Kellogg Pilots Virtual Reality Merchandising Solution

A surprising area to see this kind of implementation.     The 'lower shelf' optimal location for product goes with some very old beliefs in CPG.   But the guidelines for that were found to be mostly contextual long ago.  See my former colleague John Milby's work on Shelf virtualization, linked to in many posts below.  He combines true behavioral expertise to this kind of data.

Kellogg pilots virtual reality merchandising solution
By Rose Anthony in Retailwire  with futher expert comments.

Through a special arrangement, presented here for discussion is a summary of a current article from the bi-monthly e-zine, CPGmatters.

The Kellogg Co. last November partnered to pilot a solution that embeds eye-tracking technology in a mobile virtual reality (VR) headset to reinvent how brands and retailers gather critical consumer data at the store level.

Accenture and technology provider Qualcomm collaborated on the effort.

Conducted with the launch of Kellogg’s Pop-Tarts Bites product, the VR solution demonstrated that optimal placement for the new product was on lower shelves rather than on higher shelves, which conventional testing indicated was where consumers expected to find new products. The result was an 18 percent increase in brand sales during testing.

In a statement, Raffaella Camera, global head, innovation & market strategy, Accenture Extended Reality, said the mobile VR eye-tracking solution provided far deeper behavioral data than standard testing, which typically relies on online surveys and in-home user tests. She said, “It allows significant new insights to be captured while consumers shop by monitoring where and how they evaluate all products across an entire shelf or aisle. Ultimately, this enables product placement decisions to be made that can positively impact total brand sales, versus only single product sales.”

Among the potential benefits from the technology:.. '

How do the Great Winemakers Sell?

Intriguing view of selling.  Works if you already have the established brand equity: real, bought  or imagined.

Should You Ignore What Your Customers Want? The Great Winemakers Do.
Rather than follow consumer taste, they push it in a new direction.

Based on the research of: 
Ashlee Humphreys, Gregory Carpenter  at Kellogg

A wine expert guides a consumer in a shopping cart through a river of wine, to a particular group of bottles.  Michael Meier

Among French wines, Château Pétrus is legendary. Consumers pay over $1,000 for a single bottle. Talking with Christian Moueix, the owner and long-time winemaker of Pétrus, Kellogg’s Gregory Carpenter asked an innocent question: When crafting a wine, how do you think about the consumer?
Taken aback, the vintner paused, leaned back, and opened his eyes wide. “He said, ‘I don’t! I make what pleases me,’” recalls Carpenter, a professor of marketing at the Kellogg School.

That may come as a surprise to those who think that winning customers requires exhaustive surveys and precise analytics to discover what people want. Yet this consumer-skeptic attitude is common among winemakers. “They suspect that consumers don’t really appreciate and respect wine,” says Carpenter, “so there’s no point asking them what they think.”

But from a business point of view, that presents a challenge: How do you create devoted customers and turn a profit if you essentially ignore what customers want?

Winemakers are not the only ones facing this quandary. Marketing scholars have a term—“market-driving firms”—for businesses that, rather than reacting to consumer tastes, attempt to influence those tastes to their advantage. But prior research on market-driving firms has focused on high-tech innovators like Apple and Tesla. These companies shape consumer preferences by introducing unprecedented products and services, which often render the competition obsolete. As Steve Jobs famously stated: “Our job is to figure out what [customers] are going to want before they do.”

Carpenter wanted to know how a company can influence consumers without a disruptive new technology to offer. So, working with Ashlee Humphreys, an associate professor of integrated marketing communications at Northwestern’s Medill School, he turned to the wine industry. “Winemaking hasn’t changed in thousands of years,” Carpenter says.   .... "

Sentiment Analysis and Merchandising Calls

Quite a range of information is described. 

Can sentiment analysis improve merchandising calls?   by Brian Kilcourse in Retailwire

Through a special arrangement, what follows is a summary of an article from Retail Paradox, RSR Research’s weekly analysis on emerging issues facing retailers, presented here for discussion.

Marketers have long used sentiment analysis to target offers in the digital domain, but a new generation of demand forecasting capabilities is extending its use into merchandise planning.

Sentiment analysis examines “non-transactional” data that consumers leave along their digital paths-to-purchase that can offer an early indicator of demand. A simple example is the number of positive mentions on social or e-mail streams about a new offering. Online clicks, geo-location info and other digital data can also offer clues as to whether underlying sentiment is positive, negative or neutral. ... " 

Best Buy Banks on Smart Homes

A natural step forward, and a place to connect beyond entertainment.  Selection, design, installation, training, security ....  services come into play with devices and software.

