Changing the Retail Game in 2015

Melissa Kress
January 20, 2015
Convenience Store News
NEW YORK — It’s no longer enough to be in the game. If you want to win with today’s consumers, you have to be a game changer.
According to Nielsen, a game changer is defined two ways: a person or idea that transforms the accepting rules, and a person or idea that typically leads a movement of related businesses in the same direction.
Just being a game changer isn’t enough either, explained James Russo, senior vice president, consumer insights at Nielsen. During Tuesday’s webinar, “What’s In Store: Game Changers,” he pointed to the birth of the barcode, which traces its roots back to the 1940s. While adding barcodes to products helped revolutionize retail, the real importance comes from the data collected from the scans.
Moving forward to today, Russo said there are three key game changers to watch in 2015: digital first, hyper-localization, and in-store and on-shelf.
These game changers are important, he noted, because although things were looking up for consumers heading into 2015 (low unemployment levels, high consumer confidence, low gas prices, etc.), 65 percent of consumers surveyed by Nielsen believe the nation is still in a recession and 52 percent believe the country won’t pull out of it in the next 12 months. These sentiments hamper spending.
In addition, five years of recovery has not boosted income levels. However, in the good news department, wages are expected to tick up this year, Russo added. “We expect conditions to improve, but the consumer continues to be restrained,” he said.
Game-changing moves will help retailers and consumer packaged goods (CPG) companies break through those restraints.
Digital First
In today’s increasingly connected world with limitless potential, companies need to put digital first. It’s really all about connections — “our devices, our friends and our products,” Russo said.
Specifically, Nielsen found that 87 percent of U.S. consumers are online, compared with 39 percent of world consumers. Even more jawdropping is smartphone penetration: Smartphone access hit 1 billion in 2012 globally, reached 1.75 billion in 2014 and is expected to climb to nearly 2 billion this year.
In addition, 73 percent of global consumers trust online comments, with 68 percent of U.S. consumers putting their trust in online comments. “It’s a very important dynamic to understand the level of conversation [in the digital space],” Russo said.
Mobile payment is also a key part of putting digital first. Nielsen’s Q2 2014 Mobile Wallet Report found that 40 percent of mobile wallet users say they use mobile methods as their primary mode of payment.

Hyper-Localization
Whether regionally or demographically, retailers must find the right level of segmentation to connect with their consumers and “secure the buy” wherever they are — at the store and everywhere else, according to Nielsen.
This is driven by understanding the global population, which sits at 7.2 billion, Russo explained. “There is a tremendous amount of data being produced that allows us to get local,” he said, adding that global migration is impacting local offerings.
The retail community also needs to keep an eye on super consumers: those who live, work and shop near each other, creating super geographies. These super geographies have up to three times the return of investment in ad dollars, adopt new SKUs faster and have stronger returns on trade promotions.
The mindset, however, has to change from national to regional. All this leads to the emergence of micro trade areas — isolated groups of stores competing for the same shopper dollars. There are more than 4,000 micro trade areas in the United States, according to Russo.
In-Store & On-Shelf
“What is happening in the store is still extremely important,” Russo stressed. “Ninety-seven percent of CPG sales occur in the store and nearly $800 billion in sales.”
But as the number of SKUs increase, retailers need to focus on the most efficient assortment. And for CPG companies, packaging is a must for breaking through the noise on the shelf.
“It’s not just about introducing new products, it’s about introducing the right products,” Russo said.
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