more personalized experience but with a level of efficiency that’s not possible otherwise. Depending on the commitment to hyper-localization, retailers may also want to invest additional technology to automate the localization of their space and floor plans. Without the right systems, the whole process becomes even more complex, and quite possibly unworkable.

Because hyper-localization changes how planners work, change management is a key factor to success. Changing assortments will no longer be an annual process; instead, planners will need to check their planograms frequently to determine whether a new assortment plan is needed. In this case, commitment by senior executives to support new processes and develop a culture of planogram compliance will be essential.  

Also, your supply chain logistics will need to be evaluated and possibly adjusted to better support localized assortments. It’s important to consider how your warehousing assets and current supply chain partners can be used to best optimize your efficiency.

Hyper-localization at work

But to truly understand the value of hyper-localization, let’s look at how a leading grocery retailer is putting the strategy to work. The retailer recognized that its customers’ approach to shopping had started to change; they were increasingly connected via digital devices, had less time to shop and expected a personalized experience with an unprecedented amount of choice.

Meeting these changing needs with its current processes was a challenge. The retailer found that its periodic planogram reviews were not frequent enough to keep up with the rapid pace of new product introductions and discontinued items. In fact, its inability to adapt quickly enough was impacting its bottom line. In just the previous year, 3.2 million households – each averaging a 6.58 shopper visits per year – started shopping elsewhere, resulting in $1.2 billion in lost revenue for the company.

To combat this, the retailer started leveraging customer data science to personalize its store and digital experiences and drive a more local, personal and deeper relationship with its customers. As part of this process, the personalization science technology analyzed 200 million lines of customer data in each category to drive better customer insights, which were then fed into its assortment optimization technology, drastically improving the retailer’s assortments at the shelf.

By having its merchandising analytics integrated with its automated assortment planning technology, the time spent editing and revising planograms has been reduced from 6 weeks to just 60 minutes. This has made it possible for the retailer to drive deeper connections with its customers by delivering a more personalized and relevant shopping experience, both in store and online.  

Don’t forget, it’s all about the customer

There are several of the benefits of adopting a hyper-localization program – the most important of which is to improve your customers’ shopping experience. Many of the retailers we know are at some stage of this journey. For retailers looking for a competitive edge, being able to efficiently meet local market needs will become an increasingly important strategy.

Click here to learn more about how JDA and dunnhumby together are transforming category assortment and space planning.

This article originally appeared in the March 2019 edition of Material Handling & Logistics.

The other day I picked up my phone after having my unfulfilling Dukan diet-friendly lunch, and on autopilot, checked Facebook to see what I was missing. My newsfeed showed a promotion for some raw energy balls that looked pretty delicious. A quick bit of research confirmed they were Dukan compliant, but I couldn’t get them in my supermarket. No worries, Amazon could deliver them that evening – job done, my cravings resolved in 3 minutes flat… 

That amazing little slab of tech in my pocket turns me and every other mobile-enabled consumer into a super hero – transforming us into subject matter experts on absolutely everything, in an instant. I can make split-second purchase decisions and get everything delivered directly, often the very same day. The latest trends and products made ‘just for me’ are immediately accessible. 

If consumers find it difficult, time-consuming, costly or boring to find your product then brands have already lost the game. Even small, niche brands are able to put their message front of mind with relevant consumers, in the consideration phase, without them having to sift through irrelevant messages to discover an amazing new product that they didn’t know they even needed. 

This is fragmentation of the shopping journey through the eyes of the people; being served up information, through multiple channels, that meets their needs, regardless of how unique they are.

MORE products, MORE channels, MORE options – MORE complicated

Our consumers, customers, shoppers and users are making immediate, informed purchase decisions on the fly. The amount of information available at everyone’s fingertips means consumers are looking for brands to deliver beyond ‘product’, and authenticity and integrity are vital in order to cut through.

It’s fair to say that most products are now available through multiple channels and in a manner that suits our busy lifestyles. Compromising leisure time to shop isn’t a requirement any more, and the ease, simplicity and speed at which products can get into hands is key. 

If I want a packet of biscuits, the options available to me are mind-boggling. Large stores, small stores, discounters, cash-and-carry, delivered with my groceries, delivered solo, pick it up on the way home, direct from the brand, on a subscription. Each of these routes to market will be attractive to different consumer segments, but which are appealing to your most loyal shoppers? For brands to succeed in the face of increasing fragmentation, simplifying access is the way forward. Make the purchase easier with customer-driven options, by leveraging data to understand what matters most to specific consumer groups. A bit of legwork on the brand side will result in a happier, more loyal customer and secure their spend.

Why brands should care

The consumer base, routes to market and product offerings are all significantly more fragmented than ever before and are highly likely to keeping evolving. Consumers are now in charge and empowered to affect brand performance, no longer the requisite of marketeers sitting in a dark room. 

