Constant innovation keeps us relevant to shoppers

This article first appeared July 1, 2010.

Last week I was honoured to attend the 30th anniversary celebration of a great Australian company. A company built on “changing the game” in a crucial part of the retail marketing mix – creating footfall in stores. It’s returned me to a favourite topic – that constant innovation is the only way we remain relevant to shoppers.

SALMAT works with every key retailer in ANZ and many into Asia also. Its founders Phil Salter and Pete Mattick, two down-to-earth and family-focussed businessmen, saw very early on the power of catalogues in the marketing mix.

Pete and Phil had been retailers together, so had lived the elation of a store being full of customers day after day, and the dread of an empty store. The elation of buying and pricing stock well and selling out at full price, and the dread of watching stock grow old and have to be marked down to clear. They understood that the elation – the success in retailing – came from getting shoppers into your store in the first place. More importantly they realised that getting shoppers into store with a purpose to buy an item in stock, and the store then selling out of that stock, was gold.

This is when retailers “create footfall and take the dollar”. It is nirvana for all retailers and is the backbone behind the sustainable profitability of ALDI, Wal-Mart, and every key retailer in ANZ.

Proof?

When a catalogue drops within a 5km radius of a store – and that’s any store from quick service food outlets, hardware stores, pharmacists, through to grocery stores and departments stores – sales grow significantly.

Importantly sales grow for the specific items featured in that catalogue, and in sales of adjacent items. So if a sunscreen product is advertised its sales will be high, as will the sales of other items in the wider sun care section, including after sun, hats and sunnies.

What has struck me since the party was how tough it was for many retailers to accept the need to “change the game” 30 years ago, and how tough it still is to accept the need to keep “moving the game on” to remain relevant to shoppers and stay competitive.

Back in 1980 nobody believed in talking to shoppers by dropping very specific offers into their homes. The received wisdom was that only blanket 30 second TV advertising with a very narrow range of shoppers offers, if any at all, was the way to go.

Thirty years later in 2010 there isn’t a retailer in Oz who would back away from a catalogue as part of the marketing mix as every shopper, myself included, looks at catalogues as part of our pre-shop. Today however, not only do we use catalogues but we browse online too.

SALMAT saw this move online basically as pre-shopping, as the shopper decides what to buy, from where and at what price before even leaving their home. That’s when they created Lasoo. What started as a way of allowing shoppers to see what retailers were offering, has now become a source of shopper marketing and range information for retailers.

Why?

Because as we shoppers go to a retailer’s site to search for a particular item we want to buy from them and if it isn’t there, the retailers can now see how many potential sales they missed. “So let’s talk to the manufacturer and range it, then get back to the shopper to let them know that it’s now available here.”

Earlier in the week I spent time with a senior retailer talking about the convergence of its store locations and the web. Shoppers now not only pre-shop online but pay online too. Some choose to pay postage and packing, but more and more they choose to visit the store to collect the item.

Strange? Not really. Because every bit of research tells us that the vast majority of humanbeings like, love or need to shop in varying degrees and in a range of stores at different times of their day, week, year and life.

In the UK, Wal-Mart’s retail arm, Asda Group, agreed to buy Netto’s 193 UK discount supermarkets for about AUD$1.5 billion. They are all small format grocery stores, dotted between ADSA’s big format destination grocery stores. However, these new smaller stores will be a key plank in ASDA’s online shopping offer, using these stores as mini warehouses for fulfillment of online orders for delivery to shoppers closer to town centers, and for those who want to drop in to pick up their groceries ordered online.

Constant innovation is the only way we remain relevant to shoppers.

In his role as CEO of CROSSMARK, Kevin Moore looks at the world of retailing from grocery to pharmacy, bottle shops to car dealers, corner store to department stores. In this insightful blog, Kevin covers retail news, ideas, companies and emerging opportunities in Australia, NZ, the US and Europe. His international career in sales and marketing has seen him responsible for business in over 40 countries, which has earned him grey hair and a wealth of expertise in international retailers and brands. CROSSMARK Asia Pacific is Australasia’s largest provider of retail marketing services, consulting to and servicing some of Australasia’s biggest retailers and manufacturers.