Six Retail Insights Hidden in Data

There are problems you cannot see. There are opportunities that are hidden from you. That’s the nature of business. But problems and opportunities can be uncovered. The trick is to learn to look for the deeper truths within the billions of bits of data generated in the retail world.

That search for your deeper truths is our business. We’re good at it. We see what others cannot.

And we’d like to share with you some of what we’ve found by looking in places where others can’t, and by using tools that others don’t have.

As is often the case, we can’t share the exact truths we found for our clients. And as is always the case, we protect the confidentiality of those who do business with us.

So what follows are real stories of real companies finding real truths. The details are changed just enough so that the companies remain anonymous, but the insights we found can be shared.

Take a look at these six stories inspired by case studies of companies with challenges that may be like yours.

Their successes could be yours … if you’ll work with us to look deeply at the data.

Your customers are also their customers

Recently we helped two food packagers and two supermarket chains find new ways of understanding — and selling to — particular groups of shoppers.

In one case, a food brand asked for NPD’s help in understanding how a particular supermarket chain’s customers ate both in-home and away from home.

We pulled together data from our Eating Patterns in America study, the National Eating Trends® (NET®) database (which tracks the eating habits of thousands of consumers), the CREST® database (which contains information on 400,000 consumer visits a year to restaurants and other foodservice operations), and a variety of census figures to create a portrait of how that chain’s customers spent money on food — regardless of where such money was spent. The results were illuminating. The core insights were that customers of the supermarket chain came from smaller and more affluent households, ate roughly a quarter of their meals away from home, and spent roughly half of their total food expense on those dining-out experiences. The food manufacturer and the retailer decided there was an opportunity in combining forces to create higher-end offerings aimed at capturing a greater share of overall spend. Another food manufacturer we worked with had grown concerned over anecdotal and media reports that consumers were changing their eating habits … and losing interest in the core of their offering.

We urged the company to look a bit deeper at information our Shopper Insights team put together on the consumers of one particular supermarket chain. As it turned out, sales of the manufacturer’s key brand at that chain were well above the national average. There was something about the products that resonated with that particular chain’s customers. The food manufacturer took that information to the chain, which was duly impressed, and opened shelf space for additional SKUs.

Follow the money

Last year we heard from a men’s clothing maker that said it was suffering from a fairly common problem these days — failing to reach the Millennial consumer.

Or at least that’s what the company thought was the problem.

The manufacturer had received some very bad news from one of its retail partners — a report showing one of its core product lines wasn’t selling well to Gen Y men. The report had come from another market research supplier, and the retailer was threatening to pull the product line from its shelves.

But when we took a look at the data, we saw a completely different story: The line was actually performing better than rival products at that very same retailer.

At issue was the level of data looked at.

NPD’s measurements included cash transactions … the report from the other market researcher did not. And when cash transactions were added to card transactions, the manufacturer’s product line looked pretty good indeed.

The manufacturer took our data to its retail partner and argued successfully that pulling the line made no sense.

In addition, NPD data suggested that the manufacturer was failing to take advantage of some of the fastest-growing trends among younger consumers.

The manufacturer quickly switched its product mix at the retailer to try to win greater penetration in areas where it actually was underperforming — opportunities that the other market research company’s data had failed to uncover.

Sometimes their customers aren’t your customers … yet

Sometimes your greatest opportunities exist well outside your usual business. Companies engage in brand extensions and line extensions on a fairly regular basis. But in such cases it’s the brand’s equity that helps open markets.

But what about when a brand has little to no equity in the new target market?

Recently we worked with a giant of the packaged foods business that makes a number of brands that are in cupboards and refrigerators across America.

But the company wanted to grow its presence in the foodservice business — where it had considerably less influence. The company owned a number of foodservice-specific brands, but they were not as well-known as their consumer brands.

The company recognized that it needed to build its reputation and influence among foodservice distributors if restaurants, cafeterias, and other end-users were to start buying its foodservice brands. NPD agreed to help.

By applying our modeling and analytics expertise to a wide variety of data sources, we began the process of helping to turn the consumer-foods company into an expert in the foodservice business. By looking deeply at the information in the CREST and NET databases, and then conducting attitudinal and motivational surveys, a previously unknown level of detail emerged about the customers of specific restaurant chains.

The company was then able to take that information directly to the restaurants — showing them what a chain’s customers ate both at home and away from home, how frequently they visited the chain, and what they expected to find when they did go to a restaurant. Most importantly, the company was able to show restaurants what their own customers liked in food, opening the door to menu-planning collaboration.

Today the company’s foodservice operation is recognized as a valued partner by the restaurant chains it targeted.

Getting in with the in crowd

A few years ago, one of our retail clients decided to revamp some key stores. The idea was to capture a larger share of a handful of markets, particularly price- and fashion-conscious Millennial women.

