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    Features

    Beyond Off-the-Shelf Solutions

    Retail is undergoing rapid transformation for a variety of reasons. The 2019 IRI Growth Summit gave attendees new perspectives on some familiar issues.

    Beyond Off-the-Shelf Solutions
    IRI President and CEO Andrew Appel makes the case for AI.
    Beyond Off-the-Shelf Solutions
    The wide range of IRI solutions are displayed during the Growth Summit.
    Beyond Off-the-Shelf Solutions
    Fernando Salido delivers some grim retail statistics.
    Beyond Off-the-Shelf Solutions
    Mike Walsh provides his idea of the future.
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    Tom Branna, Editorial Director05.01.19
    It’s not broccoli, it’s business. No matter what they’re buying, consumers these days are buying it everywhere and in every retail channel. What can a personal care product marketer learn from a fashion expert or a frozen food buyer? Plenty.

    Which is why the IRI Growth Summit keeps expanding; the seventh edition of the summit, which took place in Denver amid a springtime blizzard, attracted 1,600 attendees from across the consumer packaged goods universe.

    IRI is the Chicago-based company that was one of the first research firms to harness big data to help CPG, retail and OTC companies grow their businesses. For more than two decades, IRI has provided Happi’s readers with multi-channel sales data for several key household and personal product segments. The company notes that it works with more than 95% of CPG, retail, and health and beauty companies in the Fortune 100.

    In his opening presentation, IRI president and CEO Andrew Appel explained how artificial intelligence and human intelligence will power future growth, noting that his company has invested nearly $1 billion in its technology during the past several years.

    “Companies in our ecosystem are looking at data and technology as the next enabler of competitive advantage, in creating speed, consumer intimacy and process efficiency,” said Appel. “Every major company in our industry is increasing their investment in the space, knowing that mastering the technology of tomorrow is one of the most important levers of competitive advantage.”

    As part of his keynote address, Appel discussed automated insights, augmented decision making and decision automation as transformative processes with significant implications for business operations. While acknowledging that increased automation may bring uncertainty, Appel stressed that automating simple tasks is essential for keeping up with the accelerating evolution of consumer preferences and ultimately bringing about applied change.

    Appel advised IRI clients to “embrace and add new capabilities. Take risks and do it at speed. Be comfortable and confident enough in the augmented and automated decisions that you no longer have to be the guarders of the information.”

    The company maintains that delivering differentiated growth for clients requires deep, highly integrated partnering with a variety of best-of-breed companies. Therefore, IRI works closely with a broad range of industry leaders across multiple industries and sectors to create innovative joint solutions, services and access to capabilities to help its clients more effectively collaborate and compete in their various markets and exceed their growth objectives. The IRI Partner Ecosystem includes such leading companies as 84.51°, Adobe, The Boston Consulting Group, Clavis Insights, comScore, Data Plus Math, Edison, Experian, GfK, Gigwalk, Google, Ipsos, Jumpshot, Mastercard Advisors, MaxPoint, MFour, Omnicom, One Click Retail, Oracle, Pinterest, Research Now/SSI, Simulmedia, SPINS, Univision and Viant.

    Most recently, IRI announced a new relationship with Casey’s General Stores, a chain of convenience stores in the midwest and southern United States. Casey’s will provide IRI access to its point-of-sale from more than 2,100 Casey’s stores to support its account-level insights for the c-store channel. IRI also announced it is expanding relationships with Speedway, Circle K, EG Group—including Turkey Hill, Loaf ’N Jug, Kwik Shop, Tom Thumb and Quik Stop—and other leading convenience store chains across North America to provide brands with the most granular and well-informed insights available for the c-store channel.


    Winning Companies & Brands


    Finding the right partner is more critical than ever, especially after several years of retail challenges. The good news is that CPG companies enjoyed slightly accelerated growth in 2018. And while, sustainable volume growth was lacking, the fastest-growing companies increased volume by offering a good product assortment to meet consumer wants and needs, according to IRI executives.

    “Thanks to the power of big data analytics, we are able to take a critical look at companies of varying sizes to glean important insights about industry trends and understand the drivers of the top performers,” said Krishnakumar (KK) Davey, president of IRI Strategic Analytics, during the Summit. “The CPG companies winning in today’s marketplace are doing so because they drive volume, maintain a targeted approach to mergers and acquisitions, and act on the consumer trends influencing purchase behavior.”

    In a study of the CPG category conducted by IRI and Boston Consulting Group, Constellation Brands, the $6 billion adult beverage maker in New York, topped the CPG growth-leader list of large companies (more than $5.5 billion in IRI measured sales), followed by Monster Energy, Procter & Gamble, Keurig, Dr Pepper and General Mills. The leaders among midsized ($1 billion to $5.5 billion) companies were Juul Labs, L’Oréal, Blue Diamond Growers, Post Consumer Brands and Starbucks. Topping the growth-leader list of small (less than $1 billion) companies were Vital Pharmaceuticals, Harry’s, Bodyarmor SuperDrink, Lamb Weston and Rana Meal Solutions.

