7 big ideas for driving front-end growth
Guest moderator Dan Mack of the Elevation Forum
DSN hosted its 17th annual Industry Issues Summit in December, bringing together a leading panel of executives for an in-depth discussion into how retailers and suppliers can drive more productive partnerships, unlock category growth and ultimately forge more meaningful connections between consumers and their brands.
Click here to read the complete transcript of DSN’s Industry Issues Summit.
“What blocks growth on a very high level?” asked special guest moderator Dan Mack, managing director of the Mack Elevation Forum, setting the stage for the day’s discussion. “The three things that block real growth are not picking the right partners, not building a culture that’s distinct, [and not being afraid of being disliked]. The most disruptive brands — you either love them or you hate them, and that’s quite on purpose. And third, not hiring people with a growth mindset. We are all failing more than we’re succeeding, so the ability to get over loss quickly is a really unique trait of winning organizations. They’re very resilient, and they love to learn.”
What follows here are the seven big ideas that came out of the panel.
The boomer-millennial balancing act
THE SETUP: Marketers’ attempts to reach consumers over the age of 50, according to AARP, have been miserably unsuccessful; 83% of people over 50 dislike being stereotyped. There’s a big difference between 52- and 92-year-olds, even though we all fit into one big group. Meanwhile, the new consumer — the millennial — sees the world from a values perspective. Brands can’t buy them; they can only earn them.
How do you balance the need to build loyalty with aging boomers, with the need to connect with millennials? — Dan Mack, Elevation Forum
We have programs that are tiered toward boomers, such as our circular and our Wellness 65+ program, as well as a number of other programs specifically tailored for them. We also know we have to look at millennials in a different way. I think the danger is clustering consumers into groups and thinking you should market to clusters as opposed to going one step further and looking at all of your customers as individuals.
For example, we have been having a discussion recently on Hispanic merchandising — specifically, if products should be integrated into everyday planograms or as a freestanding section that segregates products away from the everyday department. The consumer research would indicate that older consumers like to find their brands segregated to make it easier to find the products they know and trust. The younger consumers have a clear preference to have all products in a single location. The point is, when you talk about a particular consumer segment as if they all act the same, you will not be meeting their individual wants and needs. — Bill Bergin, Rite Aid
There is a danger to bifurcate the customer base into these nice names: boomers and millennials. ... I think about it in terms of how do we understand customers as individuals? ...
... We’re still organized by category, and so are all of you, and so that makes shifting to a customer-based, customer-centered viewpoint very difficult because none of us are measured that way. ... But what we’re trying to do now is to take the customer and the category — that intersection — and say, ‘When I’m in adult care ... what is the predominant need in the category? Who is the predominant customer?’ And even, ‘What’s the predominant emotion that’s going on when I’m in this category...?’
Similarly, if I’m in vitamins and I’m looking at that set, who is the predominant customer there? What are their issues [and] challenges?
[These are tremendous] opportunities for us. So we look [at it] by category, and we try to say, ‘Hey, who is the customer in this category? What are her needs? What are the key challenges that we can overcome?’ And then we can go build a promotional plan, an ExtraCare plan. We can build a planogram that makes sense. — George Coleman, CVS Health
Optimizing trade investment
THE SETUP: As manufacturers complain that retailer pressures shrink their corporate margins, hindering consumer investment, how do we honestly discuss and improve trade investments while investing in the most productive brand-building and relationship-building activities? — Mack, Elevation Forum
We use our quarterly fireside chats to engage our vendor partners to ensure we are aligned. We need vendors to partner with us, and they cannot do that effectively unless they understand our strategy and what is important to Target and our guest. Ultimately, the goal is to create win-win-win opportunities where Target, our vendor partners and our guests all win. We also answer any questions our vendor partners have at this venue. It is a two-way street. Together, we have to ensure Target’s and our vendor partners’ investments are working as hard as they can to deliver value to our guests. — Doug Stukenborg, Target
I think it starts with transparency, and it’s transparency on both sides. I think change is so fast today — the old way of doing business [has changed] where it was tell me your story and I’ll tell you my story, but you never get equal sides of each. I think those days are gone. ... Today, both retailer and manufacturer have to peel back the layers of their organizations and work together to stay current with the consumer ... meaning, you each have to be authentic brand ambassadors.
I will tell you all the things that are necessary to do business with ShopRite and how to connect with our purpose, but you have to be as passionate about your brand as we are [about ours]. I think what you’re seeing happening in the marketplace is you see these new, unique brands emerging and they’re really connecting with the consumer, and they’re connecting because the path that they’re taking is very authentic ... I often say, ‘I can’t fix your brand for you. I can only help you tell your story to our consumers, but it must be a compelling one.’ If your brand is not connecting with the consumer anymore, I think that’s a problem that you have to look at internally and fix. — Chris Skyers, Wakefern
I’ve been in retail [more than] 30 years now, and a long time ago, when I was first starting out in category management, my boss came to me and said, ‘I need you to increase your promotions and reduce your markdown line.’ You can’t do both, and he looked me square in the eye and he said, ‘That’s the job.’ That’s the job.
And that’s what I thought of when I saw this question. The job hasn’t changed; we’ve all been trying to do more with less over time. It’s just what that number is from year to year. And the vehicles change; I think the way we spend the money changes, and I’ll echo some of what has been said about both [the retailer and the vendor] having to win. We have to have ROI, and if it’s not working, we need to