Shopper-Centricity: A Model for the Future
The Food Marketing Institute (FMI) commissioned Tampa, Fla.-based Winston Weber & Associates, supported by Deloitte Consulting, to conduct the research and develop the report that led to a combined vision for the food retailing industry to move from category management to shopper-centric retailing, explained Mark Baum, chief customer officer at Arlington, Va.-based FMI.
“The business case has been made,” Baum said. “Industry practitioners – retailers, manufacturers and service providers – all agree: Change must occur. The current trading-partner collaboration model is inherently limiting. Many functions are suboptimized; data gathering, analysis and synthesis need to be enhanced. Decision support must become standardized and better utilized. Digital-based insights are embryonic today and must be part of the move toward personalization in a shopper-centric environment. Organization design, business planning, and execution processes and practices should be upgraded. And strategic alignment throughout the value chain is imperative.
“The blueprint to creating a shopper-centric model exists,” Baum continued. “The capabilities, to a large extent, are in place. We encourage industry partners to come together and utilize the shopper-centric road map to begin the journey today.”
For vendors, Jeff Culhane, SVP of sales and merchandising at Williamsville, N.Y.-based Tops Markets LLC, observed that “the ability to gain access to our data is worth the effort and resources they put into the process. Every vendor partner has been extremely pleased with the sharing of information, collaboration around the plans, and the insights they are able to gather and take back to their organizations. The level of involvement and resources put against the planning process has been nothing short of amazing.”
Vendor partners also like the idea of joint accountability, Culhane said. “As we build these plans together, the idea of being able to hold each other accountable is something many have never seen before,” he noted. “ Each action outcome of the plan has timelines with measurable goals in the form of a scorecard. Each goal has checkpoints and dates of execution that help ensure everyone stays on course.”
The solution-planning process does take time, Culhane acknowledged: “A thorough gathering and analyzing of data, researching the marketplace and building solid recommendations help build a successful plan,” he said. “At Tops, the plan presentations by the category business managers (CBMs) are done with full participation of the executive leadership team, including marketing, HR and operations. The key supplier partner with whom we collaborated is also in the room to assist in the presentation. It is as much their plan as it is ours.”
This, according to Culhane, also allows for more open dialogue, stimulating thoughts and further vetting of plan details and industry trends, as well as category or financial performance: “This part of the process ensures buy-in from the top, and quicker execution of the plan. The category business manager only needs to ‘sell’ the plan once.”
The Future is Now
Retailers should view the new shopper-centric retailing business model as a key priority, among other transformation priorities such as technology investment, store design and new formats.
In today’s intensely competitive and challenging environment, retailers have no choice but to make this paradigm shift to a new shopper-centric business model if they are to remain relevant in the marketplace. The benefits will include increased basket size, enhanced shopper loyalty, improved store execution and increased capability to differentiate in the marketplace.
Importantly, it will be a significant contributor to sales and profit growth.
(Editor’s Note: More information on the shopper-centric retailing model can be found in the 2018 Category Management Handbook inside Progressive Grocer’s December 2017 issue.)