Kantar’s Gildenberg offers tips on adapting to disruption

PHILADELPHIA — E-commerce’s endless aisle, click-and-collect shopping and the increasing prevalence of value-based retailing all have one thing in common — they’re disruptive to the traditional shopping trip where mass retailers deploy their best in-store merchandising tactics in an effort to generate a larger basket. And traditional tactics don’t work if the shopper isn’t walking through the door — whether it’s because their purchases are being delivered to them or because they’re shopping in a discount box.

“You’re going to get increasing pressure from retailers on the analytic capability to reach specific segments,” Bryan Gildenberg, Kantar Retail’s chief knowledge officer, said during the 8th Annual Emerson Group Retail Industry Day held here last week. “If only Emerson sold niche, targeted brands that could help the retailer define the environment that they’re in with incredible clarity and transformational elegance, this would be awesome, right?” Gildenberg asked facetiously. It’s actually a good thing that Emerson does exactly that, Gildenberg said. “This entity, which is Emerson and the collection of brands it supports, is unbelievably well-positioned to take advantage of this stuff.”

Retailers who are adapting to disruption in the marketplace are going after at least one of four buckets, Gildenberg said. They’re either re-inventing the store format to make the shopping trip more experiential, re-engaging shoppers on social media and mobile platforms to entice them into their stores, re-evaluating their approach to value-based shoppers or they’re retooling their digital commerce capacity in an effort to grow top-line sales in a more bottom-line-friendly venue.

All of that gets the shopper in front of the retail brand, but what happens if those shoppers don’t want to spend any more than they have in the past? That’s a big challenge for retailers today, Gildenberg explained, noting that much of the economic growth today is coming from shoppers who in the past had planned to spend less in the coming year, and who are now transitioning into shoppers who don’t want to spend more in the coming year.

That's a subtle, but significant difference.

“Here’s the trick. Retailers are good at selling stuff to people who want to spend more. I can trade you up. … They’re good at selling stuff to people who want to spend less, that’s all discounting and pricing,” he said. “What most of you have found over the last year or two, is that the shoppers are going to become much more sporadically reactive to promotions than they were historically — this is why. Basically, your shopper has turned from a deal-seeking coupon hound into every middle manager in America — ‘I’ve got my expense budget, I’ve just got to deliver it.’”

All of that creates a critical arena for suppliers attempting to use a more traditional model to sell into retail.

“Your battle as a [CPG] company, is against the endless aisle,” Gildenberg said. “A lot of the brands [that approach retailers] without a compelling economic argument, the retailer is going to try to sell them in the endless aisle. “If you’re a drug store, having 9,000 stores with 10,000 pieces of inventory that turn less than twice per year is at some basic level an idiotic economic model. No one would build a store that way today from scratch.”