Off the Shelf: The Retail & CPG Blog

A lot of shopping in my household is done post Christmas. Walk into any retail store and you see signs of "Clearance", "Sale" for all the merchandise left over from Christmas.

The size's available though are always in the L, XL, XXL category. Hardly any S; may be a few M's. I am sure this is especially frustrating for someone whose entire family falls into the Petite or Small/ Medium size range.

As for the "larger" consumers, I am sure you are happy with the deals you are getting!!

Most retailers decide their size distribution based on pre-defined percentages. A typical order to their vendors would go "Give me 100 units of that shirt; broken down into Small, Medium, Large, Extra Large using a distribution of 20%, 40%, 30%, 20%.

Depending on the retailer, this size distribution could be applied for the entire chain; for a set of stores; for some products, all products. The size distribution is typically derived based on past history.

Now for the typical problems in this approach:

• The history is taken based on sales. However not all sales are equal. Full-price sales is more representative than including clearance sales. Taking clearance sales just repeats history!!
• Given the demographic diversity in the US; it is no longer sufficient to take a generic size distribution across all stores. California will sell more "smalls"; and Texas more "XL's"
• A number of retailers order by pre-pack. In some cases the pre-packs are so generic that it completely overrules the size distribution used

There seems to be money on the table for retailers who invest in building "size optimization" capabilities; that can take into account regional differences and can accurately forecast size distributions.

Posted by Sudhir Holla at 10:29 PM | Permalink | Comments (0) | TrackBacks (0)

Customer Service:

The local grocery store that my mom goes to in Bangalore, India provides a full-service option of maintaining a grocery list on her behalf and auto-replenishing directly to the residence. They also check the inventory levels of some of the products at home!!

Product Innovation:

In response to the H1N1 scare, masks were in short supply. Some entrepreneurs went with the creative option of cutting a bra in the middle and making masks out of them

Customer Segmentation:

A small group of street kids in India make margins of 1000% plus on newspapers by selling "local" language newspapers outside the respective consulates in Mumbai, India. Apparently Europeans and Middle Eastern Arabs are ready to pay a significant premium for the pleasure of reading a newspaper in their local language!!

Pop-up Stores:

Ok, this one is not really from the developing world. But landing by cruise ship at a tourist location? Take a look around at the pop-up stores and services that emerge from the wood-works to cater to the customers stepping off the ship.

All this without sophisticated technology; but assisted with some relatively cheap labor. Can technology help in providing the same level of service and responsiveness in the US? Would love to hear your reactions and more examples.....

Posted by Sudhir Holla at 5:00 PM | Permalink | Comments (0) | TrackBacks (0)

Going green is no longer a fad. With the large-scale destruction of the Earth’s ecology and natural resources, environmental consciousness has become absolutely imperative. The corporate world has responded by making it a high priority to “go green” and to implement sustainability initiatives in recent years.

And for the last few years, in all the board room discussions, in town hall meetings across the globe, there is a considerable increased awareness towards Go-Green initiatives, and sustainability. But there are some CPG corporations who take up sustainability packaging just merely out of retailer’s compulsion, or from the perspective of regulatory compliance and cost reduction and not from environmental perspective.

Posted by Sivakumar.V at 11:04 AM | Permalink | Comments (0) | TrackBacks (0)

In this age of discerning and value chasing shoppers, Customer Loyalties can change in a single moment and gaining or retaining loyalty is a marketing warfare. Store is the final frontier where products are given equal opportunities to see, evaluate and choose the brand. Brands can be made or broken in these last few minutes of life span a shopper will give to your brand. It is then highly imperative for the brands to make best use of these last few minutes and ensure that the customers stay loyal. Here are 3 basic strategies, Retailers and CPG companies can look at to enhance customer loyalty.

Know (Insights into shopper and merchandize activity, shopper insights)
Gaining insights on what happens at the store real time with respect to your product is the most fundamental building block of enhancing customer loyalty at the final frontier. You need to know if enough opportunities were provided to the shopper to see the brand and evaluate it. Retailers and CPG companies should look for technologies that can help them measure the number of shoppers who had the opportunity to see their products, the number of shoppers who evaluated the product, average time shoppers spent seeing/evaluating the product and how much of those evaluations was converted to sale. Insights at such a high granularity will help Retailers & CPG companies to determine product affinities, adjacencies and store product placement plan effectively.

Inform (Shopper engagement)
Shoppers have been changing. Not so long ago, shoppers relied entirely on either word of mouth amongst their friend’s circles or on store associates or brand names to collect information about the products. Internet changed all that and information was made available to the shoppers at their finger tips, outside the stores. Now, mobile phones are changing even that by bringing the information into the stores as the shoppers shop. Both Retailers and CPG companies should make bets use of this opportunity to provide invaluable information to the shoppers. Information about products, new launches, promotions, offers, allied products will help in increasing opportunities to cross-sell and up-sell thereby increasing the sales basket size.

