The dynamics that drive the shopper journey are shifting, expanding the power of shopper marketing to drive sales.
A brittle supply chain, along with the rise of e-commerce and Retail Media Networks (RMNs), are prompting a shift in national ad budgets. Digital Grocer reports online grocery sales will grow at 4.5% over the next five years and RMNs may represent as much as $100 billion in spending by 2026, according to McKinsey. But dollars are not moving equally, with smaller chains losing out to Big Box stores and larger retail chains that have inventory to promote.
This comes at a time when inflation is sharpening consumer focus on item and basket price over product benefit and features. So far, pass-through costs have had surprising elasticity, but shoppers are reaching a breaking point as price hikes hit across the board—from gas to the grocery aisles.
In this environment, grocers run the risk of losing market share as shoppers look at every option to make their dollar stretch. During the pandemic, shoppers became more comfortable with buying groceries online and picking them up in store or opting for direct to driveway (D2D). They’ve also become more open to an overwhelming array of grocery subscription models and other direct-to-consumer options.
Now inflation is nudging shoppers back into the store. Avoiding delivery costs and additional fees is overriding their COVID-19 fears, although high fuel prices likely mean they’ll visit fewer stores in search of the best price. This creates the opportunity to expand the “in-store” experience and use promotional dollars to shore up loyalty as shoppers cull where and how they buy their groceries.
How is Shopper Marketing evolving?
Shopper marketing has traditionally focused on the in-store experience --how consumers encounter a product in the aisle and decide whether to place it in their carts. Common tactics include physical media blades, shelf talkers, sign kits, and floor graphics.
The new definition explodes that notion. Today’s shopper marketing puts the consumer at the center of an omni-channel experience that aims to reach them whenever and wherever they are considering a purchase—on retailer websites and apps, in-store, and across digital channels. Omni-channel shoppers tend to spend more and be more loyal and prolific, according to Symphony RetailAI. Online-shopping household penetration is up 60% over pre-pandemic levels, they say.
These shifts mean dollars for ecommerce shopper marketing are blending with those for performance and even brand media. Messaging moves across channels to build awareness, drive in-store purchases, or focus on price promotion of a new product launch. There are no incremental dollars for the overall shopper marketing budget; instead, spending is becoming more diffused as the line between RMNs and national ad budgets blurs.
In response, many CPG marketers are establishing joint business partnerships (JBPs), where they agree to a spend a specific amount of dollars with a retailer across a specific number of brands in a set amount of time.
Managing dozens of these relationships and measuring the aggregate performance of fragmented national budgets across platforms has become a big challenge. The role of the shopper marketing manager is evolving as confusion grows about who owns the shopper relationship. Launching a new item nationally now starts to look different across retailers who may view – and engage with - their shoppers differently. RMNs add complexity as diverse vendors expand their ability to deliver a personalized shopping experience across channels.
CPG marketers are looking for efficient strategies based on sustainable insights and investments. They’ve begun asking retailers:
How do you keep track of which channel prompted purchase from what customer profile within your retail ecosystem?
How do you determine what percentage of which budget paid for what promotion?
The value of actionable real-time, deterministic insights
To reach shoppers wherever they are, many retailers are turning to Shopper Marketing data experts to improve the quality of their data. They can help aggregate purchase data from shopper loyalty cards or surveys and enhance it with insights about their behavior outside of your store. They can also look beyond demographics to analyze data on ingredient preferences, price sensitivity, media consumption, and geolocation household panels.
For example, Catalina worked with a brand on a shoppable media and in-store activation campaign to drive conversion, value, and gain new buyers in both channels. They targeted existing and new brand buyers across desktop, mobile web, and mobile app.
Retailers can also use this data to see the complete path to purchase—understanding not only what’s happening at your store, but also how and when shoppers engage outside your ecosystem.
You can then efficiently respond to your shoppers based on lifestyle and category insights, seeing real-time behavioral and transaction data on anonymized individual shoppers. Data can reveal the granular differences between gluten-free and organic food buyers or uncover the differences between brand loyalists and switchers. By better understanding media consumption habits, you can identify what channel will most likely convert to a sale.
Reaching your most valuable shoppers
“Personalized shopper experiences from retailers need fine-tuning, instead of making the customer do all of the work,” said Wes Bean, U.S. Chief Retail Officer, Catalina. “Talk to them, listen, learn, then respond at scale.”
As part of your digital shopper marketing strategy, you can use Catalina’s Price Promoter to push your top deals to your shopper’s favorite digital channels and pull in new shoppers with relevant deals. You can work with CPG brands to curate customized category, seasonal, or themed trade promotions directly from a weekly digital circular. This solution delivers localized pricing, maximizes your investment and extends reach.
Catalina’s Trip Driver also is hyper-targeted for your best deals to meet your best buyers—reaching them at home and on the go. You can use this interactive creative unit to promote longer-lasting deals and drive sales with automatically delivered reminders as shoppers enter your store.
You can also use responsive marketing solutions to deliver more personalized experiences that hit your campaign objectives most efficiently by effectively aggregating marketing investments across multiple media channels. You can easily dial promotions up or down through sequential marketing, retargeting, and audience suppression. The result is a customer experience that removes friction and consumer frustration.
For example, Catalina worked with Applegate Natural & Organic Meats on a custom, sequential omni-channel campaign that aimed to acquire new triers, bring back lapsed and competitive buyers, and defend its own users. To make ad dollars stretch they suppressed an offer to those who have already purchased an item or incentivized those who hadn’t after they have been exposed to brand advertising a set number of times. The campaign’s 27MM ad impressions and in-store sequential offers drove a 42% increase in dollars per trip for existing buyers, a 25% sales lift, and an incremental increase in Return on Ad Spend (ROAS) of $2.13.
How to Improve Your Shopper Marketing Solutions for CPG Brands
“Ultimately, retailers will need to make structural, foundational changes to answer these questions. The quest for scalable, measurable solutions in this environment will become one of the toughest growing pains for CPG marketing over the last 25 years,” said Catalina’s Wes Bean.
Wallet-tightening will likely be the status quo well into 2023—for shoppers, retailers, and brands. CPG marketers want to know that their in-store media investment is working efficiently. To respond, retailers should consider working with a measurement expert that can track performance across all channels, all CPG retailers, and all your own stores.
With RMNs, retailers are becoming accountable to measure performance and share insights that can help marketers optimize the media mix of their ad spend by focusing on the audiences and channels that deliver the best results given their brand objectives.
Look for tools that can help you:
- Benchmark your store against the competition
- Identify real-time, actionable insights at the UPC level
- Measure what’s working – and what’s not
- Switch up the offer in real time or readjust an audience definition
- Optimize the media mix inflight based on actual sales data versus digital KPIs
To learn more about analytical resources and measurement tools that can help you strengthen your relationships to CPG brands, reach out to us.