Retail & customer experience

Customer experience in retail, is the overall journey of the consumer from the moment he or she sees your store to the moment he/she leaves. Due to the prevalence of social media and e-commerce, this journey now includes your website, reviews left on the internet by your previous consumers and online customer service experience.

According to a recent Price Waterhouse Cooper study, 73% of shoppers said retail customer experience is more important to them than price, or quality. Not only did they value positive customer experience, but they found that it influenced their decision on where and what to shop more than advertising did. More than 40% were even willing to pay more for a better customer experience.

No wonder retailers are paying attention to customer experience and there are several start-ups in this space.

Historically retail execution in FMCG (which we’ve covered in previous blogs starting with retail execution, continuing to the first and most important P, Product and ending with Proposition) ensured great customer experience in store. These days, while this still generally holds true, there are more elements that influence customer experience.

So how can you improve customer experience?

Your customer experience strategy should be based on your customer’s journey from when they arrive at one of your stores all the way through to post-purchase. Are there opportunities to interact with your products and services? Is your store inclusive and accessible? How customer friendly is your customer service team and the customer service process? What is the online experience of your store/e-commerce site like for your consumer?

Contactless as well as range customisation for location are key aspects for retail customer experience these days. Ever noticed that the range in each Zara store you step into is different from the rest? By analysing the products most relevant for each store location and stocking products that customers seemingly want at a local level, you can dramatically optimise operational efficiency, reduce returns and increase sales. Now, more retailers are following the trend Zara has set including Sephora and H & M. By customising assortment for each location, retailers can boost brand loyalty and provide a streamlined & relevant customer experience.

Social responsibility & Convenience

These days, supermarkets (ASDA, ALDI, Morrisons, M & S Food, Waitrose) and convenience chains (notably, SPAR with their Eat 17 collaboration) with stores that have packaging free aisles, have also seen an increase in new customers. And now with the increase in prices of day to day groceries, packaging free options may prove to be more affordable than packaged versions due to lower price increases and so may appeal to larger groups of people than just eco-conscious consumers.

Location (for quick impromptu visits), fast delivery and timing of delivery slots have been key drivers of convenience, which has emerged as a very important element of customer experience post pandemic.

Timing of delivery and availability of delivery slots is one of the key reasons Walmart is partnering with Drone Up to deliver grocery orders to parts of Arizona, Arkansas, Florida, Texas, Utah and Virginia.

Social & live sales in e-commerce and in store

Another emerging trend is live shopping. An increasing number of retailers are looking at implementing live shopping solutions on their e-commerce sites. We have now come full circle from door to door salespeople selling FMCG brands to self serve supermarkets and now back to sales people presenting their brands and SKUs online for sales. Not only are several retailers developing homegrown solutions for this, but they are also partnering with start-ups like Shoply and Vurdere.

There are several FMCG companies that have partnered with retailers to display their marketing/sales content on screens below/next to the shelves with their SKUs taking online sales/marketing content to its logical conclusion. For example, Muller partnered with ASDA to display their marketing content on screens close by/below the shelves displaying their products.

There are several CX initiatives by supermarkets that we haven’t covered in this blog. These are simply a few that stood out. If there are any supermarkets or convenience stores in particular that have grabbed your attention with their CX initiatives, please email me with details at veena@salesbeat.co so we can include them in another blog or cover them in our podcast.

Benefit Cosmetics and how they leveraged NFTs to increase consumer engagement & sales

The term NFTs (these days) is commonly associated with art these days. According to The Verge, NFTs can really be anything digital (such as drawings, music, your brain downloaded and turned into an AI), but a lot of the current excitement is around using the tech to sell digital art.
However, this is not about art, today our blog is about how Benefit Cosmetics leveraged NFTs to increase consumer engagement and sales during the pandemic by building a bespoke Virtual Atoms (a form of NFTs) powered platform.

Launch amidst lockdowns

When the UK announced nationwide lockdowns in 2020 and early 2021, Benefit Cosmetics needed a way to engage their consumers and encourage sales to mitigate closure of their stores and concession stands. Lockdowns were hard enough on sales of cosmetics, but even harder on launches of new products in cosmetics, skin care and hair care. And this was exactly the challenge Benefit Cosmetics needed to overcome. They had a new mascara product to launch when lockdowns hit. The new product being launched was They’re Real! Magnet Extreme Lengthening Mascara. The company needed a way to launch the product, reach their target consumers (‘BeneBabes’) and drive conversion.

A new way to reach their target

They needed a new approach to their sales strategy and the new consumer engagement platform needed to appeal to a jaded and frustrated audience who were now bombarded with Facebook & Instagram ads. Benefit Cosmetics describes its target consumer as ‘committed to the brand and active in social media interactions’. This meant that any ads or campaigns on Facebook, Instagram, Twitter or TikTok, would be just another ad to the target Benefit consumer. They needed a way to get their attention.