    Companies were ranked on a combination of three metrics: dollar sales growth, volume sales growth and market share gains.

    Some of the other findings include: large and mid-sized players outside of the top 10 are in decline; in addition to driving growth, acquisitions and partnerships facilitate entry into new categories, acquire new consumers and build new capabilities; and accelerate in acquisition and investment in small growth leaders during the past few years.

    “Small companies that lead year-on-year end up getting acquired,” observed Davey.

    He pointed out that regardless of the category or retail channel, they all share several trends, including a move toward plant-based ingredients, premium and convenient, and indulgent versus better for you.


    Eliminate Barriers to Buying

    Where and how consumers are purchasing all of these products is undergoing a dramatic transformation, observed IRI’s Fernando Salido, adding that since 2015, 57 major US retailers have filed for bankruptcy. In contrast, Aldi and Dollar General are posting sales gains of 7% a year, and Salido predicted that Aldi could become the No. 3 grocer, in terms of store count, by 2023.
    He noted that not too many years ago, Walmart’s strategy was “build it and they will come.” As a result, Walmart built in rural areas and was able to grab a commanding share of household dollars from a wide area. But that “gravitational pull” has weakened as e-commerce grabs a bigger and bigger share of shoppers’ dollars—and e-commerce eliminates distance from the shopping equation.


    “E-commerce is taking over high-income shopper dollars,” he explained. “We see a big shift to ecommerce in the Northeast and California.”


    According to Salido, 28% of beauty products are now purchased online; that’s significant, but still below other categories such as vitamins (48%) and pet food (43%). But Amazon wants more. In September, the e-commerce giant launched Go, a cashier-less store, in Seattle and as many as 3,000 more Go stores may be on the way. But not even Amazon gets everything it wants. Last month, after much public outcry, the company said it will begin accepting cash in the specialized store. Critics said that by refusing to accept cash, Amazon was discriminating against low-income consumers.


    How can traditional retailers compete in today’s environment? By reducing distance between them and their customers, increasing store experience, eliminating friction at the point-of-sale and leveraging momentum to increase sales. Salido noted that Walmart has increased its market cap by 40% in the past three years by maximizing something it calls “Every Day High Convenience.”
    Or, as Walmart CEO Doug McMillon said, “Customers are time-crunched, so we want their shopping experience with us to be fast and easy—truly seamless—in all the ways they want to shop: in stores, on their mobile device, or through pickup and delivery.”


    Besides eliminating barriers to buying, retailers must improve the “wow” factor when it comes making purchases. According to Salido, these include friendly in-store service, problem-solving ability, execution excellence and great brand experience.


    Wegmans tops the bill in nearly all categories and is ranked No. 1 in customer experience, he added.


    What Happens Tomorrow?


    They’re just beginning to reach their prime buying years, but Mike Walsh is already sick and tired of Millennials.


    He asked, “What is the point of connecting data if you can’t weaponize to create experience? By 2030, Millennials will be as old and as miserable as the rest of us!”


    The CEO of Tomorrow, an innovation consultancy, noted that in 10 years or so, the way companies market and sell products and the way people buy them will be dramatically different. In fact, Walsh predicted that, in the future, retailers will send consumers packages before they order them!


    “Interfaces will become more natural and more human,” he said. “Facial recognition will become a way of life.”


    As the author of “The Algorithmic Leader: How to be smart when machines are smarter than you,” Walsh predicted that all experiences will be algorithmic and that augmented reality will transform our ideas of identity.


    “In 2030, devices will influence who we are,” he insisted. “The Apple watch of the future won’t tell you the time; it will tell you how much time you have to live!”


    If you’re time here is short, you may as well make the most of it. Pam Forbus, SVP, Walt Disney Studios, gave attendees some suggested readings to get what they want out of life. Her list of books includes: Crossing the Threshold: life begins at the end of your comfort zone by Neale Donald Walsch; Survival of the Savvy: high integrity political tactics for career and company success by Marty Seldman and Rick Brandon; and Grit by Angela Duckworth, which offers lessons on resiliency.


    Friction-Free Futures

    Will Post, industry manager for consumer packaged goods at Facebook, asked the provocative question, “Why do people buy the things they buy?”


    It’s a valid question; after all, people are connecting fundamentally differently than they have in the past, but businesses are the same. The bridge, he said, is technology.


    “People spend three hours a day on mobile and check their mobile devices 80 times a day,”said Post. “But why?”


    Mobile, he explained, is the new  storefront, even the new end-cap, and Facebook is building shopping experiences that improves people’s lives, he insisted.


    “Mobile makes it (buying) personalized and frictionless; products start searching for the right people!”


    Post suggested three ways CPG companies can win in this new reality: direct to consumer, which is why Nespresso teamed up with Facebook; collaborating with retail, Facebook is working with Walmart, CVS and others; and, of course, e-commerce.


    “We are moving toward a zero-friction future for retailers and their CPG partners,” he concluded. 
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