Click and Collect – should it stay, or should it go?

When the pandemic hit, consumers were just starting to dip their toes into the e-commerce concept, and they may have been a part of a frequent shopper or loyalty program. Retailers had a shelf-first mentality.

These days, shoppers are enamored with the conveniences of ordering online and want to re-engage with the physical store. A few years ago, people were asking if brick and mortar was dying. I don’t think buying in a physical store will ever go away, but it will look much different.

Every store is becoming a miniature fulfillment center to accommodate same-day online orders from consumers that aren’t coming into the store. We’re starting to see these stores convert their floor space to increase the size of their backroom.

There are a few challenges with these new shopper journeys. Encouraging impulse buying, for one, is difficult to translate to an online environment. Online retailers and Instacart need to figure out a way to perfect point-of-purchase merchandising with A.I-driven recommendations, just as Amazon and clothing retailers perfected long ago.

Overstock no more: How the tech reset in-store will revolutionize retail

The shelf and the shopper’s experience will be taxed because of added pressure from a variety of new consumer fulfillment options. It’s important to understand the same consumer may be shopping in-store, online, and via click and collect. We not only have traditional retail shoppers coming into the store, but we also have three or four other people that are touching the shelf — for example, personal shoppers and store associates picking online orders.

Couple this new pressure with a retail labor shortage, and shelves aren’t getting stocked like they used to. The more people shop, the quicker the product turnover on shelf.

It’s imperative to understand that the historical velocities that we used to manage shelf inventory prior to 2020 for forecasts do not apply to current circumstances.

Grocery stores moved to a just-in-time inventory model that magnifies supply chain challenges when they happen.
Understanding where more inventory needs to be held on the shelf is critical to meeting shopper needs, enhancing the experience they have with the retailer and offsetting labor issues.

More trust is being put into the shopper to do what, only a handful of years ago, would have been the job of a store employee. Meijer has an app where you can scan items in your cart as you shop, More trust is being put into the shopper to do what, only a handful of years ago, would have been the job of a store employee. Meijer has an app where you can scan items in your cart as you shop, and you check out the app when you’re done. 15 years ago, that would have been unheard of for fear that shoppers would simply shoplift an entire cart full of groceries.

The world is changing, technology is getting better, and our retail experience will continue to evolve.

The new age of category management: Aisle management

Category management is evolving into aisle management. What does this mean? If you’re playing in one segment of beverages, you should be able to manage — or at least have visibility into — the entire beverage aisle for a few reasons.

Private label wins retail real estate

Private label quality is getting better. We’re even seeing price and quality tiers within private brands. The price is still lower than national brands, but in most categories, store brands have one of the largest brand shares. Every time national brands take their innovation to a retailer, it can feel like they’re showing their new items directly to their largest category competitor.

In the OTC pain relief category, roughly 35% of that category is private label and, depending on the retailer and channel, it can be over 40%. For all intents and purposes, private label is the largest brand in the category because the largest national brand has a 27% market share.

How brands can compete with private label

How do brands stay relevant? Continuously improving the core value proposition is crucial — whether it’s through positioning product benefits, consumer benefits, or packaging. Consumers aren’t blind to shrinkflation. They notice when you take servings out of your product. Brands and manufacturers can’t innovate or repackage without offering a benefit that consumers perceive as better.

True innovation meets an unmet need and prioritizes convenience and portability. As American consumers continue to have less time, convenience and portability will certainly be attractive points of differentiation.

Packaging is an interesting way to innovate or renovate your brand and enhance the consumer’s experiences with your product. Think about how genius it was to put a zip lock closure on a shredded cheese bag. You must improve the core value position to stay relevant and to continue to renovate.

Let’s not turn back time: Trade plans and promotions

The way manufacturers and retailers used to spend their trade dollars was very archaic. Historically, they rinsed and repeated whatever they did the year before, without any kind of understanding of how profitable one event was over another. Protecting share and driving revenue was all that mattered.

But you need to drive revenue and profit both for the retailer and for the manufacturer. That’s where having the capability to evaluate every promotion comes into play.

Consumers want you to be more personal: to move the needle, you’ll need to be much more targeted. Whether it’s through a retailer’s loyalty program or through some type of shopper marketing program, you have to have a strategic trade plan to drive profit for both yourself and your retail partner.