The implication is clear – if the consumer really is in the driving seat, steering products to success or failure, then brands must understand them better than ever before. Analysing their unmet needs at a granular level should be the driving force behind product innovation. Without a consumer-focus, innovation is wasted time and money. While consumers may not know what they’ll want next year, the brands that win will already be doing their research and have a pretty good idea. 

As media evolves to become more data-driven, programmatic’s role increases with importance. And we should know! It forms a key part of the many seamless media campaigns we create for brands and retailers around the world.

But programmatic is not always easy to understand. 1st party data? Open RTB? App funnel? MAUs? As the programmatic industry develops and the ecosystem changes, so does the lingo, acronyms and expressions. It can be challenging to figure out what each buzzword means. That’s why we’re giving you this: The Programmatic A to Z, a book to help marketers cut through the noise and discover the true value behind each term. Enjoy!

Die richtigen Preise sind wichtig. Doch noch wichtiger ist die richtige Preiswahrnehmung. Wenn Kunden nicht davon überzeugt sind, dass ein Einzelhändler angemessene Preise für die Produkte veranschlagt, die er verkauft, werden sie sich nach Alternativen umsehen. Allerdings ist die Preiswahrnehmung auch von vielen Faktoren abhängig, die mit dem eigentlichen Preis gar nichts zu tun haben. Eine repräsentative dunnhumby-Umfrage unter 3.000 deutschen Konsumenten hat gezeigt, dass es bei der Preiswahrnehmung nicht nur auf das Produkt ankommt. Entscheidend ist vor allem, auf welche Art das Produkt dem Kunden präsentiert wird – und die Bepreisung ist dabei von zentraler Bedeutung. Einzelhändler, die sich dabei geschickt auf die Erwartungen ihrer Kunden einstellen, können großen Einfluss auf deren Kaufentscheidungen nehmen. Darüber hinaus ist eine positive Preiswahrnehmung auch zentral, wenn es um die Frage geht, ob ein Kunde wiederkommt. Einzelhändler müssen wissen, dass der Preis an sich nur einer von zahlreichen Faktoren ist, aus denen sich die Preiswahrnehmung des Kunden zusammensetzt. Daraus ergeben sich viele Möglichkeiten, aber auch viele Fallstricke.

Der Preis ist mehr als nur eine Zahl

In der Regel werden Preise vor allem dann besonders positiv wahrgenommen, wenn Einzelhändler ihren Kunden zum Beispiel mit Treueprogrammen oder personalisierten Angeboten eine überzeugende Customer Experience liefern. Im Allgemeinen setzt diese sich aus den sieben Faktoren Basispreise, (personalisierte) Angebote, Sortiment, Eigenmarken/Hausmarken, Kommunikation und Einkaufserlebnis zusammen. Es zeigt sich also, dass nur ein kleiner Teil der Faktoren, die die Preiswahrnehmung beeinflussen, direkt mit dem Preis zusammenhängen – und dass es für Einzelhändler und deren Kunden nicht nur um Zahlen geht. Ein Einzelhändler, der seinen Kunden einen positiven Gesamteindruck bietet, kann davon ausgehen, dass auch seine Preise positiv wahrgenommen werden.

Was können Händler tun?

Dunnhumbys langjährige Zusammenarbeit mit Einzelhändlern und Marken aus aller Welt und auch die Ergebnisse der Studie haben gezeigt, worauf es den Kunden ankommt. Aus den bereits genannten Faktoren ergibt sich für Händler eine Reihe von Möglichkeiten, ihre Produkte effektiv zu bepreisen und damit großen Einfluss auf die Preiswahrnehmung ihrer Kunden zu nehmen.

1. Effektive Promotions durch Kundendaten
   Die meisten Promotion-Programme umfassen zu viele Produkte aus der gleichen Kategorie. Dadurch kommt es zu einem Kannibalismuseffekt, wodurch im schlechtesten Fall ein Produkt durch das andere verdrängt wird. Retailer sollten eine Analyse von Kunden- und Verhaltensdaten in Erwägung ziehen, aus der hervorgeht, welche Produkte auf welche Art vermarktet werden sollten.
    
2. Die besten Preise für die wichtigsten Produktlinien
   Jeder Einzelhändler sollte seine Schlüsselprodukte kennen und sich darüber im Klaren sein, dass das Pricing sich hier in besonderem Maße auf die Wahrnehmung der Kunden auswirkt. Daher lohnt es sich, für diese Produkte besonders niedrige Preise zu veranschlagen, was die allgemeine Preiswahrnehmung unabhängig von der Bepreisung des restlichen Sortiments positiv beeinflusst. Es ist wichtig, zu wissen, dass es dabei nicht immer um die großen Marken geht. Auch hier sind Kundendaten der Schlüssel.
    