Engage (Shopper marketing, mobile marketing)
Mobile technologies are changing the way marketing is traditionally done. Marketers have excellent opportunities today to engage the shoppers real-time through communities and social media networking. Enabling their shoppers to access product reviews, peer reviews, write their opinions, feedbacks and ideas on product usage, co-development etc are few of the avenues that retailers & CPG companies can use to engage with their shoppers more effectively, real time at the store.

If you are attending NRF BIG show, here is an opportunity to know more on shopper marketing and store insights. Do plan to visit our Innovation Station #2171 at the BIG show, our experts in Shopper Marketing and In-Store Marketing will be glad to demonstrate how some of the global Retailers and CPG companies are enhancing customer loyalty at the final moment of truth.  You can also schedule a meeting with our experts by mailing Monica_pepicelli@infosys.com or visit us at room #1783 for live interactions.

Posted by Kirthi S Subramanian at 8:45 AM | Permalink | Comments (0) | TrackBacks (0)

So Mr. Dhir has taken us through the some of the possibilities of scanning and using 3-D images for selling such things as clothing online. There are a lot of dependencies for this to come about and put the "reality" in augmented reality. Once the dependencies are in place, the possibilities are amazing.

So what needs to be in place for this Web 3.0 to work? Along with viewing things in 3-D (think Halo, except for shopping and not shooting), there is also the potential for 3-D browsing. All of this will put a strain on your graphics card. You'll also need a new 3-D monitor and 3-D navigation tool. Technology has a funny way of catching up quickly though, I expect these items to be in place before someone can write a practical application for them.

Assuming all of the technology comes together (it always seems to), what does this mean for eCommerce as we know it?

With Adobe's Scene 7 already showing 360 degree views of products, augmented reality proposing more 3-D views, the next step is 3-D browsing. The question is, does this really create a better browsing experience?

My prediction is that what starts as a gimmick could develop into something tangible. The obvious place for this phenomena will be at a store kiosk. It's unlikely that brands and retailers build 3-D browsing for the net in an environment where no one has a 3-D monitor, mouse, or "goggles." However a store kiosk at a high street retailer can generate interest and create a unique shopping experience. Coupled with endless aisle (the idea of being able to purchase items at a kiosk that are out of stock or not available in the store) this creates a cool shopping experience. DIY retailers have been using virtual showrooms for the past few year but this presents a whole new level of that experience.

As the technology develops, Web 3.0 will catch up with gaming industry, and we'll practically be browsing in "The Matrix." Where do you see the opportunities? As always I have more questions than answers......

Posted by Seth Lively at 10:18 PM | Permalink | Comments (0) | TrackBacks (0)

Today I read in Business Wire about orderonlinedrugs.com with a tag line "Your #1 Online Canadian Pharmacy".  The orderonlinedrugs.com is claiming that it can save on the prescription drugs up to 80% compared to prices in the US.  Orderolinedrugs.com is slightly different from other online pharmacies as it claims to be transparent in where the prescriptions are filled (Abbotsford, BC, Canada) and fully licensed pharmacy part of the Rexall group.  Orderonlinedrugs.com is one of the many such online pharmacies operating outside US however targeting US consumers.  What if importing of prescriptions drugs are allowed in US?

You might be aware of the famous PharmacyChecker.com who collects, evaluates and reports credentials, prices and customer feedback regarding online and mail order pharmacies.  Pharmacychecker.com has been in operation for years now and many of the people living in US are very well aware of them as it is the place to go for comparing drug prices.  Today's comparison shows unit price of Lipitor Brand Drug (10 mg) is selling for around $1.60 by multiple online pharmacies who are in Canada, Turkey, New Zealand, Israel, etc whereas costco.com is selling the same branded drug for a unit price of $2.90 that explains the up to 80% savings claim by orderonlinedrug.com.  By the way, orderonlinedrug.com is also a verified member of PharmacyChecker.com from today.

I couldn’t resist my urge to click and check the orderonlinedrug.com.  Reasonably a simple online pharmacy site with no major bells and whistles with simple prescription drug search feature.   Our popular Lipitor 10mg unit price is $1.15 for 90 pills package.  My next attention went to the Mr. Obama picture in the Daily Medical News section claiming that Obama supports Canadian Pharmacies.  Very intelligently used Obama for the marketing, well done by orderonlinedrugs.com.  The last thing which caught my eyes is that the disclaimer in the bottom which says FDA's general position: The FDA, due to the current state of their regulations, has taken the position that virtually all shipments of prescription drugs imported from a Canadian pharmacy by a U.S. consumer will violate the law.