To do this we used a pioneering new technology, Virtual Atoms (VA) – a form of NFTs, to create a ‘lashtastic’ virtual-media campaign with real-life results.

Virtual Atoms (VA)

Benefit Cosmetics used a new technology, Virtual Atoms (VA), to create a virtual media platform and campaign to reach and wow their consumers. The VA campaign was multi channel and gave ‘BeneBabes’ a full 360degree experience if they so wished. Ads on social media encouraged fans and potential consumers to sign up to the VA platform. The platform engaged its users through virtual and real life experiences that had gamification at their core and drove them to buy the new magic mascara.

Users were asked to drop a pin to share their location. Then using AR, registered consumers used their device camera to view and collect ‘surprises’ they could see around them within the safety of their home/wherever they were then.

The surprises, Virtual Atoms, were stored in their Virtual Atoms’ wallet and could be redeemed to ‘spin the wheel’ and win prizes such as virtual beauty consultations, mascaras and product discounts. Winners were then redirected to their virtual store where they could collect their prizes and also buy product.

The platform also housed exclusive content from well known beauty influencers and promoted the campaign with nearly 1.4million followers on Instagram.

The results

Through the innovative use of NFTs and Virtual reality, Benefit Cosmetics created an omni-channel campaign that was fun for its target consumers and also delivered results. The campaign delivered a conversion rate of 55.4% vs a target of 46% and a click through rate (from registration to the platform) of 39.4% vs a target of 35%. The average dwell time was 2 minutes and 22 second, 29,870 new BeneBabes registered and 16,534 prizes were collected.


Not only was invaluable data captured through this campaign, but the platform helped Benefit Cosmetics connect with new and existing target consumers during a time when other companies struggled to do so.

The changing world of customer experience in FMCG

Forrester Research defines customer experience as “how customers perceive their interactions with your company.”
Customer experience in FMCG starts with how customers become aware of a brand/company and ends with any interactions with the company’s team for returns, damaged products etc. This includes any activities the brand team or company may undertake to increase awareness and encourage intent to buy. Eg: sampling campaigns, surveys, free product, in-store promotions etc.

Customer centricity aka customer experience aka CX is becoming an increasingly important business KPI in FMCG companies and retailers.

Why is CX becoming increasingly important in FMCG?

When customers (consumers) have positive experiences while interacting with a brand, they tell others about their experience. They do this through reviews on retailer/brand websites or on their social media accounts. This is free word-of-mouth advertising for the brand. Positive customer experience can also encourage brand loyalty and repeat purchases. 

But how do you improve CX if you don’t sell to the end consumer?

This is the case for many FMCG companies that sell their brands through distributors, supermarkets & convenience stores. For these companies, retail execution is key to unlocking superior customer experience. They employ various strategies including ‘shop in shop’ concepts, interactive brand discovery on screens, samplings/tastings, product experiences and brand videos. In-store brand ambassadors (sales people) who are knowledgeable about the brand who consumers can talk to and learn more about the range are extremely effective. Brand ambassadors can not only sell effectively to consumers, but they can also act on/pass on to relevant brand teams any feedback the consumer gives.

However, the pandemic has accelerated change in how consumers/shoppers buy and experience brands. Previously, it was important to have a great brand website and an e-commerce portal. Now it is vital that consumers are able to access the brands without travelling to a store.

A few recent CX stratagems employed by brands

Below are a few examples of superior CX which have generated considerable interest from consumers and have translated to sales in these challenging times.

‘Lumi’ by Pampers:

The Pampers team came up with Lumi as a way to address the plentiful worries a new parent has. The goal wasn’t just to sell Pampers. They understood the worries that new parents have about their baby’s sleep routine and created an app that acts as more than a baby monitor. Lumi monitors their baby’s sleep patters, tracks diaper wetness to alert parents and provides actionable insights on how to sleep train their baby. Lumi is all about the baby and providing the baby’s parents with peace of mind.

By making the baby’s comfort and development the core of the Lumi app/monitor, Pampers has delivered a truly superior customer experience that will encourage new parents to buy Pampers diapers. The ones that work with Lumi are only 4 cents more expensive per diaper than regular ones.

To top this all off, the Pampers website is all about expecting mothers and the baby. While there is a section on ‘products’ that lists the Pampers range, most of the website is about the various stages of pregnancy, and about babies and their development. You cannot get more customer centric than that!

Heineken Silver in the Metaverse later launched in real life

Brewed with pixels, Heineken Silver is the world’s first virtual beer. Heineken launched its ‘digital’ beer inside the company’s virtual brewery. According to the company, the beer is made of the finest, 100% computer-generated ingredients, brewed with Binary Coded Hops grown by NPC (non-player character) farmers.