3. Ein gutes Gefühl durch personalisierte Angebote
   Der Kunde möchte nicht einer von vielen sein. Man sollte ihm das Gefühl geben, genau zu wissen, was er in seiner individuellen Situation braucht. Vor diesem Hintergrund erweisen sich Promotions nach dem Gießkannenprinzip als ausgesprochen ineffizient. Stattdessen sollte man einen Teil des Budgets für personalisierte Angebote nutzen. Hierfür ist ein umfassender Einblick in das Profil des Kunden erforderlich.
    
4. Eigenmarken stehen für ein gutes Preis-Leistungs-Verhältnis
   Eine starke Eigenmarke, unter der alle Schlüsselprodukte in guter Qualität und Bepreisung als Alternative zu bekannten Marken angeboten werden, hat großen Einfluss auf die positive Preiswahrnehmung der Kunden.
    
5. Ein nachvollziehbares Angebot schafft Vertrauen
   Es ist wichtig, dem Kunden eine Auswahl verschiedener Produkte zum gleichen Preis anzubieten. Darüber hinaus erwarten Kunden große Gebinde mit besserem Preis-Leistungs-Verhältnis. Eine nachvollziehbare Preishierarchie mit einfachen Promo-Mechaniken wirkt sich ebenso positiv auf die Wahrnehmung aus. Vor allem dann, wenn ein sehr umfangreiches Sortiment vorhanden ist.
    

Im zweiten Teil dieser Blogserie werden wir tiefer in die Ergebnisse der dunnhumby-Umfrage eintauchen und einen Blick darauf werfen, worauf deutsche Konsumenten im Zusammenhang mit dem Preis besonders achten.

Why shoppers today are different, and how retailers can weather the changes 

Today’s shopper is drastically different than even just a decade ago. Contrary to the 1980’s and 90’s, when incomes were on the rise and Customers were demanding high quality, premium items; the new millennium brought about stagnant incomes, the housing bubble and the Great Recession. As Americans faced the harshest and longest lasting recession since the Great Depression, Customers’ attitudes, values, and preferences—particularly around money spend—had shifted greatly. The National Bureau of Economic Research (NBER) saw shoppers began saving by taking advantage of coupons, sales, private brands, and larger pack sizes, making more shopping trips, and shopping more at discount stores. 

A key question coming out of the recession was, “When will shoppers return to their pre-recession behaviors?” In 2019, after five years of robust economic growth, does the data show consumers shifting back to pre-recession behaviors, or are the consumer changes more permanent?

To address that question, we will look at the three most interesting behavioral changes from the NBER report:

1. Private brand sales
2. Shifting to discount retailers
3. Making more trips

Private Brand

According to Nielsen, private brand’s share of the market grew from 16.2% in 2009 to 18.0% in 2017 (source: Nielsen). This is a sizable chunk of the $682 billion grocery market (source: Nielsen TDLinx and Progressive Grocer).

Private brands have also grown faster than branded products from 2013-2017, when the private brand CAGR was 2.0% versus 1.2% for branded products. And the YOY number (2016 vs 2017) was 3.0% for private brand and -0.5% for branded products.

Discount Retailers

Looking at the top 10 fastest growing banners for grocery sales* since the Great Recession, five are price focused or discount retailers: Walmart Neighborhood, Dollar Tree, Aldi, Dollar General, and Winco Foods. Sprouts and Trader Joe’s are not discounters but are known for the best prices within the premium segment. The Fresh Market is the only true premium banner, while Albertson’s made the list because of an acquisition.

*(source: Planet Retail grocery sales. Filtered by banners exceeding $1 billion in 2018 grocery revenue)

Moreover, since the Great Recession, fewer people define the traditional supermarket as their primary place to shop. FMI data shows a 12-percentage point decline since the Great Recession. And immediately following the 2009 recession, it dropped 5 percentage points as people explored lower cost channels. 

More trips

More trips opened the door to visiting multiple retailers, allowing shoppers to find their preferred combination of price, quality, and store experience. In recent years, visits have fallen somewhat, but the number of channels and retailers visited continues to grow, according to the Food Marketing Institute (FMI). In fact, it’s grown by almost 20% since 2015. Moreover, FMI, along with dunnhumby’s RPI, (we should link this here) finds that the average household visits about four different retailers in a month (source: FMI Grocery Trends 2018).

When will pre-recession behaviour return?

The evidence suggests that much of this price-conscious behaviour continues into 2019 and will likely persist for many more years. Private brand will likely continue to strengthen as Aldi, Lidl, Costco, and Trader Joe’s continue growing. Many retailers are realizing that a strong private brand is key to their success, as it drives differentiation, improves value perceptions, and builds the overall retailer’s brand.

