Jaime Silvester, Head of Retail IRI UK
To say that 2020 was turbulent would be an understatement. Within the world of FMCG retail, however, we can take some positives. One that I’m certainly noticing when I speak to retailers and brand owners, is the increasing appetite to better understand customers’ shopping habits and be able to predict their wants and needs more accurately. As we continually embrace new technology, retailers and suppliers are looking to analyse data in a smarter way and put their shoppers at the heart of their future planning.
In this blog, I’ve outlined the steps retailers and suppliers should take to evolve their approach to shopper insights and enhance the future of retail. First though, let’s take a look at how shopper insights work in practice.
In recent years, there has been an explosion of growth in the gin market, with craft brands, fruity options and sloe gins taking over supermarket shelves. This led Waitrose to see repeated growth, year-on-year from their gin section. But the supermarket had their sights set even higher: to be in the top 5% of the market for their gin offering.
To do that, they turned to shopper insights. In collaboration with the IRI team and Bacardi Limited, they reviewed the shopper data and the habits of gin and spirit customers across all Waitrose stores.
A combination of shopper and market data revealed plenty of insight, including which brands attracted a high level of loyalty from shoppers and which size bottles customers most wanted. The data spoke loud and clear, shoppers were attracted to Bombay Sapphire in larger bottles. By adding a greater range of one-litre bottles of Bombay Sapphire, a huge sales opportunity was realised.
The insights resulted in a win-win situation for Waitrose, Bacardi, and the shopper with Waitrose outperforming the market as a result of Bombay Sapphire.
This is just one example showing the value of a data-led approach, rather than relying on gut instinct or guesswork. Following analysis, Waitrose was able to collaborate with their supplier to make a quicker and better decision that will ultimately drive shopper value and drive-up revenue for both brands.
Now, let’s take that one step further and use the demographic profiles and purchasing behaviour inherent within the shopper data, to identify new groups of shoppers. At IRI we implemented a solution to do just that.
Using Audiences™, retailers and their suppliers can very quickly:
- Identify and analyse new or lapsed shopper groups
- Measure the impact of promotional activity
- Gauge the size of an opportunity
The tool is also quick and easy to use; shopper groups are built within minutes and can be analysed repeatedly. Once created, reports can be shared between retailer and supplier directly from the platform, creating a stronger relationship through shared understanding.
Increasing market penetration by uncovering potential new shoppers is a priority for all brands. To encourage this, IRI created tribe analysis, which is a step beyond audience research. In essence, we’re using customer data to hyper-segment shoppers’ purchase behaviour to fill in the gaps and create a fuller picture of shoppers, such as interests, lifestyle, and life stage. Once the tribes have been identified, we can connect them to the physical and digital world by working with various selected household, location, and device data partners - allowing us to extend reach.
Cohort creation is broken down into three parts:
- Insight and definition –Collaborating with the brand or retail partner to define details such as the objective of the tribe, characteristics, size, opportunities and merging behavioural inputs to create ‘holistic tribes’.
- Integrate and activate – Working through our partnerships to integrate a tribe to the real world (such as locations, channels, devices and lifestyles).
- Verification and measurement – Employing our established solutions to verify exposure, measure sales impact at tribe, format and campaign level. Additionally, we simulate and optimise marketing plans across media shopper, price and promotion.
By incorporating all these elements, not only does customer purchase data become far richer, providing more than just a view of a basket, it builds a distinct comprehensive shopper profile that is invaluable for future insights. By using it in a proactive way, layered with complementary data sets, it becomes an incredibly powerful tool to help retailers and brands identify and connect with entirely new and clearly defined bullseye groups of potential consumers.
Of course, it isn’t just about penetration, retention is also important. The next step, and of course the holy grail, is to predict behaviour and retain those shoppers.
For retailers, we already have the ability to anticipate shopping behaviours.
At IRI, we created six main levers that form the basis of our targeted marketing approach for retailers. They allow both brands and retailers to effectively and rapidly respond to any small changes in shopper behaviour to encourage shopper loyalty and prevent them from switching to a competitor. The six levers are: revenue loss management, churn, up-sell, reward and retention, seasonal events and cross-selling.
Proactively monitoring and responding to each of these six levers is vital to help retailers and suppliers direct R&D investment, improve marketing effectiveness, and maximise supply chain efficiencies, while significantly increasing revenue and customer loyalty.
In uncertain times, retailers and manufacturers can de-risk their decisions by being more data-led. But the ability to quickly respond and pre-empt customer behaviour is what will set industry leaders apart from those lagging behind. That’s why shopper insights are the smart approach to retail planning.
Find out more about the six levers of targeted marketing in FMCG
Read our whitepaper on customer loyalty for more detail