Best Buy Banks on Smart Homes, Experiential Merchandising in Stores
By Adrianne Pasquarelli

In its quest to better connect with customers, Best Buy is focusing on connected living. At the Minneapolis-based retailer's Investor Day on Tuesday, its first in five years, executives laid out a new strategy of priorities and changes in its merchandising, training and marketing over the next three years.

Called Best Buy 2020, the plan is CEO Hubert Joly's second chapter in the growth plan he began in 2012, when he began transforming the 51-year-old retailer by zeroing in on the challenge of showrooming and opportunity in ecommerce.

Now, Joly is doubling down on smart homes, assisted living for seniors and in-home tech support. By the end of next month, the company plans to offer smart home shops and enhanced merchandising within all of its more than 1,000 stores. .... " 

Tailored Video Messaging

We experimented with many kinds of interactive and tailored messaging in our retail store lab:

Can tailored digital video messaging transform grocery end-caps?
by John Karolefski  In Retailwire: 

Through a special arrangement, presented here for discussion is a summary of a current article from the monthly e-zine, CPGmatters.  .... 

The Coca-Cola Co. recently rolled out a new digital signage system attached to endcaps located in the center store of supermarkets to deliver branded video and e-coupons to customers.

The plug-and-play system, powered by a mix of Google Cloud technologies, works on any HDMI-ready display. The digital signage can tailor content messaging to approaching shoppers based on data on their smartphones. Targeted messaging can range from brand campaigns to store-specific promotional offers or even app-guided shopping lists. .... "

Virtual Reality in Merchandising

In Retailwire, with a discussion.

Will virtual reality transform in-store merchandising?

hrough a special arrangement, presented here for discussion is a summary of a current article from the monthly e-zine, CPGmatters.

Virtual reality (VR) simulation is arguably the most talked-about tech solution in grocery today. It aims to drive faster, smarter and more profitable decisions by enabling retailers to ideate new in-store concepts, evaluate them with test shoppers, and activate those concepts.

The technology is “a good value,” Tom Wozbut, director, category analytic and shelving hub, Kellogg Co., said in a presentation he did at the Western Michigan University 2017 Food Marketing Conference last month along with Jason Smith, VP, customer service, InContext, its VR technology provider. ..... 

Retail Algorithmic Merchandising

 In the Gartner blog:  On algorithmic merchandising.  Good thoughts in the importance of data, process and analysis used with more concise and repeatable algorithmic methods.

" ... By 2020, merchant leaders will be algorithms, prompting the top 10 retailers to cut up to one-third of headquarters merchandising staff. 

Predicts 2016: Digital Business Uproots Traditional Retail Revenue Generation

Analysis by Robert Hetu

Key Findings:

An explosion of digital business opportunities will cause retailers to increasingly rely on algorithms to manage complex business opportunities that will exist for as little as a single moment ... 
Smart machines using algorithms will make complex decisions, such as merchandise assortment and distribution, product pricing and marketing messages.

The algorithmic economy is coming alive for multichannel retailers as they continue to seek better ways to drive decisions through advanced analytics. Some algorithms will be ubiquitous, and shared for the betterment of the industry. Others will be more directly aligned with the interests of the retailer, “the secret sauce,” and, as such, kept confidential. As the number of algorithms grows, and the quality variations expand, retailers will find that the management of algorithms will require an expert to oversee how they are cared for (which ones can be shared), and which ones provide even momentary competitive advantage. ... " 

Inside the Mind of the Shopper, 2nd Edition

Much anticipated. 2nd edition.  Pre order it.   By colleague Herb Sorensen  who we used for shopping innovation.   An ideal companion to our new world of advancing analytics in retail.  This connects  science to store behavior in ways that are essential to design, analysis and delivery of retail results.   I am reading and will be excerpting through the year.

Inside the Mind of the Shopper: The Science of Retailing (2nd Edition)
Anticipated on Sep 4, 2016
by Herb Sorensen

" ... What do you really do when you shop? The answers are fascinating and, for retailers, they're cash in the bank. In Inside the Mind of the Shopper: The Science of Retailing, world-renowned retail consultant Dr. Herb Sorensen, Ph.D. uncovers the truth about the retail shopper and rips away the myths and mistakes that lead retailers to miss their greatest opportunities. Every year, says Sorensen, shoppers will spend a quadrillion seconds in supermarkets and they'll waste 80% of that time. 

Sorensen analyzes consumer behavior–how shoppers make buying decisions as they move through supermarkets and other retail stores–and presents powerful, tested strategies for designing more effective stores, improving merchandising, and driving double-digit sales increases. He identifies simple interventions that can have dramatic sales effects, and shows why many common strategies simply don't work. 