Shoppers are also likely to continue shifting toward discounters, particularly for the commodity categories and items. Ecommerce will also make it easier by buying commodity items from low-cost providers. Lastly, Brick and Mortar visits could continue to fall as Ecommerce gains share and shopping multiple banners will likely continue as the market continues to fragment and specialize.

What does this mean for traditional supermarkets? 

The key takeaway? We think about value differently since the Great Recession. Perceived value is the combination of our perceptions of quality and price. Before the recession, value was driven more by quality, but since the recession, it’s driven more by price. Quality is still important, but when deciding to take action, retailers must carefully consider how those changes will impact price perceptions. 

For example, many regional retailers think they can differentiate themselves by moving more upmarket, either more premium and/or more natural/organic. Still others think that becoming more digital and multichannel is the answer. In both instances, retailers should understand how these changes will impact both quality and price perceptions. In today’s post-recession market where shoppers’ price anchors are increasingly influenced by Walmart, Costco, and Aldi, significant reductions in price perception must be countered by significant improvements in quality perceptions. Moreover, if a retailer’s footprint covers lower, middle, and higher income markets, it is not likely that the quality improvements will exceed the lower price perceptions. If a retailer wants to move more upmarket, targeted real estate becomes essential for success.

This also holds for digital and eCommerce. Will the benefits exceed the costs? eCommerce often requires fees or increased prices to cover the incremental costs. Does the improvement in quality exceed the hit to price? Dozens of grocery retailers believe it does, while one of the most successful--Trader Joe’s--recently cancelled their eCommerce pilot because they felt the added costs exceeded the benefits.

What can traditional supermarkets do to improve value perceptions? 

The good news is that several factors can shape value perceptions besides investing in price. dunnhumby research finds that about one-third to half of a banner’s value perception is impacted by base price – meaning that there are other areas that contribute. The most effective method is to layer lower prices with changes in assortment, merchandising, and store experience, and then tell your customers about these changes with carefully crafted messages.
 
The first step is to build a highly efficient organization. Efficiency and keeping costs low are essential for any retailer to compete in today’s market. This is seemingly quite obvious but getting there can be painful. Labor is a big cost. Do you really need someone behind that counter?  Trader Joe’s, Costco, and Walmart are almost exclusively self-serve. How about ready-to-eat foods? This department can also be very costly, so do the benefits exceed the costs? Trader Joe’s has minimal fresh prepared foods but fills that vacuum with high-quality frozen prepared foods that are easy to prepare. This reduces shrink and maximizes profit.

Of course, the pricing blocking and tackling plays a role. The high-volume items play a bigger role in price perception than the lower volume items. Are these higher volume items priced competitively? Could you increase prices on lower volume items? What about entry level price points or the minimum and maximum gap across the category? Lower entry price points and smaller gaps have both been shown to improve price perceptions.  
 
Assortment and merchandising can also affect value perceptions. How much variety is on the shelf? Are there opportunities to simplify the SKU? Research has shown that too many choices can negatively impact variety perceptions and reduce the likelihood of purchase. How is the store merchandised? What products occupy endcaps? High volume, competitively priced items or less relevant overstocked items? What’s at eye-level on the shelf? Is this filled with your key value items or expensive premium and natural/organic items? What do customers see when they shop your store?

Private brand is also a key element within assortment and is unique in impacting both quality and price. On the quality side, it can uniquely help differentiate the overall brand by providing products that can only be found at your store. They have your logo on them and are the quickest way to build overall brand equity. There is also an opportunity to aggressively price these items, defending you against the more price-focused banners. And once you have a strong private brand, those items can occupy your end caps and prime space throughout the store.

The fact of the matter is, today’s consumers are different. So how can you adjust your value proposition to better align with the fundamental shifts? Of course, there is no silver bullet, but a review of which banners are succeeding, and which ones aren’t, is a clear indicator of what works and what doesn’t. In the meantime -- recalling a fictional storm memorialized in film -- we are clearly not in Kansas anymore. Nor are we likely to ever return. There's a new normal in retail, and the smartest players are adjusting to the realities. For more on who is succeeding, see our most recent Retailer Preference Index report. 

Retail media is changing the game and will quickly become a core element of many retailers’ business strategies. So it’s important for retailers to understand the scope this opportunity creates for their own business (and how much revenue could be coming their way).

But it’s not an easy thing to measure, which is why we’ve created our media revenue calculator, which can help retailers understand the extent of their media opportunity.

Based on our years of experience working with retailers and deep retail market research, we believe that retailers can generate media revenue equivalent to 1% of their total retail sales– which can translate into a 10% increase in profit.

Our calculator can help retailers understand the level of revenue their business can achieve, based on a number of factors. Below are the factors we deem as most influential on the impact of the size of the prize:  

• Percentage of branded sales: retailers which have a higher percentage of branded products have a larger pool of potential advertisers to sell to. A discounter with a large % of own-label brands will not be able to generate as much media revenue as a premium brand-heavy retailer.

