Much has been written about Amazon acquisition of Whole Food Markets. Every day brings an avalanche of opinions: from the industry pundits' speculations on a scope of inevitable disruption of the grocery industry to flash analysis of the Whole Foods price reductions. I decided to join the choir and offer my observations and opinions from a perspective of the industry ecosystem participant.
So far there were strong indications of higher traffic in Whole Foods stores after the acquisition and lower pricing on selected items. There are also reports on internal operational changes that have sent the vendors, brokers and distributors into a very unhappy frenzy. The most disturbing are the Whole Foods shoppers' complaints about the quality of organic produce and availability of products on the store shelves.
At the time of this writing there is no evidence whatsoever of any positive change from the perspectives of shoppers or the grocery ecosystem. In fact, there is every indication that Amazon adopted a very hands off approach to Whole Foods management who continues to implement operational initiatives conceived long before the acquisition took place.
In the wake of the acquisition, some major grocery retailers announced significant investments into technology to combat Amazon's (technology giant) foray into their territory. Some, like Kroger, started to court smaller, regional product brands that are threatened by Whole Foods abandonment. That may be a very good development for artisanal food manufacturers, when and if it actually materializes.
Most analysis you can find focuses on the impact of the Whole Foods changes on very large, publicly traded companies. Very little is written about how the independent grocers, small batch product manufacturers, food brokers, demo agencies and merchandisers are impacted by these changes. There is some evidence of lower foot traffic in the independent stores and an ebb in the promotional activities by the brands on the store floors. However, many grocers we spoke to are in denial that a small grocery eco-system will be materially affected. And that is a mistake.
Thanks to Jeff Bezos's relentless focus on the quality of customer experience, i.e. long term sustainability of Amazon business, everyone assumes that the acquisition will produce some magical result and force a major change in how we buy our food. So far this "earthquake" is yet to produce a tsunami of change. Amazon does not always succeed, but it succeeds most of the time. Change now. Before you have to.
While the small, independent grocers cannot compete with the big boys' scope of technological investments, they can and should mobilize their ecosystem partners to provide a better, more personal, experience to their shoppers. As Whole Foods pushes away their trade partners, who helped them to become successful, independent grocers could use this opportunity to forge closer alliances to provide more engaging shopping experience in their stores.
Some people may think it is a trick question. Let me assure you it is not. Unfortunately some brands will only pay for demos because the retailers require them to support the "exposure" of their products. If this is your "strategy", the most successful demo is the cheapest one. In this case the demo budget is viewed as a promotional expense and no direct return is expected, except continuing to keep the product inventory on the store shelves.
If you think that only major brands are big enough to afford aggressive field/experiential marketing, you are missing the point - it is their commitment to demo programs that made them big. The brands that strive to promote products on the store floor, to the consumers who are there to buy, do it to lower customer acquisition costs. The success of such a strategy depends on effective execution to bring the desirable results. Well planned and coordinated demo programs are known to generate significant and lasting increases in revenue.
One of the most critical elements of planning is to decide which stores and at which times would likely have the most advantageous environment for your products to shine - even the best tasting products with the most creative packaging and sales sheets would not have a successful demo at the low traffic store. On the other hand, the pressure of very high traffic will cause even the best Brand Ambassador to give away too many samples without converting them to sales.
The most successful programs not only consider shoppers' demographics of a store, but also plan a frequency with which a sequence of demos should be scheduled in that store to maximize sustainable conversion. It is often far more profitable to invest in a smaller number of the "right" stores, than throw money at the wide range of locations in an effort to cover the market.
Recruiting and training quality Brand Ambassadors, demo table setup, selection and presentation of flavors, coordination with stores and inventory availability - are all key ingredients for "cooking" an effective field marketing campaign. However, without deciding on how to measure success you are not likely to achieve consistent results.
Recent research from Customer Experience IQ used four metrics to measure demo program effectiveness:
It is important also to measure the performance of individual Brand Ambassadors and correlation between the time of each demo and the product re-order data. The exact set of metrics depends on your products and your demo reporting capabilities.
