Using information to win the retail blitzkrieg (62.318Kb) - DOWNLOAD

Yesterday, technology, in the form of a superior product, gave you the competitive edge. Today, in industries as diverse as pharmaceuticals, IT and telephony, success hangs on the ability to beat competitors in a retail environment.

Meanwhile, the pace of change in retail is increasing.  A few years ago companies would run a promotion with a retailer for 3 or 4 months. Today a few weeks has become the norm.

Often, instantaneous response is the only way to survive. In the USA, mobile phone tariffs are set regionally, varying city by city.  So, telesales teams have to be able to react instantaneously to the latest local offers from competitors.  It is only by launching an immediate counterattack, with an offer that caps the competitors in some way, that companies can retain their customer base.

Often knowing where to push is half the battle. Microsoft found that its new Mediacenter PCs were selling better, by an order of magnitude, in the Mid West and Texas. Having access to regional store-by-store sell-out data, meant it was able to spot this trend and then push hardest in these areas, so building up critical mass. Having proved the product’s success in one region, Microsoft was then able to roll it out elsewhere.

Yet many suppliers are woefully ill-equipped for this new battle. Often they are working with companies, such as Walmart, who regard much of the data it collects as a competitive advantage which should not be shared with its suppliers. Suppliers also still face inventory levels of 4 to 6 weeks in the retailer, further clouding an already unclear picture.

Often, we find that technology companies simply haven’t got round to changing their cultural mindset away from technology and product supremacy.  Scratch the surface, and they haven’t begun to understand that they must now behave like the fast moving consumer goods companies they have become.

“Instantaneous response is the only way to survive.”

We have been working for the last six months with Data Analytics, an instore market research company to craft the sort of information armoury that these new technology FMCG companies need.

What is required is an online database, which brings together data feeds from a host of different sources. These should include:

- Sales on a store-by-store and region-by-region
  basis
- Data on what is actually on the shelves in
  individual stores
- Research on what promotions are currently being
  pushed in each store and in each store chain
- Prices at store chains on a regional basis

What is required is a way of merging all this data together, so that it can be used to take decisions.
So what lessons have we learnt along the way?

1) It can be done
Such databases exist, and are working in many industries where they play a vital role. However, the process of assembling this data, particularly the initial design and input, is extremely costly.

2) Use what you have today
It is easy to fall into the trap of not proceeding with the development of such a comprehensive database. It is a temptation to wait until the mother of all databases is ready.  But it is better to start messing around with the data you have to hand now. This process is about being creative and inventive. Indeed, it is only when you start to handle the data you have to hand, that you can start to specify that mother database.

3) Win over the retailer
It is possible to get retailers to buy into this process. They appreciate the threat posed by Amazon, Dell and others. This has to be a deeply collaborative process. After all, if this research can show them how to improve their shelf sales, then they are the ultimate winners.  It is always worth pointing out to a recalcitrant retailer that the benchmark here is not another of his suppliers, or one of his retail competitors. The benchmark is Dell and Amazon.

4) Let the frontline troops use the data to make decisions
A lot of the data to come out of an exercise like this is tactical. So it is vital that it is used by category managers, account managers or even the heads of telesales teams. Our sense is that this data is gradually being given and used by the people who are on the coalface.                         

Based in Portland, Oregon, but working internationally, Marketframes is a marketing network design, planning, and services firm. It focuses on the development, renovation, and management of marketing organizations. The company provides effective marketing system designs, action plans, and operational services. The aim is to help clients to optimize their marketing assets, investments, and activities. www.marketframes.com