Taking a customer-centric approach, Jeff's experience is similar to millions of customers that are feeling more open and willing to experiment and try a store brand item. To the extent customers have the same "better than I expected" response as Jeff did to the trial, store brand share will improve. Store brands compete for the mind of the customer and if the underlying quality is there, gaining trial is the secret sauce in their long term growth.
The problem with most personalization is the mindset of using the data to sell something as opposed to serving the customer. Customers don't want companies to market to them better, they want them to leverage what they know to make it easy for them to get what they want. Adapting the timing of sending emails may feel like personalization because it is using customer response data, but is it really making anything better for the customer?
The time to be customer-centric is when designing what personalization should look like. What would YOU genuinely like to see a brand or retailer do to make your experience better or make it easier for you to buy from them? When you adopt the approach that a customer's purchase and browsing history can be leveraged to serve the customer, it opens up a whole new set of ways to leverage your data. It's also the kind of personalization that connects with customers and drives sales and loyalty.
Both messages will resonate with customers because they are not simply price messages. They are message of empathy that demonstrate an understanding of the stress and concerns their customers are feeling. This is powerful marketing that connects with customers on an emotional level.
It's important to note that the weekly circular isn't going away -- it's the physical printing of the circular that is declining.
For grocery retailers, the print circular is like the tip of an iceberg. Behind the circular is a massive promotional infrastructure that involves marketing, category management, distribution, and the ad department as well as their CPG partners that are the funding source not only for the discounts, but also to help cover printing costs.
The underlying processes to generate promotional offers have not gone away, retailers are just discovering more effective and efficient ways of communicating those offers. Digital communication and the incredible power of personalization and offer curation is where smart retailers are investing their savings from reducing print.
How many times has it been said that free delivery is "table stakes" and that retailers should eat the cost of their e-commerce activities to remain competitive?
I think the real news here is that even Amazon realizes that free delivery doesn't make financial sense for grocery. As we move beyond the pandemic-driven e-commerce boom, grocery retailers will want to encourage customers to come back to the stores as Whole Foods is doing here.
It seems to me that the results of the study are being interpreted in an odd way. The headline suggests that 95 or 99 cent pricing backfires by discouraging upgrades, but the results actually prove that the pricing works to create a sense of value.
What is really going on here is a demonstration of the impact of "framing" which considers how we humans perceive pricing based on how it is presented. Consumers gauge the value of each item based on how it is priced relative to other options.
It shouldn't surprise anyone that increasing the perceived price of the small coffee makes the upgrade to the large coffee seem like a more reasonable choice.
The same dynamic is what drove the Williams Sonoma bread maker sales in the story that Jenn mentioned, but it worked in the opposite direction. With the bread makers, the existence of the more expensive product made the mid-tier option seem like a better choice.
I love Phil's suggestion to sign up your spouse as it gets to the root of the challenge and that is providing valuable content.
Email marketing is fundamentally different from other promotional efforts because the customer is in control. Too many retail marketers approach email marketing with their own objectives in mind, which causes them to fail to deliver on what the customer wants. When customers don't feel served or rewarded, they stop opening emails.
The secret is to make sure that every time the customer opens an email from you, they feel rewarded and served. That's where personalization comes in. Personalization can take regular promotional messages and make them feel more like a customer service.
COVID-19 has thrown a monkey wrench in the predictive capability of pre-pandemic data. Customer shopping behaviors have been changed by an external force, so existing algorithms and machine learning are a bit less accurate. That impact is even more dramatic when you consider AI applications which rely even more on a wealth of data and some level of predictability.
The impact of the pandemic creates the need (and opportunity) to leverage purchase history data in new ways. The challenge is to dive into the dynamics of recent behavioral change to gain insights into how to compete and how to better serve your customers. The best way to be relevant right now is to help the customer adapt to the new normal. Looking at each customer's behavioral change as a result of the pandemic can reveal insights into how they are responding and how the retailer can best meet their current needs.
I think it is an awesome move and I think that selling them at cost is a strategic choice to achieve the most good. They could certainly afford to give them away, but they know that pricing affects demand and giving them away might not be the best solution and could actually backfire. They might be flooded with orders and sell out of available supply too quickly. Charging the minimum sustainable amount avoids hoarding, which would likely occur if they were given away.
I agree Jeff. This discussion is about the possibility that running promotions might make things worse by getting more customers into the store. But the flipside is that any retailer that stops their normal promotions might be seen as taking advantage of the situation to make more profit.
This is a situation where clear communication is key. Retailers want to be seen as responsible and respectful of the situation, but also empathetic to their customers' desires to save money. It's a tough situation to navigate with no conventional wisdom for how to manage it best.
The challenge for many independent operators is that so much of what is being hyped these days doesn't even suggest a near term payout. It is crucial that the retailer's technology efforts are focused on tangible, customer-facing improvements or promotional efforts that can deliver positive sales gains.
Ron Bonacci mentioned the low hanging fruit for independent operators when he talked about how quickly personalized promotional programs can be implemented. Done properly, that's an area where retailers can see an immediate profit impact and create a competitive advantage.
I agree 100 percent, Richard. The same culture that caused H-E-B to win the top ranking with customers is the culture that made the company want to share the success and recognize their employees.
H-E-B understands the importance of connecting on an emotional level, both with their customers and with employees.
The root of the problem is evident when you read the response of Barnes & Noble: "The booksellers who championed this initiative did so convinced it would help drive engagement with these classic titles."
That's about selling books, not celebrating black history.
I would suggest that Amazon incorporating hot food into their Amazon Go format is not about making the format profitable. It's all about showing the huge convenience store chains that the Just Walk Out technology can handle everything that they sell. If they can spur the convenience industry to embrace Just Walk Out, Amazon will profit as the most efficient provider.
This is the same approach that they used to dominate e-commerce, cloud computing, etc...
I love the design of the Target Circle program because it provides value to the customer while being consistent with the Target brand. Instead of focusing on providing points or other incentives for customers to shop at Target regularly, the program focuses on reminding customers what they love about Target and why they love to shop there.
The goal is to strengthen the emotional connection that is at the heart of true loyalty.