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Near-term success for food companies will require laser-focused attention to the needs and desires of customers, not only in the marketing department, but also in the merchandising department. A presentation today at the 2016 Food Marketing Institute Connect Conference in Chicago sponsored by Precima, reveals that supermarket operators need to invest in the products, promotions and services that matter most to customers or they risk losing market share.
Titled Delivering on The Promise of Customer-Centricity: A Case Study of Success, the session is presented by Graeme McVie, Vice President & General Manager of Business Development at Precima, and Chuck Sample, Vice President, Insights and Analytics, at US Foods. McVie reports how several leading retailers around the world have committed to customer-centricity as a more effective way to compete for customer loyalty and are seeing substantial benefits as a result.
“Walmart with Savings Catcher, Kroger, Target and Safeway with their loyalty programs and mobile apps, and, most recently, Whole Foods with their Rewards program have all listened to their customers and created a unique experience that really engages the shopper. They are constantly gaining insight into the consumer’s behavior to capture more of their grocery spend,” McVie explains.
A case study will be presented by Mr. Sample, demonstrating how US Foods successfully implemented a customer-centric approach across departments and included assortment, pricing, customer marketing and supplier collaboration to win in the marketplace.
US Foods “puts the customer at the center of everything we do,” said Sample. “We’ve branded our customer-centricity strategy ‘CookBook’. CookBook powers customer-centric, actionable insights through predictive analytics. These insights allow us to deepen customer relationships.” CookBook continues to expand as US Foods develops their customer-centricity journey and when fully deployed, US Foods believes CookBook will create more value across all stages of the customer lifecycle.
To truly deliver on the promise of customer-centricity grocers need to pursue a series of integrated, customer-centric strategies and tactics, including:
- Strategy: Understand where the greatest customer-driven opportunities to grow the business are and allocate resources to pursue those growth opportunities.
- Customer marketing: Create programs that capture the imagination of the shopper and generate passion for the store’s brand.
- Pricing: Develop shelf prices that reflect the prices customers want to pay in exchange for the value of the product; integrate with customer marketing to deliver personalized pricing to individuals
- Trade Promotions: Design and deploy promotions that deliver against category and customer objectives
- Assortment decisions: Identify items that have high transferable demand and low value to loyal shoppers that can be safely removed from the shelf
- Customer service: Recognize the needs of customers shopping in each store to tailor service levels to those specific customers
The keys to success with customer-centricity include executive commitment, a customer-centricity roadmap with the appropriate change management and a data and analytical platform to drive an integrated and on-going approach. The benefits to grocers are substantial with leading grocers, who fully embrace customer-centricity, capable of delivering ROIs of 5-8 times their customer-centricity investments while competing effectively by satisfying the needs of shoppers better than the competition.
Note to editors: The presentation from the session is available to those interested.
About US Foods
US Foods, Inc. is a large foodservice distributor serving chefs and foodservice operators across the country. Its customers include independent and multi-unit restaurants, healthcare and hospitality entities, government and educational institutions. The company employs approximately 25,000 people in 61 locations nationwide. US Foods is headquartered in Rosemont, Ill.
Precima is a global retail strategy and analytics company that provides tailored, data-driven solutions that drive sales, boost profitability and build customer loyalty. Leveraging our deep analytics expertise, Precima helps organizations improve their competitive position across all facets of planning and operations from assortment optimization, price optimization, promotional optimization, targeted marketing, and supplier collaboration. Precima’s credentials include solutions for Fortune 1000 brands and grocery retailers, including global market leaders. Together with LoyaltyOne, LoyaltyOne Consulting, BrandLoyalty, AIR MILES, and IceMobile, Precima is a part of Alliance Data, a Fortune 500 Company and the global leader in data-driven loyalty solutions. In 2016, the company was named among the Top 10 Analytics Solution Providers by Retail CIO Outlook. Precima's head office is located in Toronto, Canada, with global offices in Den Bosch, The Netherlands, Chicago, USA, and London, UK. www.precima.com
A new report on pricing sponsored by Precima, a retail strategy and analytics firm specializing in shopper insights and customer-centric solutions, revealed that retailers are worrying more now than in years past that consumers do not believe they are priced competitively enough. The Retail Systems Research (RSR) report, Pricing 2016: Life Becomes Unmanageable, reviews current pricing practices and challenges facing U.S. retailers and technology enablers.
