We’ve all felt the tension. Retailers are interested in growing their top line sales, regardless of which brand shoppers select, while suppliers have an inherent interest to spend their marketing dollars promoting their own brands.
Are these two objectives necessarily pulling in different directions? Can retailers and their suppliers truly collaborate on personalized marketing programs and keep everyone happy?
The answer is YES…it can and should be done. But it’s complex, and it requires a slightly different mindset on everyone’s part. It also requires technology, and the right people in place to execute.
Let’s dig a bit deeper into the problem, as the issue is much more complex than that.
Firstly, the scale and pace of the grocery environment is mind blowing – large retailers have tens of millions of individual shoppers who shop multiple times per week, via a range of online and offline formats, assortments are huge, the number of potential available offers is in the thousands, and consumers can be reached via multiple communication channels at various stages in their paths to purchase. Wow.
Secondly, there are numerous constraints and potential areas of conflict between retailers and suppliers around where to allocate budgets, who controls the touch-points / media, and even how to measure the effect of all the marketing activity.
So where do we even begin to make sure that both parties meet their objectives, and that it’s not at the expense of the shopper, who simply wants to buy quality food while saving time and money.
There’s currently a lot of hype around AI (Artificial Intelligence) in the grocery industry, and there’s good cause for that. The problem we presented above is a perfect opportunity to let machines sift through the billions of permutations on an ongoing basis in order to find the optimal personalized offer mix for each and every shopper, via each communication channel, and make sure it’s relevant at every point in time. Machine learning can also be deployed to recommend offer pools that can house both retailer and supplier offers, predict their uptake and take into account all of the budget and communication constraints we mentioned above. And all of this can be done in an environment that enables both retailers and suppliers to create campaigns, execute them, and analyze the results collaboratively by having access to the same data and tools.
But technology is not enough. Even the most advanced AI tools require human intervention to operate and fine tune them, and to ensure they keep developing in order to stay up to date with evolving consumer needs and the ever-changing marketplace. That means any retailer’s personalized marketing team needs to comprise both savvy marketers, data wizards, and technical experts, some or all of which can be outsourced.
As standout examples, Hannaford and Food Lion (both part of the Ahold Delhaize group) are leading the pack in collaborating with suppliers to ensure optimal use of personal marketing budgets. You can find more details on their activities and others in our Industry Report “Loyalty Leaders”, which you can download for free here.
Happy trading
Chen Katz