• Multichannel presence: a lot of the value in media comes from the capacity to reach customers seamlessly across different channels. The more diversified the assets (e.g. online and offline), the greater the revenue potential.

• Media coverage: the monetisation potential depends on how much coverage a retailer is ready to give to advertising. Whether the retailer opts for a minimal number of ads or a more media-rich experience will affect the revenue potential. Put simply, the question here is how important is advertising in the global strategy? 

• Brand creative freedom: brands will pay more if they are not limited by strict creative guidelines.

• Data maturity: being able to personalise content to customers wherever they are is hugely valuable to advertisers. And this relies on having the right data capabilities in place. A retailer with a fully integrated data capture will be able to target customers across channels and devices and measure the true impact of campaigns, which will add value to their media offering.

The algorithm has been finely tuned using our 30 years’ experience in retail, however the revenue figure displayed is not guaranteed as each retailer is different and there are various elements that can impact the potential level of monetisation.

To receive a more accurate estimate, contact us for a fuller consultation and monetisation healthcheck.

Retailers and brands are facing a double whammy of keeping sales and profits buoyant, while facing a period of unprecedented change with an explosion of new market entrants. Many are seeking new ways to create revenue. This month for our 3-minute interview, we talked to Sandrine Devy, Global Manufacturer Practice Managing Director to learn more about why retailers should be monetising their data, how brands can benefit, and what they need in place to make this happen.

With current pressures in the retail landscape, what factors do you think brands and retailers need to prioritise more than ever?

With grocery channels under pressure, driving growth, creating efficiencies and developing new revenue through monetisation are the 3 main areas of focus for retailers and brands (make, save and find money).

Today, one quarter of the top 250 retailers in the world are monetising their Customer Data through insights (many more are doing so with their Sales Data), generating direct income of an estimated £320m from their supplier base. This has grown by 40% in the last two years and we estimate it will double in the next three years – not just by the number of retailers, but by revenue per retailer as well.

Retailers who are not currently thinking about monetising their data and media assets are in danger of missing this opportunity to secure additional income outside their core grocery sales business. But more importantly, they are missing an opportunity to gain wider benefit from Customer-First retailing by aligning their suppliers to this way of doing business.

In developing markets, where sales are still growing, retailers and brands really have to structure their category management approach to become more Customer-First focused. When a business understands the Customer and activates against their needs, they’ll not only be more responsive to changes in consumer behaviour, they’ll improve the Customer experience and generate long term loyalty. This type of operating model creates a platform for sustainable, strategic growth. And the best way to maximize this is to engage suppliers through insights, focusing the collaboration on what matters most to Customers in categories.

In mature markets, where sales growth is more limited, many retailers and brands will need to focus firmly on efficiencies. The challenge here is around promotions, and how to optimise them - driving more sales from a smaller investment. While promotions are already a key element in the relationship between retailers and their suppliers, analysis of their true performance generally suffers from lack of transparency.

What are the key things retailers need to address for monetisation?  What are the main barriers?

There are a couple of ingredients which are vital for launching successful monetisation strategies. First is having the right data to monetise. EPOS (electronic point of sale) data is not enough nowadays, but loyalty card data or tokenised data which enables richer insights on actual Customer level purchase behaviour is the way forward.

Secondly, and in some ways more importantly, if a business does not have the will to change the cultural mindset to become data-driven, then monetisation will fail. And changing the culture of a business is not a simple task – it requires total and absolute commitment from the top-down and bottom-up to drive a change in attitude and processes.

So while having a direct Customer data feed is paramount for any monetisation strategy, for it to be sustainable, the business must adopt a Customer-First approach to decision making. If you fail to consider the impact of your monetisation approach on your Customer experience, then you risk losing the very asset that’s driving the revenue – your Customers. Business decisions should be made to improve Customer experience in equal measure as to drive revenue; the two are not mutually exclusive.

And lastly, the retailer must have the desire to collaborate with their suppliers in a transparent way that creates a working relationship for shared success. The ultimate goal for both parties should be improving the Customer experience to grow sales.

Tell us a little bit about how the Manufacturer Practice team at dunnhumby helps clients win.

Most brands and manufacturers are one step removed from their shoppers, as generally the retailer owns the relationship with the Customer. We help manufacturers collaborate more effectively with retailers, giving them deeper knowledge of shopper behaviours, so they can understand which new products work best, which ranges should be put in which stores to be Customer relevant, and which promotions are most effective to optimise sales and profits. And the starting point of this is to define and agree the collaboration framework with our retail partners.

What are your retail trend predictions for the next 12 months?