Part of that plan called for increasing the floor space it dedicated to a particular type of clothing. The retailer came to NPD looking for input.

We dived deep into the issue — looking at data, running analytics, conducting store visits, and running consumer surveys.

The opportunities we uncovered were numerous, but two in particular proved crucial.

First, the data and analysis showed clearly that the retailer was moving too slowly at the start of the spring fashion season. In the crucial month of May, although dollar volume was rising, the retailer’s share was falling. The retailer had to get new items on the floor faster.

Second, we showed that the retailer wasn’t carrying one key brand that Millennial women seemed to adore. Sales of that brand were rising 20 times faster than the rest of the channel. The retailer needed to reach a distribution deal with that brand, or miss out on fair share opportunity in excess of $5 million.

The retailer changed its tactics and pursued the opportunities we had uncovered.

The retailer began shipping its spring inventory earlier … adding several crucial weeks of sales. And that brand that has sales growth 20 times faster than the rest of the channel? You can buy it now in a dedicated section of those revamped stores.

Weakness in key weeks

Every manufacturer and every retailer knows that the weeks of the year are not of equal importance. If, for example, you sell pencils and backpacks, you know that there is time in the late summer — the “back-to-school” season — that can either make or break you. But key weeks can also make and break you.

It’s fairly common for a company to look at the numbers from its key weeks and see only the obvious (sales are up!) and miss the less-than-obvious (everyone’s sales are up, and our market share fell!).

Recently we worked with two brands from very different spaces that had just such a blind spot. In the first example, a clothing manufacturer, let’s call it Brand X, thought that things were going quite well. Sales were rising most every month compared with a year earlier. But that was only half the picture.

When we looked at the manufacturer’s weekly sales data, we found a very different story. The entire segment was seeing sales rise on a monthly and annual basis — but Brand X was lagging behind its rivals in key weeks. While Brand X’s overall sales were better than before, they were worse than those of competitors in the most important times of the year. Brand X was losing share in a rising market.

We saw a situation with a children’s product manufacturer that was both quite similar and quite different. Sales of one of its most longstanding brands, let’s call it Product Y, were declining. The parent company needed to move quickly to re-strategize and turn things around.

This time, a look at weekly data and Account Level Reports (in which retailers allow manufacturers to see detailed information about how their items perform) showed the issue could be price related.

The marketplace was flooded with dramatically deep discounts of items that competed with Product Y, causing both a key retailer and the manufacturer to lose dollar share in one of their largest categories. And those discounts got deeper during the key pre-Christmas season.

As it turned out, price collaboration was required between the retailer and the manufacturer to better position Product Y during key times of the year.

Finding solutions to situations such as those faced by Brand X and Product Y isn’t easy (and will likely involve a lot of conversations with retailers). But the solutions can only be found when we look at the right set of data and uncover the real problems.

Fowl play

There is a question that has plagued philosophers from every culture and in every age: Which came first, the chicken or the egg?

In retail, we pose that question in a slightly different fashion: Does a brand become the best-seller in a category because consumers like it best, or because more stores carry it?

As it turns out, the answer is clear … if you look at the right data in the right way.

Recently some folks at NPD were looking at the sales figures from a segment of consumer electronics. At first blush, the story appeared to be the classic chicken/egg scenario: there was one brand that dominated. It outsold everything else. And it was sold everywhere. Perhaps consumers loved it. Or perhaps retailers thought that consumers loved it, so they carried it to the exclusion of rival brands.

But when we began to look at a measurement we call velocity, the answer was far more complex. In science, velocity is generally defined as a measure of speed in a specified direction. But in retail, velocity can also be thought of as a measure of love.

In velocity we look at the sales figures but control for distribution — which is research-speak that means looking at how well something sells at the places where it’s actually available. That yields a metric that more closely tracks how consumers feel about a brand or a product when they have an option to select it.

What we found in that consumer electronics segment was fascinating.

There was a brand in the space that seemed to receive little overall love from consumers. And the brand’s overall sales and distribution levels coincided with that interpretation.

But that brand had one item — let’s call it the Golden Goose — with extraordinary velocity. In stores where it was available, consumers flocked to the product.

Looking just at national sales numbers, there were 30 rival products that sold better than the Golden Goose. But after adjusting for distribution, the Golden Goose was the eighth best-seller in its category.

It turned out that people loved the Golden Goose. They just couldn’t find it at a lot of places. Suddenly the makers of the Golden Goose had a compelling story to share with retailers and a strong argument to make for wider distribution of that product.

Perhaps more importantly, at least to philosophers, the answer to the age-old question had been found. It’s neither the chicken nor the egg that comes first. It’s the goose.

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