You'll learn how to appeal to the "quick trip" shopper; make the most of all three "moments of truth"; understand consumers' powerful in-store migration patterns; improve collaboration between manufacturers and retailers; learn the lessons of Stew Leonard's and other innovators; and much more. Then, in Part II, Sorensen presents revealing interviews with several leading in-store retail experts, including crucial insights on using technology and retailing to multicultural communities.   ... ? 

Ahold Optimizes Customer Data

How Ahold USA Optimizes Customer data

Collecting customer data and figuring out how to use it is a challenge for all retailers, one that Ahold USA has met by managing its data to help the company make decisions about different shopper segments and target the selection and prices of its merchandise, according to Nick Bertram, the retailer's senior vice president of merchandising strategy and support. "Customers aren't in one spot. They are omnichannel, and they need to see us in print, online, in their phones and everywhere they go. We're not limiting ourselves. We're just trying to be smarter in every place we play in," Bertram said. ... " 

National Retail Federation (5/23) 

Storeflix for Whole Picture Brand Insight

Late to this, but I note that the Storeflix site has been updated, with some new directions.  Image based in-store analysis.    Less emphasis on compliance.    Some mention of analytics being driven, but no details at the site.  Did a bit of work with them.  I like the idea of connecting easily acquired images to retail intelligence.  See also, their blog. 

" .... created the first real-time visual collaboration technology for CPG companies to optimize retail execution using smart phones and tablets. Kroger is using the StoreFlix technology now to manage retail merchandising conditions. .. " 

" .. You can’t optimize until you opt for the whole picture. ... You’re a long way from all the places .. your brands meet, greet and engage with customers. And yet you’re still responsible for
how you come across to the world. ...  

Getting this kind of scope on your brands has been arduous and time consuming: NOT available in real time and never as robust and responsive as you would like. Or might have ever imagined it could be. .... 

Until now... The storeFlix Solution
This is where we come into the picture – and you get the visual insight and control you deserve. ....   " 

Kroger and Predictive Analytics

Kroger and predictive merchandising.  Kroger's Improved Analytic Capabilities Powers Merchandising Decisions  ....

" ... One key area where the in-house analytics team is being leveraged is in analyzing consumer behavior and predicting demand. As the healthy and organic craze moves from the buzz and niche phase to an established long-term trend, mega grocers like Kroger are quickly joining the likes of Whole Foods and Trader Joes and offering healthier food options to meet rising demand.  

"We certainly do a lot of predictive analytics with data we see not just inside our stores but overall in the economy, trying to figure out where the consumer is going," Schlotman said. "It clearly does seem as though there's going to be persistence and shift to a more healthy lifestyle and maybe out of some of the traditional center-of-the-store categories into more fresh categories."

In typical Kroger style they are not just following the trend but setting the pace. The grocer not only sells natural and organic products but has its own store brand Simple Truth dedicated to providing healthy food options.... " 

Cognitive Capabilities for Online Merchants

Interesting to see Watson derived capabilities being used for  merchandising and marketing data insights.

" ... IBM ...  today announced new commerce capabilities that help online merchants easily gain the insights needed to evaluate category and product performance and make quick and effective merchandising decisions. Leveraging cognitive capabilities from Watson Analytics, IBM Commerce Insights allows practitioners to gain a real-time view into customer behavior and market factors that are impacting their ... "

Terrifying Retail Words

In Gartner Blogs, by Robert Hetu,

" ... What are the most terrifying words in retail? “There is nothing here to buy”.  The speaker of these words was none other than my spouse last night in our local Walmart.  So I was glad to hear comments from Walmart CEO Doug McMillon, that I characterize as getting back to the basics.  In particular adding items to the assortment that are new and exciting, as well as better blending of art and science.

McMillon described the balance between art and science that makes a merchant successful and noted that as the company grew ever larger over the years the science side of the merchandising equation had come to dominate decision-making. “You can manage a category to death,” McMillon said. “We need to be creative and do something people don’t expect by getting after items that will surprise and delight shoppers.” (www.retailingtoday.com) ... "

Ahold Virtual Markets

We experimented with virtual markets for years ...

Ahold uses virtual supermarket to test concepts
Ahold USA is testing marketing and merchandising concepts with a virtual supermarket using Web-based 3D interactive software from InContext Solutions. The technology helps the retailer save time and labor and prevents store disruption, while providing consumer data on aspects such as store layout and product placement. "We're able to manage tests more effectively in a controlled environment," Category Management Insights Director Ed Sheedy said ... "

Customization Nation with Services and Supply Chain

In Retailwire:   Thoughts about the meaning of services in retail.  Beyond the classic offering of a selection of products.  New changes in the relationship of retailer and manufacturer.  I like the idea that customers are building their own supply chains with the same customization idea.