Heineken partnered with self-taught street artist, J. Demsky to design parts of the virtual brewery. According to several attendees, the launch event was (intentionally) bizarre, later confirmed by Heineken.

Bram Westenbrink (from Heineken) said, “We know that the metaverse brings people together in a light-hearted and immersive way but it’s just not the best place to taste a new beer.

Our new virtual beer is an ironic joke. It is a self-aware idea that pokes fun at us and many other brands that are jumping into the metaverse with products that are best enjoyed in the real world.”

In an ironic twist, Heineken took Heineken Silver from the Metaverse and launched it in real life last month.Taking this further, Heineken unveiled a series of FRTs – For Real Tokens – collective art pieces by Spanish artist, J. Demsky, poking fun at the NFT culture during the launch event.

Heineken was not afraid to poke fun at themselves with the launch of Heineken Silver in the Metaverse. By sharing this experience with their loyal consumers and providing an unforgettable experience for new to Heineken consumers, the brand built strong rapport with their consumers.

Launching Heineken Silver in real life showed they listen to their consumers and is a key element of CX.

AB Inbev’s digital horses and their vision of Metaverse beer which can be delivered in real life

AB InBev moved into the virtual Ethereum based game horse racing platform Zed Run. According to Lindsey McInerney, “brands should parallel in the metaverse what they do in reality”. 

With its history of sport sponsoring, especially horse racing, AB InBev was eager to be among the first to start one in the metaverse. They moved into the virtual Ethereal based horse racing (game) platform by an Australian start-up. The virtual horses on Zed Run are ‘breathing non-fungible tokens’. While users are able to name their horses, how their horses behave on the track is defined by algorithms based on characteristics such as their bloodlines, just like in real life.

According to Adformatie, Stella Artois created a set of unique horse breeds for Zed Run, with Stella Artois-themed skins and a 3D racetrack. According to Forbes, these unique horses were sold for millions of dollars for the digital races.

This creates an entirely unique customer experience for the target consumers for Stella Artois and Budweiser. They have created a new of way of reaching their target consumer and providing them with an unforgettable brand experience.

According to McInerney, the vision is to some day have people from different parts of the world attend the races together, buy a round of beer at the races and have them be delivered in real life, so friends can virtually attend an event and have a drink both virtually and in real life.

By creating new ways for people to get together and bond, AB Inbev is providing its existing consumers with an unforgettable experience that they are unlikely to forget. Also, they have created an innovative channel to reach their target consumer and encourages trial.

There are several other brands leveraging technology to create unique customer experiences. If there are any brands in particular that have grabbed your attention, please email me with details at veena@salesbeat.co so we can include them in another blog or cover them in our podcast. The next Salesbeat blog will look at how retailers are leveraging technology for superior customer experience.

L’Oreal & Modiface: no more messy in-store trials

On 16 March 2018, L’Oreal announced their acquisition of ModiFace, an Augmented Reality (AR) company known as the leading provider of AR technology for the beauty sector. L’Oreal had been working with ModiFace on a project basis for 7 years before this announcement was made.

Early months

A year into the acquisition, by early 2019, they had developed several hundreds of solutions, nearly one project a day, according to an interview by The Drum, of Lubomira Rochet, the Global Chief Digital Officer. According to Lubomira, they had launched 120 of those projects by the end of the first 12 months as they had observed that engagement times double and conversion rates triple with the AR feature on their website/app.

Amongst these solutions were a diagnostic tool capable of predicting and addressing visual signs of ageing to make product recommendations and a virtual shade selector tool to make hair colour recommendations. They were also testing the technology for consumers to virtually try out cosmetics from the comfort of their homes in early 2019.

Just in time for the chaos 2020 brought the beauty sector.

Lockdowns & L’Oreal

L’Oreal went into partnership with Google. Consumers seeking lipstick or eyeshadow brands by L’Oreal could use the ModiFace solution to try on any shade virtually before they bought the shade they wanted.

Through a similar partnership with Facebook, they saw a five fold increase in usage of their virtual make-up tools and the conversion rate from ad to sales was three times higher with the virtual try on tool. It was particularly effective for hair colour, due to salon closures during the pandemic.

202o results

When the results for financial year ended 31 December 2020 were announced, Jean Paul Agon, L’Oreal’s then CEO, said, ‘….sales achieved in e-commerce rose sharply by +62%, across all Divisions and all regions, reaching the record level of 26.6% of the total Group’s sales for the year.

Despite declines in sales of Professional, Luxe and Consumer product ranges, sales of their Active range grew by 13% that year. Also, there was a remarkable difference in sales across regions. Asia Pacific, which has always been a technology friendly region with high adoption rates for new tech, saw an increase in sales of 1.5%, despite the pandemic.

