Shopper Insights: The Algorithm of Buying
I am sure most national account managers will have wondered at some point whether their buyers were artificially intelligent. Well, perhaps now it is about to happen. The rise of the machines is happening. Judgment Day is upon us! The recent announcement from Waitrose that they are culling a whopping 40% of their buyers in order to ‘implement[ing] a new way of working for our commercial directorate to set our business up for continued future success’. It’s the latest move by desperately seeking growth supermarkets to embrace a new world of operating, based on the rapidly emerging science of shopper-based insights.
The Waitrose statement confirms that the new, heavily streamlined, buying team structure will ‘provide clear direction for our commercial teams as we move to a category management approach focused on the needs of our customers’.
Grocery is Evolving
This is just the latest in a now unstoppable and game-changing process of evolution within the grocery sector. If category management was the nirvana of the nineties and noughties, then, shopper insight decision making is the holy grail of today.
Waitrose will be expecting its buyers to work even more closely with data gleaned from its MyWaitrose card database. This allows it to more closely match ‘products to shopper needs’. Moreover, the introduction of a new, ‘buying administration system’ will relieve buyers of some of the more mundane product and technical tasks whilst simplifying supplier relations.
The Shopper Insight BuyingBot Has Arrived
So, welcome to the world of the BuyingBot! For most account managers who are used to selling into Amazon, many will have never met a human buyer. The all powerful, all knowledgeable ‘Amazon algorithm’ decides pricing, positioning, discounts, and delists. Almost everything other than the original decision to stock!
The seemingly slightly stalled process of splitting Tesco buyers down the middle into ‘Buying managers’ and ‘Selling managers’ creates a potential ‘nightclub bouncer’ barrier to new suppliers. They must satisfy (that is pay) the ‘gate fee’ for entry to the dance floor of beautiful selling managers who are the only ones who can actually influence the pricing, positioning and feature of your products and brands.
Now, you may imagine all this change is for the good. To make their and your businesses more aligned to the shopper and their needs. Thereby driving increased sales and profits – so the mantra (or is that propaganda) goes.
However, it comes at a cost. Doesn’t it always?! Once you have paid your ‘entrance fee’ to the big burly bouncer there is then the small matter of who pays for the data? Well, it’s not even a question. It’s you, the supplier, and it doesn’t come cheap.
For the big multinational brands, it’s not a problem. They have had massive, great category teams deployed for many years. They can, therefore, simply switch investment from traditional category management focussed quantitative and qualitative research into shopper insight data.
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The Little Guy Loses Again
Unfortunately, as always, it’s the smaller and newer players who find themselves trapped in a doom loop. The loop of needing data to gain decent insight, to persuade the supermarkets to sell more of their products. Yet, not having the sales in the first place to generate the revenue to pay for the data.
And there is a final sting in the tail. Once you have finally stumped up the money to access the data, you will be confronted by a harassed, overworked, under-resourced buyer. A buyer who because of swingeing cutbacks does not have the time, resource or energy to interpret what you have!
So, again, it’s down to the supplier to provide the (human) resource to deep dive the data and drag out the juicy golden nuggets of shopper insight. Those that will show what needs to be done, where and how, to fully meet shopper needs. That, in turn, will make them buy your products in the first place, buy them more often and, or buy them in greater quantities.
Most of the big supermarkets make a big noise about their groundbreaking ‘incubator programmes’. These ‘hot houses’ for new, small, emerging suppliers. Some of them are genuinely supportive and well-meaning. Furthermore, some even include some cheap or even free shopper insight data access.
The Reality for Small-Medium Suppliers
However, for the vast majority of suppliers, it is very much pay (big) to play. The dilemma for many, small to medium-sized suppliers, the very bedrock of the own label supply base, is how to juggle the impossibly competing needs of inexorable cost price (‘efficiency savings’) reductions, your own investment and profitability needs and the costs of shopper-based insight data access and mining?
Perhaps one of the big grocery players could steal a march on their competitors with a big, generous, open offer. Where have we heard that before and how did it end?! An offer of free data for all (own label) suppliers. The loss of data revenue could be massively offset by the step change it would launch in understanding their shoppers and fully delivering against what they want. It would not only increase product sales but also create a huge loyal overall supermarket brand halo.
Watch this space, stranger things have happened…
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