CPGmatters: Welch’s Focuses on Shoppers to Increase Category, Brand Sales
By John Karolefski
Through
a special arrangement, presented here for discussion is an excerpt of a
current article from the monthly e-zine, CPGmatters.
Welch’s is leveraging
shopper insights to drive category revenue for retail partners for its
assortment of jams and jellies. For example, Welch’s can help the retailer
convert existing shoppers who shop the category in other chains. In addition,
it can increase the “buy rate” of existing category buyers in
the retailer’s stores.
To facilitate the process
and obtain insights, Welch’s relies on a program from IRI called Shopper
Insight Explorer.
“The Shopper Insight
Explorer program is an easy way to look at the leakage,”
said David Moore, business development manager at Welch’s, in a presentation
at a CPG summit hosted by Information Resources, Inc. (IRI) recently in Las
Vegas.
“For each category you look at, to what degree is my retailer attracting
a shopper in the category, and where are they missing opportunities? Where
are they attracting the shopper, but the shopper is buying the category elsewhere?”
According to the program,
the retailer in the example captures about 8 percent of U.S. households.
About seven of ten households buy jams and jellies somewhere in the marketplace,
not necessarily at the retailer.
“That’s a pretty
broad household penetration,” said Mr. Moore. “But the question
is: Are they doing well with this shopper? Most retailers can tell you
about what their shopper does when they’re in the store. They don’t really
know what happens when they go outside those walls, and what potential
opportunities [exist] if they were to convert some of those shoppers to
their store.”
According to the analysis,
the retailer was only capturing 13 percent of the total potential shoppers
who buy jams and jellies; in other words, 87 percent of their shoppers
who buy jams and jellies bought them outside of the account.
“I want to know
why,” said Mr. Moore. “That’s a big shopper opportunity. It’s
a great jumping off point, a leakage tree. Well, this retailer and I decided
we’re going to focus on getting new shoppers into the store to buy this
category.”
When looking at the attributes
that this shopper prefers, Moore found that this retailer had only one
of the key package types – jars. They didn’t carry any of the squeezable
packages.
“We looked at the
demographics of the squeeze shopper versus the demographics of the jar
shopper,” he said. “We discovered that the squeeze shopper is
a unique shopper. It is more affluent and from a slightly younger and smaller
household, which is exactly the target this account wanted to attract.”
In the 26 weeks prior
Welch’s bringing in new product, the category was about $3 million in sales
and was flat in terms of growth. Welch’s was able to achieve category growth
of 29 percent. The non-Welch’s products grew 22 percent.
“This was going
to be incremental to the category growth and it was,” he said.
“It brought in new shoppers and grew category usage. Overall, it’s a
win-win for the shopper, for us, and for the retailer.”
Discussion Question:
What does shopper analysis tell you about why customers aren’t shopping
a store for a certain category? What doesn’t it reveal? What are the
overall challenges in analyzing and understanding why a customer shops
competitors for certain categories?
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11 Comments on "CPGmatters: Welch’s Focuses on Shoppers to Increase Category, Brand Sales"
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Let’s start by being skeptical about 29% category growth, especially attributable to new buyers. That would mean that (a) squeeze bottles are a huge segment of the category and (b) all of a sudden people noticed they were there–people who weren’t buying this category in these stores before.
That said, the syndicated suppliers have been using this data this way ever since the widespread availability of scanner data, comparing chains in a market on brand and product development. This is not a new insight or a particularly new tool, although IRI may have made the navigation of the data simpler. We used to have a different tool–it was called client service.
This type of consumer insight analysis is fine, but it misses the critical question: what can I do that truly changes what the consumer buys? Too often, the analysis ends at the point of identifying a fact (affluent shoppers buy more squeeze bottle jams and this particular retailer is targeting that segment). That’s a great start, but so what? What are you going to do about it? I could think of a hundred ideas. Which of those hundred ideas work, for Welch’s and the retailer? Which just shift demand within the category with no benefit to the retailer? Which shift demand between retailers with no real benefit to Welch’s? Which just push margin dollar into the consumer’s pocket without any incremental spend? These are the tough questions.
Welch’s doesn’t welsh on facts. But certain facts can have more value to some implementers than others. If the Shopper Insight Explorer process is as effective as projected above, and I have no reason to refute their projections, it will probably become widely used. But if all major CPG companies use it and all major retailers participate, will a win-win sales panacea happen for everyone with sales increasing to new levels? Or will some other condition arise?
I have a friend in retail who keeps saying, “what’s wrong with retail today is that we’ve got too many scientists involved.” And I agree with him. The IRI research sounds pretty strong, but the caution would be that it replaces actually getting the Welch’s brand managers out there THEMSELVES to listen to and watch customers and associates. There is no substitute for that experience.
Eduardo Castro-Wright, Walmart exec., has a nice interview in the New York Times Business Section this past Sunday, where he talks about the best strategies being derived from talking to customers yourself. I agree with him in that at times, we all try to make retail much harder than it really is. I hope Welch’s is thinking like a customer and not like a scientist. After all, we are all customers, just put that hat on!
I agree with my colleagues that the increase seems implausible, but my question would be, how does this increase in assortment affect related categories such as peanut butter, crackers, etc? Does this change increase overall basket size? Does it increase customer satisfaction? What about the purchase cycle? If the squeezable bottle lasts longer than the jars are they really increasing share of wallet? If the price point is higher than jars are they not purchasing other products in the store to compensate? These are the real questions retailers care about.
If Shopper Insight Explorer had never been invented, would anyone at Welch’s have noticed that there were no squeeze packages on the grocer’s shelves?