Beyond 2020

In 2021, L’Oreal recorded a sales increase vs 2020 of 16%, with e-commerce claiming nearly 30% of sales. By this time, L’Oreal revenues had recovered to nearly the same revenues as 2019… due to their almost prescient investment in technology.

Recent regulations in the FMCG sector

Increasingly, consumers are demanding products which minimise harm to, or have a positive effect on, the environment. As a result, there has been a proliferation of brands and products which claim to meet that demand. Thus, there have been an increasing number of regulations in the FMCG sector addressing health and environmental impacts , especially food & beverages in the last 2 or so years. And still more to come.

Two of the key ones are around the plastic straw ban, in place in several countries and pending in several more, and around HFSS (high in fat, sugar and salt).

HFSS regulations

Legislation around HFSS (to be implemented from October 2022) in the UK has been the topic of discussion for a few months now. Companies have been scrambling to reduce the fat, salt and sugar content in foods to avoid being subject to advertising and promotional restrictions.

Brands that fall under the HFSS category will face restrictions on how they can advertise their products and also what promotional mechanics they can use. For example, volume promotions like ‘Buy one get one free’, ‘Half price’ and ‘Buy 2 get one free’ will no longer be allowed for this category. Also, they will no longer be able to display them in shelves at end of aisle, check out or near the entrance. Europe has also mandated restrictions(but not as stringent as those in the UK) on HFSS products in its ‘Farm to fork’ strategy.

A report by Access to Nutrition Initiative shows that in the UK, 71% of sales at the largest food & beverage companies here are generated by brands that fall into the ‘unhealthy’ category. So it goes without saying that there is expected to be a significant impact on revenues of these companies. To the extent that The Kelloggs Company is taking the UK Government to court over the HFSS regulations.

According to IRI, a big data and analytics company in the sector, the changes place £1.1bn of sales at risk in the UK. This number raises the question of how much of the packaged/processed foods we buy fall into the HFSS category.

Expected loss of sales by category. Source: Barclays IRI research

There are several ‘healthy’ low fat products that also fall into this category. This is because, very often, with low fat brands, they are reformulated with hidden sugars to improve the flavour. Case in point is low fat or no fat natural yogurt. As they are not flavoured, you assume the yogurt has no sugar as it does not taste sweet. However, there are ‘hidden’ sugars to make it taste better without the added fat. How can hidden sugars make food taste better? Probably the subject of a separate blog.

Some companies like PepsiCo (Walkers snacks business unit in particular) have been proactive and launched HFSS compliant versions of their most popular flavours and SKUs.

Others like Mondelez (confectionery), have decided to stay the course. As all companies and brands in the confectionery sector face the same regulations, they expect that they may even benefit from the strong established brands they have in their portfolio. They feel they are less likely to lose share to new entrants due to the new regulations.

Plastic straw ban

Another piece of (impending) regulation that has a major impact on the FMCG sector is the one around plastic straws.

According to a BBC report in 2020, when England banned single-use plastic straws, stirrers and cotton buds, an estimated 4.7 billion plastic straws, 316 million plastic stirrers and 1.8 billion plastic-stemmed cotton buds were used in England every year.

Scotland has new laws around single use plastics, including straws coming into place in 2022.

Source: www.zerowastescotland.org.uk

Canada is aiming to ban single use plastics including straws by end of 2022 and China has also banned plastic straw use and sale in restaurants.

While there is no federal ban of single use plastic straws in the US, cities that have a plastic straw ban in place include Miami Beach in Florida, Seattle in Washington and Malibu in California. India is now implementing a strict nation-wide ban on single use plastic straws.

While a ban on single use plastic straw may feel daunting for several companies, what we need to remember is that paper straws preceded plastic ones. And natural rye grass straws preceded paper ones.

The earliest known use of straws is by the Sumerians in Mesopotamia. They used straws to drink beer that they brewed in large vats (too heavy to lift and pass around or pour into smaller containers). So they drank from long straws together.

In 1888, Marvin Stone filed a patent for drinking straws made of manila paper and in 1937, Joseph Friedman creates the worlds first bendable straw by inserting a screw in the straw and winding floss around the thread of the screw to create grooves. Upon removing the screw, the straw could now bend.

It was only in the 1960s that plastic straws replaced paper straws. But by 2020, an estimated 500million single use plastic straws were being used every day. In Europe, 25.3billion single use plastic straws were being used every year.

So what alternatives are available?

Paper straws – We used them once before and the technology exists. However these do have a large environmental footprint when compared to re-usable alternatives.

Bamboo straws – These are becoming increasingly popular and several start-ups are now making and selling bamboo straws. (Side note: If anyone is looking for bamboo straw suppliers, feel free to contact us and we can put you in touch with a few)

Metal straws – Metal straws are now more popular than bamboo ones, as consumers can clean and use them again.

Re-usable plastic straws – While these reduce the number of plastic straws thrown away, this is still plastic and we are just ‘kicking the can down the lane’.