Brands, especially bigger brands, may lose out as consumers turn from global to local, seeking out niche products, looking for more personalised, relevant experiences from the brands they love. Understanding Customer needs more deeply will become increasingly important to brands as they need to adjust their strategies to engage on a personal level.

More retailers will monetise their Customer Data and their media assets. Doing both – media and insights - simultaneously will provide added value to retailers (and their suppliers), as the optimum way to improve the Customer experience in a relevant and engaging way, rather than just acting as a mechanism for generating extra income. 

And finally, trade and promotions planning will become increasingly automated, especially in mature markets, driving massive efficiencies in the industry and allowing more time and investment to be directed towards new product development, proposition and experience development, to support changing Customer needs.

One year ago, the introduction of the General Data Protection Regulation (GDPR) in Europe was a game-changer for brands and retailers.

Some outcomes were largely predictable. As last year’s launch date approached, companies were always going to be scrambling to get their houses in order. No crystal ball was needed to forewarn of a steep rise in reported data breaches once the legislation was in place. And it was a fairly safe bet that someone was going to be slapped with a big fine – Google, as it happened.

So much for the expected; what about the unexpected? Here are four ‘who-would-have-thought?’ revelations from the first year of GDPR.

1. Retailers in other countries actually want GDPR

We’d always anticipated a ‘domino effect’ once GDPR launched in Europe, with other countries adopting equivalent legislation. What we hadn’t expected was retailers in non-GDPR countries approaching us for help in adhering to the new rules.

Some simply want to get ahead of legislation that’s in the pipeline within their market. Others view adoption of best practice data privacy as an essential brand value – part of building their reputation. But interestingly, it seems that the EU’s GDPR has provided the rest of the world with a handy pick-up-and-use set of rules that gives businesses a defensible position for their handling of data privacy.

2. With privacy, there's no such thing as done

Privacy isn’t a milestone to be cleared and then forgotten about. In EU terms it is a fundamental human right requiring an ongoing ecosystem of policies, processes and controls that businesses need to manage. Risk assessment in particular has to be continual – even if you’re good today, are you good tomorrow? Putting this ecosystem into practice systematically across an entire organisation is hard even for those with the most resources, and anecdotally, it seems many organisations are experiencing challenges.

Two areas that businesses really need to stay on top of are:

• Moving goal posts: The law will keep evolving, especially as case law emerges and regulator guidance is published. Processes and controls have to move in step with these changes.
• Basic governance: Every change you make to your technology and services, even the mundane – a tweak to your loyalty programme, for example – means you’ve got to ask, ‘How does this affect privacy?’. You need the controls in place to spot these changes and then the resources available to assess them quickly.   

3. Privacy tech isn’t a magic bullet

According to iapp’s 2018 Privacy Tech Vendor Report, the privacy software industry has more than doubled over the past year. But these tools are still in the development stage, at best. And companies who’ve invested in them are finding that either the software lacks functionality, or their teams are struggling to use it effectively. Good privacy compliance relies on good processes, and there’s no short-cut for it.

4. The ad-tech industry is now stuck between a rock and a hard place

GDPR doesn’t fully cover ePrivacy – the EU rules governing permission-based online marketing through channels such as emails and cookie-powered internet ads. Updated legislation in the form of an ePrivacy Regulation is anticipated but could take another year or more to be finalised. Until it arrives, companies are unsure whether to use GDPR as the yardstick, follow the latest draft legislation (which is the subject of heavy lobbying and could undergo significant change), use industry-created compliance frameworks– or wait and see what happens. To add further complexity, there have been some tricky privacy complaints made to regulators about the industry; both the UK and Irish data protection authorities are now investigating. All in all, it’s a time of deep uncertainty for the digital ad-tech market.

So it’s probably safe to say that it will be two to three years before most companies are fully up to speed. Many happy returns, GDPR.

Retailers the world over are facing revenue woes. According to Deloitte’s Global Powers of Retailing 2018 study, Europe’s share of the Top 250 global retailer’s revenues has dipped from 39.4 per cent to 33.8 per cent since 2006.  

In the UK, retailers’ profits have slumped more than a third in the past 11 years despite a 50 per cent rise in sales, and in France, the three largest retailers - Auchan, Carrefour and Casino - have all struggled to sustain consistent growth.

In the current climate, some retailers may struggle to see beyond the tightening margins and rising costs. However, all is not lost for retail - now is the moment retailers should be capitalising on untapped revenue potential from their unique media assets.

Putting the process into action

It’s already well known within the industry is that shopping is fragmented and there’s a lack of information about the return on investment of marketing contributions. The good news is that by using their own vast and valuable customer data - largely related to habits and historical purchases - and loyalty programme data, retailers are in the perfect position to create a virtuous circle of rich data assets telling them where, when, what and how customers shop.