With the intensity of price competition in retail, the understanding of price-sensitive items and setting an optimal price based on analytics is critical. The RSR report cites that only 35 per cent of retailers believe their company has a strategy in place to manage prices and promotions effectively across all channels.
“Never before has there been a greater need for analytics to inform a data-driven pricing strategy,” says Brian Ross, President of Precima. “Retailers are acknowledging this need for greater analytics, recognizing that to overcome the barriers of implementing effective pricing practices, they need to improve the analysis process for pricing and the integration of Software solutions that support pricing decisions and work flow.”
The RSR report also reveals that 50 per cent of US retailers believe increased price sensitivity of consumers is a business challenge, citing the possibility of negative customer reaction to changes in price strategy as the most significant organizational barrier to more effective pricing practices. Interestingly, retailers recognize consumer price sensitivity as the largest business challenge while also perceive it as an obstacle to moving forward. An effective way to address this conflicting concept is with the application of well-established analytical approaches.
“Retailers with customer data have a leg-up in the market and can leverage their competitive advantage through identifying key customers and then pinpointing what is important to them and where they care about price,” adds Ross. “Further, the next generation of pricing will need to incorporate competitive prices and data-defined competitive price indices to optimize price investments. The pay-off in doing this right is huge, namely incremental sales, profit and growth from loyal customers.”
Other highlights include:
- 41 per cent of retailers cite not enough IT resources available as being a barrier to implementing effective pricing practices, followed closely by lack of price, competitor, and purchase data at 38 per cent
- Personalized pricing is the goal for many retailers however 41 per cent of retailers feel that internal challenges indicate nothing drastic is likely to occur near-term until retailers implement the right approaches and processes
- Less than half of retailers feel their company pricing strategies are building customer loyalty and only 23 per cent feel the pricing strategies are effective at driving bottom line results
- Retailers are looking to replace early competitive price intelligence solutions and plan to invest in new capabilities around promotion optimization, markdown planning, and inventory management
“Back in 2012, we began expressing serious concerns about both strategies and tactics, but retailers seemed convinced they could win the race to the bottom on price or at least, by participating in the race, they could stay in the game. Fast forward to 2016, and retailers are now starting to feel the negative impacts of their past pricing decisions” said Paul Rosenblum, Partner at RSR. “Consumers may be sensitive about price, but no retailer, not even the lowest-priced retailer, can win on price forever.”
To learn more, sign up here for the live webinar Retailers Can’t Win on Price Forever: Is Personalization the Answer? hosted by Vice President of Business Development at Precima, Graeme McVie.
About Retail System Research
Retail Systems Research LLC, a research company, provides insight into business and technology challenges facing the retail industry ecosystem, and thought leadership and advice on navigating these challenges for the retail industry. It offers benchmark reports that focus on the issues retailers face; retail winners reports to highlight how technology supports business growth and change in real life; advisory services by conducting internal review of marketing materials, visioning sessions, strategy days, and/or roadmap analysis, as well as by validating users’ plans with the company’s survey results; and Webinars and speeches at industry and user events. The company also provides custom research for technology vendors and practitioners in the retail eco-system; and Selling Technology Value to Retailers, a sales training program to understand the language of retail, business challenges and opportunities, how technology enables retailer success, what matters to retail line of business executives, and how to sell through the CIO.
Precima is a global retail strategy and analytics company that provides tailored, data-driven solutions to drive sales, boost profitability, and build customer loyalty. Leveraging deep analytics expertise, Precima helps organizations improve their competitive position across all facets of planning and operations from pricing optimization, promotional planning, assortment optimization, targeted marketing, and supplier collaboration. In 2016, the company was named among the Top 10 Analytics Solution Providers by Retail CIO Outlook. Together with LoyaltyOne, LoyaltyOne Consulting, BrandLoyalty, AIR MILES, Dotz, and IceMobile, Precima is a part of Alliance Data, a Fortune 500 company and the global leader in data-driven loyalty solutions.
LoyaltyOne announced today it is partnering with FoodShare Toronto and Global Teacher finalist Stephen Ritz of the educationally acclaimed Green Bronx Machine to launch the Good Food Machine, a new healthy food education program for children in Canadian communities.