While banning single use plastic straws are a great step toward reducing plastic pollution, FMCG companies should also view this as meeting consumer demand as on average, 8 in 10 consumers are looking to reduce plastic consumption.

For those interested, below is a video by the National Geographic on the history of plastic use globally.

What else do you think FMCG companies should do to reduce single use plastic? Do you think there should be more done to make packaged food & beverages healthier? Send us your thoughts by commenting on the blog or on our posts on social media.

Unilever – how the marketing team returned Pot Noodles to sales growth

This case study looks at how understanding your consumers and your consumers’ motivations better, helps you keep your brand in growth.

Pot Noodle has been a supermarket staple aimed at 16-24 year olds. The brand became iconic in the ’90s when Gen X (aka slacker/MTV generation) embraced the brand for its ease of use. According to Marketing Society, ‘These were the kids who were proud to sit around in their undies on the sofa watching Men Behaving Badly and playing on their PlayStations. The ease and convenience of Pot Noodle made it the perfect food for this infamous 90s lifestyle, and the brand became emblematic of slacker culture.’

The team had been using music themed ads for this target segment. In the noughties, the Pot Noodle team launched a new ad campaign, ‘Why try harder’, which according to Marketing Society, featured a man marrying a footballer in order to live the easy life and another pretending to be a towel so people would carry him to the beach every day. While the ad was in keeping with the generation they had previously targeted, the 16-24 year old of the millennial generation had different values from the previous one. So the brand started losing share to others in the same category. The irony was that the category was in growth and Pot Noodle was underperforming vs the remainder of the brands in the category.

What was causing this?

This generation, the Millennials, had grown up watching their peers become tech billionaires and global peace envoys. According to a 2014 survey, 79% said career success was important to them, 76% wanted to achieve more than their parents and 55% planned to start their own business. In complete contrast to the ‘slacker’ image portrayed by the Pot Noodle ads, this generation was probably the most ambitious one yet.

So why was the rest of the category in growth?

It wasn’t that the rest of the category was in decline as well. In fact the category grew by c. 2% (value) between 2013 and 2014, but Pot Noodle’s market share dropped by c. 5% (value) during the same period.

When the marketing team behind Pot Noodle at Unilever dug deeper into this, by spending time with people in this generation, they found that convenience was still a highly valued selling point for this category. They found that this generation valued convenience not because they were lazy, but because they were ambitious and driven. Spending less time putting together snacks & meals gave them more time to focus on their career.

This was a generation that was defined by the financial crisis in 2008. They knew that unless they focussed completely on their careers, they would not be able to enjoy the same quality of living as the previous generations did.

So they bought and consumed instant meals/snacks to make more time for work.

However, the ‘slacker’ image portrayed by Pot Noodle was not in line with the ethos of this new generation.

A different portrayal of the same benefit

While the fact remained that both generations valued convenience, the reason for why they valued this convenience had changed.

While Gen X valued the minimum effort that went into putting a snack/meal together, Millennials valued the time it saved them, that they could use to focus on their careers.

So the Unilever marketing team launched their ‘You can make it’ campaign.

Re-launch of the Pot Noodle brand in September 2015

They used the 3 months of December 2015, to completely re-launch the brand. Given they were now targeting a generation of digital natives, the campaign focussed heavily on digital channels. The campaign kicked off with the story of a young man who dreamed of success in the Boxing ring.

You can make it

They also ran mobile and online ads around this theme, ‘You can make it’. They went beyond just running ads however, they launched partnerships with online youth sites to back entrepreneurs. They launched music careers, funded & launched launched inventions through their on pack competition and handed out c. 100k samples at Universities.

Turnaround of the brand

The campaign resonated with this generation and completely turned around the brand performance in stores.

#youcanmakeit generated a whopping 29 million impressions during the campaign period, with the majority of the users aged 16-24 (Pot Noodle target age).

The ad changed the way Pot Noodle was perceived by people. Pot Noodle went from being a guilty pleasure to one that gave its consumers more time to focus on success.

Major media outlets and youth influencers praised the positive message about gender choices that the Boxer spot delivered and were supportive of the message behind the ad. During the campaign period positive reports of Pot Noodle in the press outweighed negative ones by a factor of 10 to 1.

This change in perception had a major impact on sales, market share and penetration.

By understanding their target consumer/shopper segment better through data, the team behind Pot Noodle was able to reverse and even grow the brand. Sales value increased by 3.6% and nearly 364k NEW households bought the brand. Pot Noodle not only reversed their decline but became the fastest growing brand in this category.

Internet and its influence on sales

On 12 March 1989, Sir Tim Berners-Lee submitted his proposal for the World Wide Web.

