Core Competencies Retailers and Suppliers Must Master
Looking at 2011 and beyond, there continues to be five core areas where retailers and suppliers are seeking to gain momentum and share.
A recently released study from Kantar Retail identifies the core competencies retailers and suppliers must master to drive growth and gain market share in 2011 and beyond. In “The 5 Shares: Kantar Retail’s Guide to Retailer/Supplier Strategy for the Next Five Years,” Kantar Retail recognizes that market share is an outcome, not an objective and that the enablers to gain share are fundamentally changing. According to Kantar Retail, these enablers are “shares” themselves.
“The news headlines from 2011 reveal seemingly unrelated developments, from retailers closing stores or closing for business, to retailers expanding into new geographies or seemingly unrelated businesses, and brick and mortar retailers becoming increasingly digital,” said Bryan Gildenberg, Kantar chief knowledge officer and author of the “5 Shares” study. “Why is all this happening? The simple and quick answers might be ‘it’s the economy,’ or ‘shoppers have changed because of the recession’ or ‘digital communication is changing everything.’ Kantar Retail believes these dynamics are rooted in a core business issue: Retailers are running out of places to build new stores and are struggling to grow sales in stores they already have.”
To sustainably and successfully grow market share in 2011 and beyond, retailers and suppliers must master some essential capabilities. The competencies required to drive growth are what Kantar Retail refers to as “The 5 Shares for the Next Five Years.”
- Share of Real Growth – Forces retailers and suppliers to examine the markets, channels, and customers that are growing faster than the marketplace overall and understand whether they are positioned to capitalize on this increasingly selective growth. This might mean tackling new geographies (like Target entering Canada) or new segments (like HEB has done in the United States with its Joe V discount banner). Kantar Retail expects to see more retailers experimenting in new markets and with new formats.
- Share of Decision – How do I get shoppers into my store? As shoppers continue to be exposed to marketing and information from a variety of sources, smart retailers are aggressively ensuring they are part of the shopper’s rapidly changing decision processes. This becomes increasingly complex for retailers as they try to win a more informed shopper who has easier and better price/assortment information at home or on their mobile devices than ever before. The U.K. price war between Tesco and Asda illustrates the battle to win shopper loyalty and trips. Successful retailers must decide whether and how they will compete with price leaders or construct their own unique value positioning adjacent to the price war. Kantar Retail expects to see retailers radically revisit their pricing strategies and try to win shoppers at their new first moment of truth—wherever that may be.
- Share of Wallet – How do I get shoppers to buy more from me? Retailers and suppliers invest significantly on shopper insights. Getting a return on this investment will be absolutely critical to driving competitive superiority going forward. Generating insights that answer the “why” questions behind behavior is a critical competency that will allow retailers to capture and convert shoppers in key categories. Kantar Retail expects retailers to redesign store layouts and shelf sets, integrate their online messaging and in-store approach more effectively, and partner more closely with their biggest and best suppliers to make this happen.
- Share of Solution – What can I offer to deliver more value and broaden my relationships with shoppers? One strategy is as simple as a retailer launching an own label that extends its positioning (as Safeway recently did with its Open Nature line or CVS with its B for Basics). Other examples include Mercadona in Spain, a leader in product innovation, and Whole Foods through its wellness “clubs” initiative. Kantar Retail expects more retailers will expand their brands into products and services that have historically been beyond their scope.
- Share of Engagement – How do I get my shoppers to care about me? With so much of shopping behavior being habitual, retailers must be smarter about how they engage with their customers. Examples include Target partnering with Lady Gaga on her latest album release or Walgreens pioneering a Beauty Within website with video episodes about the lives of its shoppers. Kantar Retail expects retailers to improve their story-telling and relationship building in-store, online, and at home to engage the shopper in a world where the shopper’s attention is harder to earn.
“The real power of the 5 Shares is to examine them in aggregate to better understand how well or how poorly a retailer is performing, and to understand how they are trying to drive their business,” Gildenberg said. “The world’s largest retailers – Walmart, Carrefour, The Home Depot and Tesco – are all going through fundamental shifts in how they approach some or all of their strategies to drive these 5 Shares in response to an evolving – and increasingly challenging and competitive – retail landscape.”
To find out more about Kantar Retail’s 5 Shares, download the Executive Summary or the full report.