Last updated on September 5th, 2012 at 02:50 pm
by Rick Rusch, Thought-Tech
Special to The Shelby Report
Grocers, like all merchants, are prone to a fairly simple view of marketing. Many grocers see their marketing as the basic activities designed to draw people to their store.
But is that really the purpose of marketing? If so, then measuring the success of your marketing should be based on how many times your doors open every day. Try taking that to the bank!
It’s more likely that marketing success is measured against revenue. And when marketing dollars are spent, it is imperative that customers walk into the store and buy.
What are ‘barriers to exit’?
In today’s uber-competitive, multi-channel, instant-access world, the most effective marketing is combined with an in-store experience creating barriers to exit. What exactly are barriers to exit? Barriers to exit are defined as perceived impediments that keep your customers from spending their grocery dollars at your competitors’ market. In other words what is being done in-store to encourage shopper purchases—at your store.
Grocers who work at in-store conversion are more likely to satisfy their customer’s needs with both planned and unplanned purchasing options.
With the barriers to exit definition in mind, it is easy to see how marketing takes on a more comprehensive role than merely bringing customers in the door. Today, in fact, marketing inside the store is increasingly more impactful.
Let’s explore how and why it is important for grocers to leverage marketing to create barriers to exit.
Before we begin, however, let’s establish two basic facts about marketing in the grocery industry.
Grocers’ spending on advertising is low
Grocers spend about 1.3 percent of gross revenue dollars on marketing—which is the lowest among industry sectors. Retailers typically spend more than 5 percent and toy brands spend an eye-popping 14 percent. With a small percent of sales available for marketing, it is difficult to envision how grocers can spread their marketing dollars to in-store as well. However, statistics show that now more than ever shoppers are making more purchasing decisions in-store. Grocers wishing to capitalize on this trend are coming up with creative ways to extend the impact of their marketing dollars.
Grocery store marketing is predictable
Grocery store marketing has remained relatively consistent over the years. It has traditionally taken the form of weekly specials promoted through ad circulars, point-of-purchase displays and customer loyalty programs that may provide product discounts or free gifts for spending a certain dollar amount.
If spending on marketing is low and we tend to stick with predictable marketing tactics, how do we create barriers to exit? First, grocers must identify who they are targeting. The 2012 Shopper Engagement Study, performed by Point of Purchase Advertising International (POPAI), places customers in four shopper segments.
TIME STRESSED—Needs to get in and out, second highest percent of basket purchased on impulse (70 percent), highest total basket average ($67)
EXPLORER—Wants to be inspired, is impulsive and easily tempted, highest percent impulse basket (72 percent), makes most weekly trips
TRIP PLANNER—The organized shopper, lowest percent impulse basket (67 percent), fewest weekly trips and shortest time in store
BARGAIN HUNTER—Looking for a good deal, most likely to NOT make an impulse purchase, lowest basket average ($54)
If the bulk of your marketing is newspaper inserts loaded with coupons, you are having success with Bargain Hunters. But coupons are largely ignored by higher spending groups like Explorers or Time Stressed. That is not a good use of your marketing dollars. By diverting some of your marketing dollars to in-store tactics, it is possible to connect with all four customers in your store.
Where do I start creating barriers to exit?
1. Connect Your In-Store Experience With Consumer Trends—If it’s important or of interest to your customers, it’s a safe bet they’ll be drawn to it in your store. Price is always a “trend,” but other 2012 trends include:
Boomers are big—This group, all 76 million of them, are the largest food influencers and purchasers. Boomers will account for more than half of the $706 billion spent on groceries by 2015. This consumer group is brand loyal and retailer loyal, and they have a high interest in healthy food.
Fork it over—Farm-to-fork and the buy local movement have created a new food celebrity: the farmer or rancher. Collaborating with these straight-talking and knowledgeable producers offers grocers a wide range of opportunities to inform and market to consumers.
Dad’s doing the shopping—An ESPN study shows 31 percent of grocery shoppers are men. In 1985, only 14 percent handled the shopping duties. Other estimates put men at half of all shoppers. Whatever the number, as men tend to be faster shoppers than women, it is imperative to grab their attention in-store.
Eat at home—Consumers are making a conscious decision to prepare more meals at home. That’s good for grocers. Certainly there’s a cost-cutting motivation for this trend, but there are other reasons as well. After saving money, the greatest benefit from dining in compared to eating at restaurants is promoting a healthy lifestyle. Food consumed at restaurants typically has a lot more calories and fat than food prepared at home. Increased family time comes into play as well.
2. Customer Service—There is a direct link between great customer service and increased revenue. A study conducted by the University of Michigan Ross School of Business has determined that companies ranking in the top 20 percent of the American Customer Satisfaction Index (ASCI) greatly outperformed the stock market, resulting in a 40 percent return.
The value of great customer service carries so much weight in a firm’s financial performance that it supersedes price promotions. Although pricing can be an effective short-term growth opportunity, it has been proven through ACSI’s research that price-cutting is almost never sustainable in driving revenue growth.
3. Excel in One Area (rather than being all things to all people)—Excellence, and marketing your expertise, is significantly easier when you know what your strengths are and who is your target audience. 2012 will be a year for grocers to focus on their unique niches and position themselves as the definitive source for information, products and services related to the specific places in the markets where they operate.
Great concepts, but how do they apply to the real world?
Focused excellence is a key trait of Fresh Encounter markets, which operates 30 stores in western Ohio and Indiana. Eric Anderson, EVP of marketing and CMO, says, “We believe convenient locations, good customer service and an excellent meat selection is what brings customers back.
“We focus on three categories in the meat department—all natural pork, premium Angus beef and Amish-raised poultry. These are truly the best proteins you can buy, in our opinion.”
At Fresh Encounter, in-store barriers to exit often come in the form of cross-sell merchandising.
Anderson points out, “We believe that simply gaining that one more item in the cart is critical. We are placing a great deal of emphasis on in-store merchandising to achieve that goal. Whether it be one additional produce display out of department, or cross-selling in the bakery and deli, generating that one additional item sale at store level creates a tremendous impact.”
At George Bowers Grocery in Staunton, Va., co-owner Brian Weideman completely overhauled his in-store experience to meet the needs of his customers. Located in the historic downtown of Staunton, population 22,000, Weideman opened a full-service market in late 2008. Turns out the community needed less grocery and more access to “a ‘walkable’ food and beverage market.”
Weideman converted the store when they moved to a new location to “sell specialty foods, beer and wine and to-go foods…no produce.”
The new Bowers location sported an outdoor patio, so Weideman began hosting live music two nights a week as a way to attract local residents.
Weideman says, “Facebook has been an extraordinary tool to leverage. We don’t use it to sell product so much as to sell the experience and friendly nature of George Bowers Grocery.
“We like to say,” he continues, “we’re informational and cheerful and we have some great music planned, so come down, and, oh by the way, grab a sandwich while you’re here.”
Are superior meats and live music the only barriers to exit? Of course not. Both Fresh Encounter and George Bowers Grocery identified what was important to their customers, determined how to deliver the product or experience and used it to leverage more dollars per visit and/or more frequent visits from their customers. As a result, Eric Anderson and Brian Weideman are firm believers in the barriers to exit concept.
Rick Rusch is managing partner of Minneapolis-based Thought-Tech LLC, a brand communications firm. Thought-Tech guides clients in branding, online connection strategies, social media, product launches, business and marketing plans as well as expert competitive analysis. Rusch can be reached at [email protected].