Sir Berners-Lee proposed a way of structuring and linking all the information (like a web) available on CERN’s computer network that made it quick and easy to access. This concept of a ‘web of information’ would ultimately become the World Wide Web.

The launch of the Mosaic browser in 1993 opened up the web to a new audience of non-academics. By 1995, the internet and the World Wide Web were established phenomena. In 1995, the Internet had less than 40 million users globally. In contrast, Facebook had 2.9billion monthly active users in January 2022.

While in its early days, the internet was structured on the basis of decentralisation (think p2p file sharing sites like Napster), these days, most use the internet for social media (Twitter, Instagram, TikTok etc), entertainment (think Netflix, Spotify) and for updates on current events, whether fake or not.

Why are we blogging about the internet today?

The internet has had an outsized impact on sales and predictability of sales since inception. While its early (negative) impact was on sales of music, books and movies, due to sites like Napster and Bittorrent, its later impact was on sales of consumer goods, both every day and luxury. This is largely due to social media.

Current events(‘news’) have always influenced our buying decisions. Prior to the advent of the internet, this was restricted to watching the news once a day or to the daily newspaper. So the influence was sporadic. These days, there are several websites (some legitimate, some not), that people can go to for their current events update. This has made the world a lot smaller and influences choices.

Influencers

Influencer marketing has been around since Roman times, when gladiators endorsed products (Source: Forbes.com). According to Forbes.com, the first well known influencer collaboration was when Thomas Wedgwood made a tea set in 1760 for the wife of King George III and marketed his brand as having ‘royal approval’.

In the early 2000s, mommy bloggers were the influencers sought out by various brands to popularise and talk about their products. But the term ‘influencer marketing’ was popularised by social media.

Social media

Of all the websites and apps on the internet, social media has the biggest impact on sales. This is not just owing to the influencers on the internet and what they post, but also due to what regular people like you and me post. With content now going ‘viral’, it is viewed not by 100s of thousands of people, but a few million or billions of people.

In June 2021, Musk tweeted a heartbreak emoji and a Linkin Park referenced meme while talking about Bitcoin. The result: The price of Bitcoin dipped 3.6%.

Another, rather infamous twitter post, was by Weetabix and Heinz. The post was polarising enough that other brands, retailers and even foreign embassies got in on it. Within just a week of posting this, Weetabix sales was up by 15% in Sainsbury’s alone (Source: The Grocer)

Increased information on brands/companies

As information has become the new currency of today, any actions taken by companies are fodder for news, which eventually makes its way to social media.

With Gen Z & Millennials now forming the bulk of shoppers and given how their views on purpose have influenced how Gen X and Baby boomers think about consumption choices as well, this increased availability of information has the power to change brand preferences, based on the information on decisions taken by these companies.

Following the start of the conflict in Ukraine, when Unilever, Pepsi & Coca Cola did not initially pause Russian operations, consumer responses influences sales enough that they then decided to pause operations in the country.

How can sales people predict changes in preferences and prepare for it?

  • Make it a point to stay updated on current events through legitimate sources.
  • Check social media sites regularly to keep an eye on what posts are trending.
  • If your view or preference has been impacted by a particular event, news or a social media post, you can be sure that there are several more whose preference has changed as well.
  • Join different social groups and ensure you regularly talk to people across different generations. Each generation reacts differently (or does not react).

People have always been influenced by the opinions of others. This has been so since times immemorial. Technology has magnified this and will continue to do so as people search for human connection on the internet instead of ‘in real life’.

Amul – how they grew during the pandemic through their (inadvertent) use of data

Amul is a household name in India. For those who have not lived in India, Amul is a dairy brand in India. Amul is possibly the biggest FMCG brand in India by revenue – $5.3billion in 2020 according to Global Dairy Top 20 report by Rabobank.

The organisation behind this brand is Gujarat Co-operative Milk Marketing Federation.

The structure of this co-op has been the subject of several research projects and movies, as the purpose of the co-op is to minimise profits. The co-op sells dairy products to customers and consumers at the lowest possible prices and pays its farmers the highest possible price for the milk and maintains skinny to zero profit margins. They sell the Amul brand through their own retail outlets and also through supermarkets, convenience stores and kirana stores (bodega stores/independents)

Amul’s unique structure is not the reason for our case study. Today we explore how Amul was able to foresee the consequences of the pandemic and pivot in time to meet demand.

Learning from others’ experiences

As the MD for Amul, R S Sodhi, had been tracking the spread of infections in China, he already had a plan for how to amend operations within Amul facilities and offices to curb the spread of infection. He immediately put this plan in place.

‘I remember, on March 17, we looked at different aspects of our operations like precautions, social distancing, sanitisation, invoicing and warehousing and figured how to have a robust IT backbone to carry out our operations smoothly. Anticipating disruption, we started stocking up products in our 77 warehouses, transporting much more than what we normally would. At the head office, we split the team into two, working in two sets.’ said Sodhi, the MD of Amul.

