COLORADO SPRINGS, Colo. -- Customer-driven merchandising programs are quickly becoming standard for progressive retailers looking to capture and keep customers, operators said at the Multi-Channel Strategies for Merchandising, Sales and Marketing Conference, sponsored by the Grocery Manufacturers of America.
At Ahold stores, Roger Davidson, senior vice president of nonperishables and corporate brands, wants to see no more multi-branded promotions like bake-offs, but instead wants programs geared toward regional communities, classes of shoppers or specific ethnic groups, he said.
"We just challenged Kraft to take a look at its Capri Sun drinks," Davidson said, noting there is no sugar-free variety of that brand. Consumers are beginning to read labels more closely, and as of 2006, trans fatty acids must be listed on the label. So, if a product has more than zero, it will be in trouble, he said.
"We're not Whole Foods Market or Wild Oats, but bring us products that address [the nutrition] issue," he said.
Meanwhile, a Wild Oats official described a plan whereby the chain retained an experienced staffer from a natural cosmetics manufacturer for one year to train Wild Oats' staff about all aspects of the product.
Steve Kaczynski, the natural food chain's senior vice president, sales and marketing, cited other examples of how Wild Oats is adapting to changing times. When the chain began stocking Green Mountain and other regional coffees, coffee retails went up, but profits went down, he said. Executives met to find a solution.
At this point, money usually used for marketing and related fees went to educate store associates, and then the customers, about the fair-trade coffee movement. The campaign included details describing how organic agriculture helps the environment and how fair trade benefits the growers. This approach soon doubled coffee category sales, even with the higher prices, he said.
Another initiative the Boulder, Colo.-based retailer undertook was to sit down with executives of Seventh Generation, a Vermont-based manufacturer of environmentally friendly household products, to get some ideas. One that came to fruition and garnered results was executed last April 22, on Earth Day. Wild Oats offered product samples and featured the Seventh Generation line all month. The result? Better than a 235% increase in the total category, Kaczynski said.
Again, the supplier played a big role in the education of store associates, which Kaczynski cited as the basic reason for the big increases in both categories.
Both supermarket retailers were featured in a seminar devoted to explaining innovations that deliver the "wow" factor. Others on the panel included Robert Price, senior vice president and chief marketing officer for Wawa Food Markets, Wawa, Pa.; and Bob Berman, vice president, buying, for May's Drug Stores, Tulsa, Okla., who represented the drug channel and the independents.
Rethinking strategy is critical to the success of traditional retailers right now. Supermarkets have lost 10 trips per year to supercenters, according to statistics offered in another session by Neil Stern, senior partner, and Ted Zittell, partner affiliate, McMillan/Doolittle, Chicago. Consumers have split their shopping into multiple channels. Larger chains have consolidated, which is good, but not great, they told a general session audience.
"They're using tried-and-true methods, but they can deliver the 'wow,' and one advantage they have is the built-in traffic."
Instead of waiting for manufacturers to dictate programs, retailers have the opportunity to act as advocates for their consumers, asking for support in new ways, as Ahold is, Stern said.
"We are living in a multichannel world, yet the subtext of each session and the meeting as a whole was transformation," said Mark Baum, executive vice president of GMA, Washington. "Perhaps it will be the beginning of a dialogue among trading partners that will lead to more top-line growth."
