Retail Political Power…a Force for Change?
(How to optimise supplier and retailer's power, in the aisle)
By Brian Moore, Global retail consultant and CEO EMR-NAMNEWS, mailbox@namnews.com

Given their sensitivity and ability to respond rapidly and cost-effectively to consumer-shopper needs, based upon their intimate knowledge of their target audience (name, address, income, shopping behaviour, hobbies, family circumstances, financial exposure, health…) it could be said that retailers have more political power than the politicians…

Anyone doubting the potential power of retailers should bear in mind their ability to exercise real political power in two ways, direct influence on the consumer-shopper in-store, and via direct impact upon the economy.

They can use price, the ultimate persuader, to modify the entire value-set of individuals, whilst they can directly affect the economy via their leverage in terms of influencing/controlling inflation, the balance of payments, direct employment of significant numbers of wage-earners, and especially their ability to control access to in-store traffic-flow.

The Retailers’ track-record

Specifically, doubters should reflect upon retailers’ track record in unilaterally dismantling restrictive and out-of-date legislation relating to limited shopping hours, Sunday trading, Resale-Price-Maintenance, and the Net-Book-Agreement, in recent years.

Even if it takes a few ‘failed’ legal cases and prosecutions to make the point that a particular law has passed its sell-by date - so be it; especially when the publicity resulting from a £1000 fine not only reinforces their image as the peoples’ champion, but would probably cost £250,000 via  prime-time TV in the real world.

Moreover, whilst politicians attempt to sway the public every five years, a retailer manages to persuade most of the population to come to a store and pay hard-earned cash for ideas, sometimes several times a day.

Whilst they may have slightly different perspectives in that retailers see store traffic in terms of consumers and shoppers, politicians see voters carrying shopping baskets…the potential for influencing change via shopping behaviour soon becomes obvious to both sides.

And bearing in mind that all voters are shoppers, whereas not all shoppers are voters, ‘captive’ store-traffic can represent a fruitful target and potential source of votes for a political party…

Working with retailer power

However, before the political parties discover the pulling power of in-store posters/TV and attempt to monopolise available space, there is scope for vendors to harness some of the retailers’ power via aisle-level collaboration, use of their media, and jointly persuading ‘their’ consumer-shopper to shop the brand.

It is important to bear in mind that a superstore is simply a large mom n’ pop corner-shop doing simple things well, with access to far more potential knowledge of the shopper as a means of influencing shopping behaviour. This potential shopping insight, combined with the added advantage of direct ownership of powerful in-store media that can carry a detailed brand message to a hand-in-pocket shopper, moments before making a purchase, makes it imperative that vendors find ways of tapping into and sharing a retailer’s ability to persuade, by releasing the synergies available from a combination of shopping insight and consumption insight.

So what if the retailers are effectively running the country? That is perhaps a problem best left for the professional politicians...

Sharing Retail Power in the Aisle…

Left to their own devices, retailers will often try to use the brand to attract appropriate shoppers to the store, there to be confronted with the target brand, and alongside it a private-label equivalent, as good as the brand and possibly 20% cheaper. A vendor is thus presented with a dilemma: either produce the private-label and prevent the business going elsewhere, or market the brand so effectively in the aisle that the retailer does not bother to make a private-label available, preferring instead to share in the optimised sale of the brand.

Provided the vendor has chosen the trading partner on the basis of brand consumer-profile and shopper-profile congruence or near-perfect fit, there is a good chance that vendor and retailer will share similar aspirations with regard to optimising a shopper visit. It is obviously important to then ensure that all members of the category are represented on a ‘fair-share’ basis in the fixture.

On the assumption that both parties are willing and able to share synergies arising from the combination of consumption insight and shopping insight, it then remains to communicate the proposition via in-store media.

The power of in-store media

Retailer-owned in-store media, with its power of immediacy derived from a wealth of named shopper data, and its ability to satisfy the shopper’s appetite for specific detail at point-of-purchase, probably represents the first real threat to traditional above-the-line media ever encountered……  Those in doubt should perhaps consider the difference in consumer attitude to an unasked-for interruption to a favourite TV programme, compared with the same consumer in shopper mode, hungry for detailed information on brand performance at the checkout…

Add to this the power of store-specific marketing and assortments, together with the vendor’s challenge of distilling national brand advertising, brand positioning, and category approach to branch level, via effective manning, and the opportunities and threats become clearer.…

Finally, having successfully overcome the above hurdles, it is crucial to retain a very practical approach to getting basic things right in retail, at local level.

Optimised use of shopper data

One example may help to illustrate the pragmatic approach required to optimise trading opportunities in the aisle:

As enthusiastic practitioners of open-minded data-mining, Wal-Mart demonstrate the application of their pragmatic approach in their ability to access their ‘Pentagon-scale’ database, and drill for examples of linked purchases, discovering in the process a Friday evening connection between sales of baby-diapers and six-packs of beer.

Many retailers would tend to dismiss the apparent relationship as coincidence, but not Wal-Mart. They were not satisfied until they established that the male in a partnership, shopping for bulk packs of diapers on a Friday evening, tended to pick up a six-pack of beer on the way to the checkout…

A more enlightened retailer might accept a direct relationship, and mount a Friday evening promotion on six-packs of beer in the alcoholic drinks sector, but not Wal-Mart.

Wal-Mart had the inspired pragmatism to acknowledge the link, the self-confidence and appropriate trade partnerships to move some beer into the Baby category and run a Friday beer promotion for new fathers.

Thus, uniquely in the world, Wal-Mart became the only retailer to merchandise beer in the baby section, achieving a 30% incremental gain in sales in the process.

Successful retailing is about doing simple things right, in a living laboratory. A vendor’s innovation can take nine months to reach a shelf, whereas a good retailer can put a product on a fixture at 0900 hours, and by 1600hours on the same day will know whether to de-list, or double the order…            

Ready for some real power-sharing…?