Social distancing norms were introduced in village societies beginning 17 March along with new sanitisation protocols.

Amul’s MD predicted consumer reaction based on his family’s reaction

According to an interview of the the MD, when Prime Minister Modi announced lockdowns in March 2020, his wife encouraged him to go out and stock up on essentials and this included milk, yogurt, butter and paneer.

He realised that millions of other households would be doing the same thing and that there would be concerns around availability.

The next day he sent out a 2min phone recording to all their stakeholders, customers and farmers, and re-assured them regarding continued operations.

Predicted changes in consumer behaviour based on previous curfews and lockdowns

Gujarat, as many of you may know, has had curfews and lockdowns imposed previously, in the 1980s/1990s. R S Sodhi knew that his consumers would behave in similar ways as they did during those times, with the new nationwide lockdowns. So he diverted production to consumer focussed SKUs. Instead of packaging milk, yogurt, butter, ghee and paneer in bulk for the on-trade, he increased production of shelf ready SKUs to be sold through their retail outlets and stores.

Agile decision making

As ice creams are sold primarily through the on-trade in India, Sodhi knew that there would be a weakening of demand for Ice-creams. He also knew that school and office closures meant that demand for at-home consumption of milk (including flavoured milk), yogurt, butter, ghee and paneer would increase. So they diverted production from Ice-creams to packaged milk (incl. flavoured milk), yogurt, paneer, butter & ghee.

Increased investment in the business at a time when everyone else chose not to

When most other companies were pausing further investment into their businesses, Amul chose to go the other way. They increased employee salaries by 40-50% on average, increased margin distribution and increased advertising activity. They also invested in plant hygiene and social distancing initiatives. When they realised that people were watching a lot more TV, especially old re-runs, they re-ran Amul ads from those times taking advantage of the nostalgia element.

Their policy to never turn a farmer away paid off

During this time, several other milk co-operatives and unions were struggling with infections and absenteeism, causing them to shut down their plants. This, in turn, impacted the farmers who supplied these plants as they could no longer sell their milk. GCMMF(the co-op behind the brand, Amul) has a policy to never turn a farmer away. This meant that the co-op always had a steady supply of milk.

So what did/does this mean for Amul?

During a time when several other FMCG companies were struggling to keep their supply chains and sales going, Amul was well set up for supply chain and sales shocks. There wasn’t ever a single instance of Amul going out of stock in stores or at their outlets.

As they were still running their ads on TV and continuing with their marketing activities, they were able to not just retain market share, but also grow share exponentially.

Despite the pandemic and the resulting loss of sales through the on-trade, Amul posted a 2% growth in revenues for the YE 2020/21. Their consumer focussed SKUs grew by 8% and was offset by the significant decline in sales in the on-trade sector in 2020/21. For YE 2021/22, they’re expecting an 18% growth in sales.

Sources: Economic Times, Live Mint, ICMR Case Study – Unlocking in the lockdown

DtC scaling – strategies to mitigate risks

There is no doubt that the pandemic accelerated growth for several e-commerce FMCG/CPG (FMCG = Fast Moving Consumer Goods; CPG = Consumer Packaged Goods) brands. However, scaling DtC (Direct to consumer) brands online is far more expensive than scaling through supermarkets.

According to Statista, 80% of sales are still happening in store. Whether that is ‘buy online, pick up in store’ or ‘buy in store’. Also, conversion rates in supermarkets range from 20% – 40% vs online conversion rates of 3% on average.

Also, as more established companies and brands enter the DtC & e-commerce space, they push up the cost of customer acquisition due to their deep pockets. According to Statista, the cost per click on Facebook in Q4 2019 was $0.81. In November 2021, this was $1.22. Compare this to supermarkets or convenience stores where significantly more consumers walk by the shelf (an impression) at no incremental cost.

So what do DtC brands need to be aware of when entering the brick & mortar space?

  • Lack of proximity to shoppers & consumers: A key advantage that DtC brands have that has allowed for accelerated initial growth vs brands by large FMCG companies is that the teams behind the DtC brands are closer to their consumers. They leverage the data from their own DtC website to understand shopper behaviour, consumption patterns and preferences, which they use to fuel their supply chain. Also, they get valuable product feedback through reviews on their platform that they leverage to improve their brand.

    Large companies/brands, in contrast, are typically at least one step removed from their consumers as they sell through retailers. So the retailers are usually the ones who get the data on shopper preferences and consumer preferences. This may not always be passed on to the ‘brand owners’.