Few months ago (June 2009), a bill was introduced in US Senate S.1232 : A bill to amend the Federal Food, Drug, and Cosmetic Act with respect to the importation of prescription drugs, and for other purposes.  This bill is yet to be passed.  This bill allows importation of qualifying drugs from registered importers.  This should significantly reduce the cost of prescription drugs. 

Posted by Ezhil Mani at 5:40 AM | Permalink | Comments (3) | TrackBacks (0)

CPG companies have been dabbling with Trade Promotions Management for a very long time and have come a long way in understanding the nuances of TPM. Yet, there seems to be a gap in their understanding and the maturity of the practice in global organizations. With more and more CPG companies looking at globalization to balance it out against the effects of economic slowdown, it becomes more prudent to take a closer look at the maturity of trade promotions management practices at their own organizations. The CPG companies have much more need today than ever to closely monitor their trade promotion management systems, processes and returns of the trade promotion programs. In one of the quantitative researches, Lora Cecere, AMR Research (Requires AMR subscription access) concluded that almost 14% of a company’s revenues are spent in trade promotions, and yet only 52% of them are even evaluated post promotion.

At Infosys, we conducted a survey of global CPG companies along with Trade Promotion Management Associates (TPMA) with 3 objectives –
1. Global Trade Promotion Management (TPM) Practices: What practices do leading international firms follow
across geographies with respect to systems and processes?
2. Systems and Tools in TPM: Do top global marketers implement the same systems in all the countries where they
do business? To what extent do they customize?
3. Barriers to TPM Implementation: What are the biggest barriers they face to global implementation?

The results were revealing. It was amusing to know that still 60% use excel based sheets for managing promotions, many are in early stages of evolution of systems and tools in TPM and the non-standardization of integration of data owned by multiple players and different systems poses the major challenge in implementing TPM effectively. There were many revealing insights from the survey which I’ll cover in my subsequent posts.

The results were also presented in a webinar by me and Bob Houk, Executive Director, TPMA which is available here for download.

What is the maturity of TPM in your organization? Are you still stuck with excel based spreadsheets? Do you feel the need for integration of multiple systems, platforms and data models? Let us know.

Posted by Hari Natarajan at 7:48 AM | Permalink | Comments (0) | TrackBacks (0)

Cost-optimization is currently one of the high priorities for companies. It is very important to make sure focus does not shift from this during good times. According to a 2007 KPMG survey of more than 400 companies worldwide, 9 out of 10 cost reduction programs fail to achieve their targets, and the gains that are achieved appear to be short lived.

Back in June I came across an ingenious online shopping experience that Zugara had developed to allow customers to ‘try on’ clothes online before committing to a purchase. By using an Augmented Reality interface between their site and a customer’s computer and webcam, Zugara provide a service whereby customers can see an augmented reality version of the clothes they’re interested in, projected onto their image on screen. Sounds pretty cool huh?

This of course followed the fantastic use of augmented reality by UK retailer Glasses Direct in which customers can’ try on’ different glasses before purchasing them online. So here we have two solid examples of real-world applications of augmented reality. I then pondered, how long will it be before we can stand in front of our webcams and have flawlessly fitting clothes delivered to us each time we shop online? Think about it, it's merely a case of developing software to determine our measurements; surely this cannot be too difficult right?

When I read on Revolution Magazine that the UK fashion company InnovaClothing developed software that uses state of the art body scanners to capture a 3D image customers to produce perfectly fitting clothes, I was excited to say the least. This is the world's first online shopping service that features a 3D body scan to fit clothes to each customer's unique body shape.

After all this hype I’m going to throw a bit of a curve ball, because this technology isn't quite as far along as you would hope. The service currently requires customers to endure a consultation scanning session in the company’s office in Glasgow.  However sources have suggested that this service will be made available in more widespread locations in the next 2 years.

It would be interesting to know how far we are from having the same service provided directly through a website.  As always, I look forward to hearing your thoughts and comments around this topic.

For those of you who found this entry interesting I would implore you to take a look at a research project by the University of Cambridge called ProFORMA. It's only in the very early stages of development but already the results speak for themselves. This video shows how easy it is to scan an object with only a standard webcam. Considering that this is a conventional 2D camera it certainly may spell the end of costly 3D scanners and open the doors to a whole new realm of customised clothes shopping online.

Posted by Gaurav Dhir at 11:22 AM | Permalink | Comments (2) | TrackBacks (0)