The phrase “stands the test of time” no longer means what it used to. The amount of innovation and evolution required of retailers in just the last five years alone is exponential.
Consumer preferences are evolving at a rate that seems to follow Gordon Moore’s famous observation about the number of transistors on a microchip doubling every two years. Increased digital adoption, changes in promotional strategies, and conveniences learned during the COVID-19 pandemic have led to new shopping habits. It has become more difficult to deliver consistent omnichannel experiences to consumers. Add socioeconomic anxiety, and it’s easy to see why retailers and suppliers are looking for answers.
Today, businesses’ biggest competition isn’t the company next to them — it's the unknown. Retailers are tasked with meeting consumer demands today while trying to predict and prepare for what’s next. As each day passes, developing an innovative and marketable business strategy becomes even more difficult. But it is possible — and exciting.
To future-proof their organizations, retailers must adapt to data-driven approaches, leveraging actionable insights to cultivate meaningful customer experiences.
Demystify Omnichannel Consumer Behavior
Even the basics, like where and how consumers shop, have changed dramatically — and keeps changing. And like Moore’s law, the evolution will only get faster. For example, shopping trip frequency is up 18% since COVID peaked, but the purpose of those trips has changed. The days of stocking up in-store are over. “Spearfishing” trips with one to three items in the basket now account for 58% of all shopping, according to NIQ Omnishopper data.
Stock-up sales online continue to increase, but they still only account for 11% of all stock-up dollar sales. At Amazon, 72% of CPG shopping trips are spearfishing, compared with just 13% of trips in brick-and-mortar grocery stores.
As consumers now shift effortlessly between in-store and online, it can be challenging to pin down where they’re making their purchases and why. This can have significant consequences for retailers.
More than 80% of an item’s volume is driven by being on shelf, per NIQ Business Drivers, 2023, and retailers lose 46% of sales when an item is out of stock, according to the NIQ, Impact of COVID-19 on Consumer Behaviour survey, 2021.
To be successful, it is critical for retailers to capture and act on accurate consumer data across the omnichannel landscape. This creates supply chain, pricing, and promotion efficiencies, and, critically, improves customer loyalty.
To nurture and maintain relationships with today’s consumers, brands must ensure a consistent and cohesive experience throughout the entire lifecycle, across every brand interaction. This means collecting accurate, granular consumer preferences and carefully analyzing trends and patterns. Armed with the right omnichannel data, marketing and sales strategies can be tailored to maximize conversions and drive growth.
Uncover New Pathways for Growth via Product Innovation and Price and Promotion Strategies
Resetting price and promotion strategies is another way to maximize profitability and eliminate wasteful spend. The most effective companies leverage emerging technologies and clearly see the value of customizable data with actionable recommendations. Prior to 2019, the percentage of units sold on promotion was upwards of 30%, per NIQ RMS data. Given the current economic climate, promotional activity is now at an all-time low across the entire CPG industry.
That said, there are ways to protect margins through value delivery, early investment, and predictive analytics with AI. Delivering value is more problem-solving than price. Companies can bundle options, channel-specific sizes, and trial-driving strategies. Consumers will reward brands that invest in good value and performance at an affordable price.
Predictive AI offers a path to efficiency. By continuously monitoring, adjusting, and course correcting, companies can be ahead of changing market conditions. Through extensive, unmatched data mining powered by the latest machine-learning technology, retailers can create account-specific trade strategies to transform their future.
Foster Strategic Partnerships Between Retailers and Suppliers
Retailer and supplier collaboration will become more important than ever before. To drive mutual growth in times of change, everyone needs to be on the same page and focused on the customer. For retailers, working hand-in-hand with suppliers to drive business objectives leads to sustainable sales growth and improved customer loyalty.
For brands, a close relationship with retailers means access to key insights, which will improve ROI and offer more measurable results. These types of rewarding relationships ultimately improve the customer experience through more personalized experiences that are more relevant, valuable, and timely.
Best-in-class collaboration programs, with integrated software and processes, can also have a direct impact on topline growth. Specifically, these programs should include efforts such as integrated market analytics; supply chain analytics; assortment, promotion, category, and customer analytics; and personalized offer management.
While understanding and catering to today’s omnichannel shopper isn’t easy, there are innovative tools that can help turn related challenges into opportunities. Companies need to invest in solutions that allow them to make shopper-centric decisions — with a full view of consumer habits and trends — and will help them pursue opportunities for growth.
— Tracey Massey, Chief Operating Officer of NIQ