CatMan - Transparency’s Opportunity & Challenge for Retailers
Shoppers in today’s marketplace demand convenience, personalization, and transparency. They want the products they desire, at the time they want it, and for the right cost. Shoppers are more knowledgeable than ever before about their purchases. They research online and have a complete understanding of the price, in-stock conditions, and materials that make up their desired product.
One of the keys to delivering on these shopper needs is correct product attribution. Today’s product attribution needs are much broader than the historic shopper decision tree — brand to size to flavor to price, etc. Many shoppers want to know exactly what a food item is made from, where an item is sourced from, and all the components that make an item. This higher-order attribution builds trust with shoppers and allows them to purchase the products that meet their needs.
Catman + Transparency is a white paper produced by Label Insight and Mr. Gordon Wade, formerly the senior vice president for best practices for the CMA, which explores how transparency and the dramatic evolution that attribute-driven category planning will change the industry.
Role of Retailers in Attribute-Driven Category Planning
Retailers are collaborators with brand owners in developing category plans, and make all the final decisions on these plans. Therefore, they are critical to leveraging high-order attributes for the benefit of their shoppers.
Retailers have unique abilities and tools to deliver transparency to shoppers in ways manufacturers cannot. Retailers control the shelf and the display floor, as well as print circulars, websites, and regular emails to their customers, many of whom plan their shopping trip using these. These tools provide multiple opportunities to leverage and promote the attributes consumers seek or avoid.
However, retailers share some of the same challenges as manufacturers in today’s CPG environment. Most categories are growing slowly while competition from e-commerce vendors and other channels – especially dollar stores and deep discounters such as Aldi and Lidl – continue to grow at the expense of mass and conventional grocers.
Especially frustrating for grocers is the volume of dollar leakage they experience from their regular shoppers. Retailers are losing as much as 25% of volume across all categories. The table below illustrates the average loss per category from leakage of shopper volume to other retailers.
“A 10% gain from competitive leakage is a 21% gain in sales”
Understanding shopper need states = huge opportunity
Commitment to transparency can help retailers build volume by using attribute analysis to appeal to shoppers with demonstrated “need states” extending across categories.“Need states” such as those with food allergies, intolerances, or sensitivities, or ethical and supply chain requirements can all affect how shoppers make decisions about food across categories.
Understanding which shoppers are in which need state and then providing them with a shopping experience that supports their need state can be a significant opportunity to reduce leakage and build retail loyalty and volume.
Retailers can drive need-state shopping behavior with collaboration from manufacturers who have high-order attribute data and need-state buying behavior. Some retailers are already embracing this transparency-related need-state behavior and powering more engaging experiences for their shoppers.
Raley’s - an attribute-driven user experience
An example of an attribute-driven approach to category management in regards to a shopper experience is the sophisticated experience created by Raley’s Shelf Guide online. The user experience features the Raley’s Wellness attributes - such as Minimally Processed, Nutrient Dense, No Added Sugar, and Non-GMO - which are leveraged to help shoppers quickly interpret whether a product meets their needs based on their specific search criteria.
The health criteria are available throughout the shopping experience, and leveraged to filter lists of products quickly and conveniently. When the shopper drills down to the product page, all the relevant wellness attributes are displayed for that product, along with conventional product information such as ingredients and nutrition panel.
The Raley’s online shopping experience is one of the leading attribute-driven grocery user experiences in the market - once you shop online this way, it spoils you, and it's tough to go back to shopping with aisles, shelves, and keyword searches alone!
Want to learn more about attribute-driven category planning? Check out the white paper below.
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About Anton Xavier
Anton Xavier is a Co-Founder of Label Insight. With experience in management, operations and marketing, Anton has led the Label Insight team from its inception in Australia and subsequent move to the US, to its current position as a market leading, cloud-based product data engine. Completing postgraduate degrees in Australia, Anton gained invaluable management and marketing experience working with a variety of firms in Asia.