Friday, July 17, 2009

*Updated* Keynote Panel Discussion: Shopper-Centric Strategies for Convenience-Stores

Videoclip Below

Sonja Matthews, Director of Customer Strategies & Insights, PEPSICO
John Dranow, President & CEO, SmartRevenue
Dard Neuman, Ph.D., SVP, SmartRevenue

John Dranow begins our discussion today discussion with, “A targeted revenue strategy begins with knowing where the purchase decision is made.” Thinking about the consumer, the shopper, what decisions are made pre-store and what decisions are made in-store.
At SmartRevenue, they are “passionate about data” looking to quantitive ethnography as it merges multiple streams of data to deliver differentiated and integrated insights, strategies and solutions. Its important to quantify our wins, it has to do with identifying conversion percentage. How many people go in to the store and leave without a purchase? What is the potential dollar amount that you could spend to change that? Remember, what people say and what people do is entirely contradictory.
Moving on to PepsiCo, why is there such a focus on convenience store?
There are 135,000 convenience store locations. Thanks to research that c-stores are actually a place for an oasis and a place for refueling—its air-conditioning, it has food and beverages—and it has gambling. But convenience stores are at risk, house hold penetration of convenience stores go down about two points per year. Also, there is channel blurring, other formats are targeting c-store shoppers (drug, dollar and grocery). On the upside, there is about 15-20% revenue that could be pumped to the store. It’s a big brand hit, 4.5B hits, with brand loyal customers (Mountain Dew is top seller at c-stores).
How do you make coolers cooler?
How do people shop for beverages in the store? (Their movement, products considered and the browse vs. buy differences).
Going on a fact-finding mission, SmartRevenue and PepsiCo went into 80 different convenience stores to watch customers.
Most of the decision making happens within 15 seconds of the final purchase decision. Shopper decision trees require knowing what drives a shopper to a category and to a specific product.
Need states: What drives a shopper to the shelf?
• “I am thirsty”
• “I need something to give me energy”
• “I need something to help me relax”
• “I want a drink with nutritional value”
Purchase Drivers: What is important when selecting a specific product?
• “I like to try something new or different”
• “I trust this brand”
• “Low calories”
• “The packaging caught my eye”
It’s important as we get into the behavior of the shopper to understand how important it is to connect needs and drivers to products. This tells the story of how shoppers make their decisions at the shelf. Also, purchase driver based segmentation provides a clear insights for targeting shoppers and understanding attitudinal and behavioral differences is the key to targeting shoppers where they live in store. From brand affiliation to variety shoppers, its all about understanding the differences and similarities that customers have when going to a c-store.

Insights to Action
• Define shopper behaviors and expectations
• Quantify the unproductive browsers
• Build a path to increased sales and happier shoppers

It takes about 12 seconds for customers to select a beverage, and if it takes longer they don’t find what they are looking for but it translates to the shopper not purchasing other items. Shoppers are working too hard to find and make selection in the cold vault. People open the doors to pick up and look at the bottles; put the bottles back not purchasing it and opening cooler to look at the back of the packaging of a particular product. Today’s speakers call this the “cooler mambo.”

12% of folks who came to the cold vault and interacted with it did not purchase a beverage.
• They couldn’t find the brand
• They couldn’t find a particular flavor
• Product was not cold enough to purchase

We have the possibility of increasing sales, for every 10% reduction in walkaway rate; there is a $250M in incremental sales for retailers.

It’s important to recognize that 57% of buyers plan ahead for their beverage purchase, while 43% of buyers are undecided on which beverage to purchase. Juice is the highest impulse item and beer is the lowest impulse purchase.
85% of purchases made in c-store are for immediate consumption and 70% of shoppers in c-stores are male.


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