The first of its kind in Canada, the program launches in Toronto this September and aims to transform the health and eating habits of students in primary and secondary schools through an ongoing curriculum of how to physically grow, cook and eat healthy food –all while in the classroom. The Good Food Machine builds on years of work FoodShare has established in Toronto schools and now expands the number of schools benefitting and grants greater access to resources and food literacy curriculum.
The Good Food Machine is based on the Green Bronx Machine, the first indoor edible classroom in NYC which grows enough food to feed 450 students. The greatest success of this US program is the measured impact it has on the children, with 40% daily attendance increased to 93%, 50% reduction in behavioural incidence and bullying and 100% of post-secondary graduates training or working wage jobs.
"For more than 20 years LoyaltyOne has been a strong supporter of community charities and we are now expanding our commitment by launching a program that will make a meaningful difference in the lives of Canadian kids," says Angela Simo Brown, Head of Social Impact Strategy & Innovation at LoyaltyOne. "Working with the invaluable expertise of FoodShare Toronto, who are already so involved in delivering healthy food and education, ensures the program will have the support it needs for success."
The goal is to introduce this program in phases with phase one launching in schools across Canada in September 2016. Phase two is currently in the planning stage and the markets will be announced accordingly. For phase one, LoyaltyOne will provide 10 Good Food Machine kits to selected priority schools within the Toronto area. Each kit will contain two aeroponic tower gardens, a mobile classroom kitchen, iMac computer, multi-media license to access Stephen Ritz curriculum plus classroom teachings via livestream and FoodShare educators who will visit the schools regularly to help teach and support.
Selected schools were shortlisted by FoodShare and the Toronto District School Board (TDSB), and were invited to apply for a spot in the program. Schools were chosen based on a positive school community, a teacher who would champion the program as well as considering a variety of grades and specialized student programming. Priority was given to schools that rank high on the TDSB Learning Opportunities Index (LOI). The LOI ranks each school based on measures of external challenges affecting student success. It measures relative need and compares all schools on the same set of data.
Phase one schools include:
"We're delighted to have been selected for this wonderful program," says Martha Bartley, Eastdale CI Principal. "Our students are avid farmers and have been growing on our rooftop since 2013 with the help of FoodShare. The Good Food Machine will allow us to build on our urban farming program and grow year round with all manner of curriculum opportunities, from culinary to science programs. We can't wait!"
In addition to the donated kits, the Good Food Machine is available to all Canadian schools as a purchased program.
"We're thrilled to partner with LoyaltyOne on the Good Food Machine. Bringing good food and food education to schools is at the heart of who we are" says Katie German, Field to Table Schools Manager, FoodShare Toronto. "We've been delivering fun food literacy education to students and teachers throughout Toronto for the past decade and have seen first-hand the transformative power working with food and growing has on students. This program is not only a natural extension of our work but one we cannot wait to share with our school communities."
TODAY LoyaltyOne is sponsoring Global Teacher Finalist Stephen Ritz' presentation at FoodShare Toronto to talk about his innovative Green Bronx Machine program and how this model is being brought to life as the Good Food Machine in Toronto this September.
LoyaltyOne is a global leader in the design and implementation of coalition loyalty programs, customer analytics and loyalty services for Fortune 1000 clients around the world. LoyaltyOne has over 20 years history leveraging data-driven insights to develop and operate some of the world's most effective loyalty programs and customer-centric solutions. These include the AIR MILES Reward Program, North America's premier coalition loyalty program; a majority stake in European-based BrandLoyalty, one of the largest and most successful campaign-driven loyalty marketers; and a working partnership with Latin America's leading coalition program, dotz.
FoodShare Toronto is Canada's largest food security charity with a 30-year history of increasing consumption of vegetables and fruits through community lead projects. We believe everyone deserves access to affordable, fresh food. FoodShare has pioneered innovative programs like our award-winning food literacy program, Field to Table Schools, bringing good food education to schools across all school boards in Toronto, including the TDSB. Hands-on activities from composting and gardening to cooking and tasting to food justice and connecting with nature, FoodShare's dedicated team engage students from JK to Grade 12, and educators alike. Student and teacher workshops are tried-and-tested, with strong curriculum connections and shareable resources for all grades and educators.