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03/23/2014

Observation, empathy key to store brand innovation, growth

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To drive store brand innovation and growth, today’s retailers must be “observers and problem-solvers,” requiring them to build empathy with their shoppers, Michael Fox, vice president of marketing and Innovation for Safeway Consumer Brands, said in his Feb. 26 opening keynote presentation at the Store Brands Decisions’ 2014 Innovation & Marketing Summit, in Rosemont, Ill.

“I think we’re closer to the consumer, and we can do a better job of owning the consumer,” Fox told fellow retailers and store brand suppliers in his presentation, titled “Bringing the Best of CPG to Redefine Private Label.”

Leave some practices behind

Getting there, however, will require the industry to leave a few familiar CPG practices behind, he said. For example, retailers need to trade in a brand-centric approach for a consumer-centric one, as well as ditch Stage-Gate processes, which “kill courage” and lead to “watered-down ideas and extension mania.” And productivity conversations should not outnumber quality and differentiation discussions five to one, but they currently do.

“We should be reversing that,” Fox said, noting that many retailers spend more time focused on their own problems than they do on their shoppers’.

Embrace new approaches

In addition to leaving some CPG practices behind, retailers should embrace some new ones, he said.

“Really, the innovation should be in the process you use to create that product,” Fox explained. “Then you can create 100 products.”

He suggested the creation of simple processes that drive innovation and also emphasized the importance of building a “culture of conviction.” While Stage-Gate is designed to result in “no,” a culture of conviction will get companies to “yes.”

“Those with conviction will win,” Fox stressed.

For Pleasanton, Calif.-based Safeway Inc., the process for store brand innovation and growth is four-pronged: observation and empathy building, understanding in terms of size and intensity, brainstorming and prototyping, and refining and learning, Fox said. The retailer cannot monitor the performance of its brands to the extent that the national brands can, he added, considering that it launches roughly 700 new items per year and redesigns approximately 1,000 each year.

To build empathy, Safeway relies on such things as intercepts, shop-alongs, and forums of “power users,” he noted. Meanwhile, analytics, trend scanning and work with research firms such as Mintel and Nielsen help in the understanding part of the process. Safeway also is starting to experiment with social mining, doing both quantitative and qualitative work to understand consumer needs states that drive demand.

When it comes to brainstorming and prototyping, Fox said Safeway is improving.

“It’s very focused on who we’re trying to target and the problem we’re trying to solve,” he said, adding that the retailer gets some help in this area from its Culinary Center and chefs — and also is starting to play around with some rapid prototyping that’s neither highly sophisticated nor expensive.

Finally, the refining and learning component of the process encompasses product testing, performance tracking and accountability,” Fox said, joking that Thursdays are tough days at the office because of all the food he has to consume on the testing side of that component.

Positive results

The process has allowed Safeway to differentiate to a greater level than many other retailers. And differentiation is critical, as the role of the retailer’s store brand portfolio is to drive loyalty to its stores, he explained.

“We have a long way to go, but we’ve made good progress,” Fox said. “Fifty percent of our items have no national brand equivalent.”

And Safeway’s own-brand quality scores are up, he added, as is store loyalty.

Fox admitted that Safeway could do better when it comes to collaborating with its supplier partners. A potential “win-win” for the future would be solving a consumer problem and a supplier problem at the same time, he said.