If you believe in the mantra “innovate or die,” you might conclude that the largest consumer and retail brands are terminally ill. Giants like Kraft and Clorox all seem to be too slow and enslaved to shareholders to innovate. At the same time, they may be too large to perish… at least for now.
What we have here is the perfect storm for consumer mergers and acquisitions (M&A) avalanche.
Big consumer packaged goods (CPG) companies are struggling to sell their products to a new generation of shoppers. A quick look at sales across various product sectors shows a steady downward slide for big brands. In the past five years, large brands lost market share to small brands in 42 of the top 54 most relevant food categories, according to Jefferies. Erosion is happening in nearly every consumer category.
The specialty food industry continues to draw new consumers, particularly men and millennials. Nearly six in 10 consumers surveyed purchased a specialty food or beverage in the past six months, up from 47% in 2015.
The findings are based on an on-line survey of 2,155 adults in July. Specialty food sales last year rose to a record $120.5 billion, driven by the growth of small businesses and consumer trends. The core specialty food shopper is between the ages of 25 to 44 with a household income of $75,000 or more. Last year, men for the first time surpassed women as more likely to buy specialty food, and the gap has widened in 2016.
Nearly two-thirds of U.S. consumers have a branded food product that they love, meaning that they've developed some kind of emotional bond to it, according a new study from Foodmix Marketing Communications. The survey found 12 attributes associated with brand love—three of which are functional, and the rest of which are personality characteristics like one-of-a-kind, creative and trustworthy. Read more...
One of the recurring complaints you would likely to hear from Demo Coordinators is how flakey are the Brand Ambassadors they have to deal with. In fact, if you ever experienced scheduling a few demos, you have probably endured a Brand Ambassador's last moment cancellation or "now show".
I would like to posit that the Brand Ambassadors' perceived lack of reliability is not caused by their mercurial personalities, but by the nature of their business and unavailability of appropriate time management tools.
Consider the fact that most Brand Ambassadors are independent contractors who try to earn their living selling their personal skills in small time increments. After all, most demos only last 3-4 hours. As such, the Brand Ambassadors need to market their services to Demo Coordinators, Brand Managers, etc. as well as delivering these services in stores and events. It is impossible to estimate how many hours a Brand Ambassador has to market their services to get a single demo for which she can earn $60-$100. This reality forces them to continuously work with multiple Demo Coordinators, conflicting times and constantly changing dates.
Demo scheduling is a very fluid process that requires a lot of flexibility from all participants, from Brand Managers to store personnel, product distributor, to Brand Ambassadors. However, the last link of this chain, the Brand Ambassador, is the least equipped to deal with the demands of flexibility. The byproduct of a flexibility is uncertainty. In the case of Brand Ambassadors it is the uncertainty of being paid for their efforts. If the changes to dates and times create a conflict with their commitment to other brands they work with, they are the only link in the demo chain who is not getting paid.
Consider the fact that most Brand Ambassadors use a phone, email, Google Calendar and spreadsheets to manage their business commitments and activities, and you will see a picture of a juggler, desperately trying to keep all the "balls" in the air. It is only a matter of time and gravity before some of these "balls", i.e. demo commitments, come down crashing to the floor and cause the last moment cancellations or "no show".
There are myriads of project/task/shift/etc management services available online today. However, all of them are designed for the owners of these business processes, who are in a position to control steps, tasks and communications. Not for the last link of the process chain, Brand Ambassador, who is on the receiving end of all that "flexibility". Besides, very few Demo Coordinators use such services because they do not offer enough specific help for the demo scheduling process, and are not a good fit for other demo management tasks.
Use of a right tool for intelligent scheduling and coordination of ever changing demo requirements can go a very long way to reduce the frustration and "flakiness" of Brand Ambassadors. Additional benefits include controlled communications and greater availability of their time to you because the use of such a tool reduces the uncertainty of Brand Ambassadors being paid for their time and efforts.