Shopper marketing trickier as retail channels blur, voice shopping grows

Suppliers and retailers are still trying to figure out how to spend marketing dollars to best reach shoppers, especially with the rise in mobile commerce and voice-activated purchases.

In-store shopper marketing is still a vital part of the retail strategy. But with beacon technology – in-store wifi that messages shoppers – now considered ineffective, suppliers wonder about how to message consumers while in a specific part of the store.

Dirk Herdes, vice president of retail services for Nielsen, said as more food and beverage sales move online, marketing dollars also need to shift. Herdes was one of three panelists discussing shopper marketing Wednesday (Feb. 28) at the Greater Bentonville Chamber of Commerce WalStreet Fireside Chats. ShopperBridge CEO Beth Gregg and Matt McClanahan, director of digital strategy at Saatchi and Saatchi X, were also panelists.

Herdes said a 2016 survey showed 23% of customers had bought consumer packaged goods online within the past 90 days. That metric rose 20% from the prior year. He explained the 20% metric as important because that is typically the tipping point for saturation. By 2025 that means about $103 billion of CPG (consumer packaged goods) sales will occur online, he added.

“We think it will happen faster than that given the number of digital natives in the marketplace. Now we think saturation will hit 70% by 2022 or 2023. Looking at the book and online music category it took about 15 years to move to a 20% online saturation rate. In banking, it took 10 years to get to the 20% and we are seeing food go much faster. That means suppliers and retailers have to think differently about serving the consumers who are driving the change,” Herdes said.

McClanahan said omnichannel means different things to different people but at its core retailers and suppliers have to run marketing in all shopping modes, not at all times, but when the time is right which can be a tricky proposition. He said the technology exists to market consumers 24/7 but the permission is lagging.

Gregg said consumers spend three to four hours a day on their mobile devices which is more time than spent watching television. She said there are shoppers who never use a desktop for making purchases rendering banner ads ineffective. She said pushing marketing messages to the consumers at the right time is the most effective way to drive conversion.

She said beacons inside stores were not effective in sending timely messages because the consumer who holds the receiver is constantly moving around the store. By the time the beacon picks up their presence and sends a message for a toothpaste promotion the shopper moved to another section in the store.  Her firm uses clean databases of shopper information that allows them to send out promotions in text messages or other reminders by working through mobile apps at the opportune time. For instance, a shopper targeted for baby items like diapers could get a text message with a promotion and then see a reminder ad when they are checking another app for fitness or weather.

Gregg said it starts with clean databases of consumer insights that can be information shared between supplier brands, retailers and third-party marketers. She said relying on beacons is not the answer as evidenced by a report from Sephora that refers to beacons as a great experiment that doesn’t work for messaging. She said the jury is still out on what to do with beacons and some retailers like Walmart are removing them.

Herdes said retailers are looking at mobile because the percentage of mobile purchases continues to escalate. He said suppliers and retailers have to rethink their processes because their separate operations created disjointed customer insights.

Retailers want to deliver a seamless experience to the customers and Herdes said suppliers need to get their houses in order so they can effectively work with Walmart. That means having good item content and working together on various marketing touch points throughout the path to purchase. McClanahan said the path to purchase varies from one consumer to the next and many CPG companies are building audiences on legacy brick and mortar systems, which is not going to be effective with digital natives. He said suppliers need to work with retailers to share their marketing data to get a better picture of the various shopper demographics.

Talk Business & Politics asked the experts to weigh-in on voice commerce – aka, “Alexa” – and how marketing can be targeted to shoppers who may not use mobile apps or desktops.

Herdes said voice commerce is problematic for brands because consumers don’t shop that way. Consumers say laundry detergent, not Tide or Gain, they say diapers, not Pampers or Huggies. A recent study by Bain & Company found first-time purchases of a given item without brand specification on Amazon Alexa defaulted to Amazon’s private label over the branded items. Bain found in categories where Amazon had a private label Alexa recommended that private brand first 17% of the time.

Voice shopping represents a tiny fraction of the market, But Bain noted Alexa does tend to favor Amazon’s own brands. Herdes said Amazon has somewhat locked down the opportunity for marketing via voice up to now. He said it will matter that brands be listed in the top two or three choices for voice shopping just the way they do for e-commerce.

Walmart’s teaming up with Google Home should present opportunities for suppliers as this shopping mode picks up steam with consumers, Herdes said.

Gregg agreed the consumer is in the driver’s seat and it’s up to brands to find consumers wherever they may be. McClanahan said voice shopping gives consumers time and that’s a valuable commodity for just about everyone. He said it’s going to be a tipping point for a lot of consumers for that reason.

“Brands have to figure out a way to be there because if they get locked out, it will be very hard to rebound,” McClanahan said.