This new approach coupled with online and in-store media inventory, gives both retailers and their suppliers the ability to close the loop between media channels and in-store sales. This creates a more tailored approach to communication with new and repeat customers, and ultimately, the opportunity to grow their businesses.

Through extensive research using dunnhumby media’s Revenue Calculator - a tool that enables retailers to estimate their media revenue potential - it’s been calculated that retailers around the world have the opportunity to generate an additional 1% of their retail sales with media. This is worth £1.7bn of hidden revenues for UK retailers and equivalent to £11bn across the EMEA region.

There’s money in media

We’ve already started to see a shift where retailers are taking on the role of the publisher, generating revenue through their owned media assets.

By selling advertising space on its own site to merchants, Amazon has ultimately doubled profits and shifted a massive amount of advertising dollars away from digital power houses, Google and Facebook. Walmart is doing the same. By moving its website ad sales in-house, the retail giant has been able to accelerate Walmart Media Group to the top of the retail media sector - potentially adding over $2bn of digital ad sales within the next few years. But revenues from digital media are really just the tip of the iceberg as retailers can also monetise their in-store media assets.

So why haven’t retailers been snapping up this revenue?

The simple answer? It’s not an easy feat to get it to a place where it works perfectly. To build a successful media business, retailers must:

• Have a clear strategy for media: Understand what role your media assets should play within your overall customer strategy. This should guide your thinking on the skills and technology required to create the business and what is critical to outsource vs. bring in-house, enabling you to invest in the right areas. 

• Know where to start: Creating a new business model can be daunting, particularly for larger retailers who may be grappling with vast amounts of data, siloed teams and legacy systems. Working with data and technology partners can be helpful in identifying the best approach and getting the process off the ground, properly planning each layer of the business and each phase of deployment.

• Have a plan and processes for reducing operational complexity: Many potential media clients are selling product to the retailer, so creating a two-sided business requires support. A winning formula is for retailers to develop a transparent, simple model for working with their media partners. This way retailers will work more closely with suppliers helping them grow sales and drive loyalty by giving consumers a better and more personalised shopping experience.

With so much pressure on the retail industry to find new sources of revenue, it’s likely that we’ll see many recommendations around ‘saving the high street’, but the simple truth is that retailers cannot do it alone – and the role of the future high street will be shaped by the changing demands of consumers.  In order to monetise owned media and see success, retailers and suppliers must all work together towards shared customer and category objectives while thinking about supporting the shopper journey through retail estate and the return on investment.

In the end, not all retailers and advertisers will get the balance right, but if they do, they are poised to be the winners in the race to secure sustainable future retail revenue.

Most retailers have ever-growing volumes of data about their customers’ shopping habits. And in the current tough trading environment, many of them are looking at how they can turn this valuable data into new revenue.

But there are different ways of approaching data monetisation. Some retailers see it simply as an easy way to get a bit of extra money coming in – and of course, in these times of lean margins and challenges from new sales channels, the opportunity to generate additional income can’t be ignored. However, taking the wrong approach to monetising your data could put your asset at risk.

To create a sustainable data monetisation strategy, the retailer must put the ‘Customer First’. This means activating the insight with their suppliers to improve the shopping experience for the customer. Too often the temptation is to only focus on generation of new revenue, resulting in commoditisation of the most valuable asset: the customer data itself.

Handled smartly, your data to be an enabler for longer-term strategic growth through facilitating collaborative processes with suppliers – much more beneficial than treating it as a commodity for short term revenue gain.

Beyond additional revenue, here are six benefits a well thought-out data monetisation strategy can provide.

1. A way to put customers first. By understanding what they’re looking for, when, why and at what price, retailers and CPGs can work together to better serve their customers. Because if they don’t, someone else will.

2. A common language that retailers and their suppliers can use to talk about customer insights and how to make use of them.

3. Greater transparency and trust between retailers and brands, because they’re looking at the same insights and can use a shared metric for success. 

4. Better category management. Data-driven activations can help make sure the products on shelf are what customers want in a given category. It also helps guarantee products are well positioned, both within the store and in the aisle, so it’s easier for shoppers to find the products they want to put in their baskets. And by improving the shopper experience, retailers can grow category sales through greater customer loyalty.  

5. Better management of promotions, by using data to make them more relevant. Retailers and CPGs can work together to make sure promotions are relevant to customers in terms of the products chosen to promote and how, plus the ‘where’ and ‘when’ of how they are promoted. And if necessary, ineffective promotions can be scrapped.

6. A way to grow sales. With category and promotions working effectively, and customers getting a better experience, sales growth is much more achievable, even in a difficult market.

Across 23 markets, 62 major retailers already monetise their data – a 40% increase from two years ago. Estimates suggest that the market will double in the next three years, both in terms of the number of retailers monetising and the revenue each retailer will earn.