" ... Supermarket operators are buying into the concept of customization, taking risks and challenging the old ways of doing business. The reward is a distinct uptick in relevance to the shopper.

"As retailers, we have the intimate relation with the shopper," said Bill Nasshan, executive vice president & chief merchandising officer at Bi-Lo Holdings, LLC. "But to become even better, we need to move from just asking the shopper, 'Did you find everything you needed' to 'You should try this product.'" ... ' 

" ... In a session presented by Anthony Flynn, CEO of YouBar and author of Custom Nation, the premise was that grocery retailing is an industry grounded in the delivery of mass produced goods through bricks and mortar locations. But technology now enables consumers to create their own customized supply chains and requires personalized products designed to meet particular needs. What impact will the rise of customization have on traditional and ecommerce retailing? ... " 

How can CPG Adapt

In CPG Matters,  new and interesting updates on the onrush of digital enterprise and implications for CPG:

6 ways CPG companies can adapt
The consumer packaged goods landscape has become complex, and having channel and digital strategies is essential, writes Strategy& partner Steffen Lauster. Success will include "the development of more effective product portfolios, the use of cutting-edge merchandising, and the flexibility to work with different retail formats, particularly online distributors. In short, manufacturers must find new ways to grow beyond the grocery channel," he writes ... " 

My Updated One Page Bio

I have updated my one page bio, it continues after the paragraphs below.  Feel free to contact me about consulting, strategic and tactical.

Franz A. Dill

Franz Dill’s academic background is in astrophysics and mathematics, with degrees from the University of Pennsylvania and the University of Florida.  He worked developing tank battle simulations in the 1970s for the office of the Joint Chiefs at the Pentagon, where he won a Defense Department scholarship for information Technology.  

For thirty years he worked for the Procter & Gamble Company.  At P&G he reported to the CIO as part of an information technology research organization which scouted and vetted emergent technology use.   He worked directly with the CEO developing their first executive information systems.  This led directly to P&G’s Business Sphere data focused experience.  He led the company in the application of modeling to enterprise supply chains.   He managed work with many academic and vendor partners.   .....

Personalizing Data Interactions

In Supermarket News (required free registration):   New opportunities for richer data sources. " ... Supermarkets are using customer data and digital devices to bring more personalization and convenience to shoppers. Efforts include Ahold USA's Scan It! Mobile application and Safeway's Just For U marketing platform, which send personalized offers to smartphones, and Sprouts Farmers Market's use of customer analytics to track each item purchased, which the company says helps with merchandising and winning back lost customers. ... " 

Shopper Insight

In Retailwire,  IBM/DemandTec sponsors an interesting paper: Shopper Insights: Actionable or Academic?  An overview of a survey on the topic.   Our innovation centers were established in part to fine-tune an understanding of the shopper from a number of different resources.  From our own experimentation, from the knowledge of our consumer researchers, and from leading edge research done by internal and external vendors. DemandTec was an early visitor,  where we talked about the effectiveness of planning promotion and assortment, using analytic methods.    The paper suggests, as we saw early on:

" ... Shopper insights are here to stay, according to RetailWire’s recently conducted study of industry  professionals and practitioners, and are quickly becoming a “must-have” feature of decision-making relative to category management, merchandising, marketing and in-store activities.In particular, shopper insights derived from specific retail accounts are seen as beneficial for fostering strong collaboration between supplier and merchant. Said one respondent: “It is the new currency to drive retailer/manufacturer collaboration to work jointly to improve the business/category.” ... " 

So we clearly saw the early need for learning that was more than academic.  And produced results that could be applied early to our own mix of products and could take our understanding of the consumer, for new products and new initiatives, and combine that with operational retail knowledge.

This paper studies insights from a survey in late 2010:  " ... The study sampled information and opinion from 593 executives and managers.  Supermarket/grocery retail and manufacturer companies were most strongly represented  in the sampling, and nearly half of respondents are in upper management positions. ..." 

Worth reading for its results.  As an excerpt I always like to look at future actions, since my role was always of a futurist and technologist, and this was interesting:

" ... both retailers and suppliers expect that manufacturers will partner relative to shopper insights with more than the number one retailer in a particular market. Indeed, only 2.5 percent of the  total number of survey respondents say that a supplier should only partner with the market leader and  go no further. From the supplier viewpoint, 20 percent answer that going beyond the market leader  should be done to enhance more retail relationships, while 69 percent say that working with more than one retailer in a particular market should certainly be done for relationships, but also for gaining  additional knowledge for HQ planning.... " 

I am incorporating some of this data in a study I am doing.  Please send me any further insights you have.

Collaboration is the Thing

In Supermarket News:   " ... Haggen and other retailers are showing how to collaborate with trading partners on mutually rewarding promotional and merchandising initiatives. ... "