    When entering the brick & mortar space through supermarkets & convenience stores, DtC brands face the same risk. DtC brands can mitigate this by building a strong community for the brand as this encourages brand loyalty and feedback. Also, this can be mitigated, partially, by maintaining an online presence while also selling through brick & mortar stores to remain close to their consumers and shoppers.
  • Supply chain unpredictability: As mentioned in the previous point, DtC companies are able to leverage the data on their e-commerce portals to forecast sales. However, when selling through 3rd party aggregators (supermarkets, convenience stores and discounters), they are dependent on their customers sharing this data, which is not always common. This makes it difficult to predict sales as they then do this on the basis of historical orders placed by customers. So when they receive unexpectedly large orders, they are at times pressurised into fulfilling customer orders at the cost of going out of stock on their online stores. This may result in alienating loyal consumers who have been buying the brand since launch.

    This can be mitigated by taking a data driven approach to sales. DtC brands should consider making data sharing a key part of the negotiations during the listing process. This can help anticipate spikes in demand from customers that they can be better prepared for.
  • Inability to influence order volumes: As the size of revenues that DtC brands generate at aggregators is a fraction of the revenues that large and well established brands generate, sales teams at DtC brands are less able to influence order decisions made by ordering teams at these aggregators. So in situations when these aggregators should be holding more of the brands in stock at warehouses due to higher expected demand, DtC brands most often are not able to influence order volumes which results in stock outs at stores, losing them sales and market share.

    Conversely, aggregators may order significantly higher volumes than they should, which results in overstocking at their warehouses. While this sounds like a good outcome for DtC companies as they generate better revenues, it puts them at risk of an eventual delist if they do not sell the stock fast enough or, if some or all of the stock expires/is damaged while in the warehouse. This can be lethal for small companies.

    DtC companies should consider hiring seasoned sales people who have established relationships with customers. This may help with influencing order volumes placed by replenishment teams. Alternatively, DtC companies should consider ‘owning’ inventory management at retailers to the extent that a sale is recognised only when the brand is sold to the consumer.

    Given how this may ease working capital for the retailer, they maybe more willing to concede/collaborate on other areas like data.

If you have any questions or would like more information on the above, please leave a comment or contact me on veena@salesbeat.co

Walmart and Procter & Gamble

We referenced this collaboration in a previous blog and received a lot of questions about it. So we decided to dedicate a ‘case study’ to this collaboration.

In the late 1980s Walmart was P & G’s fifth largest customer and Mike Graen had been charged with the responsibility of improving the commercials for Walmart by P & G. He did this through collaboration and by using data and the right systems.

So what were these changes?

P & G decided to place a team at Walmart to work closely with the Walmart teams. They started with placing c. 20 people from different functions at the Walmart HQ. The team had access to inventory levels, store-level sales data, and all the data points from when P&G shipped a product/case to Walmart, to when it was sold to a consumer.

The benefit of sharing information was to improve forecasting and reduce the bullwhip effect (Bullwhip effect – uncertainty in demand grows with information that is available at higher nodes in the supply chain). This created a more efficient supply chain network and improved merchandising at stores. When analysing POS data, a more accurate forecast of demand is generated than when analysing shipment data to retailers.

This ensured that products were on shelf and in the warehouse when shoppers came in to buy it, eliminating overstocking and understocking. It made it easier for P & G to plan their production runs and warehouse stock reducing their costs. This ensured that there were no out of stocks on shelf or in the warehouse and that write offs driven by overstocking were eliminated, increasing revenues for both and reducing costs.

The ‘father’ of the Walmart/P & G partnership, Tom Muccio, said in an interview with Valuecreator “During my time as leader of P&G global customer teams, we always tried to ensure that both sides were living up to the principle of “co-determination”. In other words, no party would take a decision that could harm the other’s position without prior consultation of the partner. A case in point were the notorious “Dear vendor…” letters, which we quickly eliminated, as they did not make sense in a Level 5 relationship anymore. Another principle was to advise the customer on the best product portfolio neutrally and not just to hard-sell our products. As a result, we often ended up advising Walmart on how to deal with other suppliers in the best possible way. Sometimes, this was not beneficial to us but created a massive basis of trust. And lastly, we paid great attention to the principle of equality in our team culture. Irrespective of the hierarchy, all members of the team had the same small offices, and the corner offices were turned into meeting rooms. Such symbolic measures reinforced the teamwork culture and were also in line with the way Walmart’s culture worked.”

So what was the impact of this close collaboration?

Before these changes, the most P & G knew of sales at Walmart, was that a purchase order had come through which needed to be fulfilled. Within 8 months of the new relationship, they were able to improve profitability by $50million and P & G’s sales to Walmart went from $350 million annually to $13 billion at its peak in 2013; $11 billion in 2021.

John Nash, a pioneer in Game Theory captures this collaboration best, ‘The best for the group comes when everyone in the group does what’s best for himself (applies to all genders & entities) AND the group.’

Given the obvious benefits of collaboration and sharing data, it is a surprise that more companies do not have collaborative relationships with their retailers.