And no wonder. With customers getting more of what they want, and retailers and CPGs getting the sales growth they need, data monetisation really can be the road to a genuine win-win-win situation.

Ready to monetise?

Data monetisation represents a huge opportunity for retailers. But to turn data into sales growth, you need to get the most important factors absolutely right:

• Data– success relies on good customer level data, ideally through a loyalty scheme or tokenised sales data.
• Culture– retailers either need an existing ‘customer first’ culture, or the desire to establish one.
• People and skills– retailers will need people who can focus on driving the initiative.
• Technology and infrastructure– to enable effective access and utilisation of customer data.

In today’s market, the retailers who are seeing success are those who are putting their customers first. When your customer data is at the centre of your operations, it enables better decision making and better collaboration with your suppliers. And today’s increasingly savvy customers are spotting when their needs are not being prioritised – and taking their baskets elsewhere.

Want to learn more about kick-starting your monetisation strategy? Download our on-demand webinar:The Retail Monetisation Revolution

Historically, Customer-First hasn’t been the first term to come to mind when advertisers and publishers plan their programmatic advertising strategies. According to the Coalition for Better Ads (CBA), “the online ad experience has sometimes fallen short of consumers’ expectations, as indicated in part by the emergence of ad blocking”. While this is primarily attributed to intrusive or malicious advertising techniques, a survey by eMarketer last year indicated another likely reason – internet users simply want ads to be “more attractive to look at”. [1]

The industry’s evolution

The industry saw a 41% increase in ad blocker usage[2] in 2015, and knew it had to adapt. That year, in response, the IAB announced their LEAN principles (Lightweight, Encryption, Allowing choice, Non-invasive ads) in an effort to raise the standards of digital advertising for consumers. Hot on the heels came the launch of the CBA in the US, a group with a mission to produce a minimum standard for digital ads around the world. To champion both of these initiatives, the IAB UK released their IAB Gold Standard Certification in late 2017, further cementing the importance the industry was placing on consumer experience.

Consumers took note. In December 2018, eMarketer reported that ad blocking that year had increased at a slower pace than initially predicted. However, they also warned that disruptive and intrusive advertising was still pervasive. Publishers and advertisers using these techniques had little incentive to cease the practice as it typically yielded higher click-through rates. The logical outcome of this, as Nielsen confirmed is that “Users who are deceived into clicking on a misleading ad might drive up your CTR, but they're unlikely to convert into paying customers”.[3]

To ensure their ads are attractive to consumers, increasing the likelihood of conversion, advertisers should adhere to the following initiatives when designing digital ad concepts.

Three Customer-First creative considerations

1. LEAN & CBA principles

Ensure your creatives are LEAN and avoid any formats that “fall beneath a threshold of consumer acceptability” as dictated by the CBA.

What is ‘LEAN’?
 

  Lightweight

Securing a minimal CPU (Central Processing Unit) load (30% max, with 30% less recommended for slow internet connections) as well as initial, sub and user-initiated file loads. IAB technical Guidelines can be found here and concise advertiser recommendations can be found here.

Encryption (HTTPS)

Using encryption to improve online security and help prevent issues such as malware.

Allowing Choice (adChoices, Transparency & Consent Framework)

The inclusion of adChoices, represented by an interactive symbol on advertisements, which provides users with greater transparency and control over online behavioural advertising.

Non-invasive ads (Coalition for Better Ads)

Avoiding ad formats which have been proven to elicit a negative user experience.

2. Acknowledging Web Accessibility

Make adverts more accessible. Around 6.1 million internet users in the UK have impairments that affect the way they use the internet[4]. Undervaluing or ignoring web standards could mean your ads aren’t reaching key customers.

Web accessibility encompasses all disabilities that affect access to the internet including: Auditory, cognitive, neurological, physical, speech, and visual.

To make an advert more accessible, consider keeping the contrast ratio over 7:1 and the font size above 10pt. Want to know more? Check out the UK Government infographics on easy ways to become more accessible.

3. Sequential messaging and consistency

Focus on sequential messaging and ensure creatives match their designated landing pages in order to create a consistent customer journey and instil trust.

By tailoring the messaging and utilising the full breadth of formats (such as Dynamic, Static, Native, HTML5, and Video), advertisers can specifically target the upper, mid and/or lower funnel. For example, to target the upper funnel, advertisers could consider using overlays in conjunction with dynamic ads to create powerful brand statements or new customer promotions.

Onwards and upwards

While the ad tech industry has taken action to improve the customer experience through new standards and certifications, for these to have full effect, it’s imperative that advertisers adopt these changes quickly, or risk further erosion of customer trust in digital advertising.

To improve the impact of your digital adverts, check out dunnhumby media’s new Programmatic Creative Guidelines for recommended ad specifications and tips for making the most of each creative format.