By some estimates, $175 million will be lost by employers in the next two days due to lower productivity resulting from the start of the NCAA tournament. Hopefully this blog post opened for you despite all the bandwidth being used by your coworkers streaming live hoops action.

In the Big Dance, smart perimeter play can propel a Cinderella team deep into the tournament. This is a lesson that should be adopted by grocery retailers looking to grow sales and build customer loyalty. “Shopping the Perimeter” has been a top recommendation from groups trying to guide shoppers to a healthier diet and recent research from Kantar Retail shows that this message is getting through. In their study, they found that 50% of shoppers claim to only shop “in select aisles to get what’s needed” rather than going up and down every aisle. This is a 6% increase from 2008. They credit the recession as being the driving factor, but I think there is more to it. This presents a challenge and an opportunity for retailers to maximize the size and value of the shopper’s basket.

Understanding consumer in-store traffic flow and where they spend most of their time can help guide merchandising strategies. While the center aisles still account for the majority of sales, it is the perimeter where customers are spending most of their time. Why? There are a few factors I see at play. In addition to the renewed interest in consuming more healthful, less processed food, the perimeter is simply more interesting. There is also more variance at play that can influence the time needed: customer service, meal planning, price, seasonality and quality. Here are some simple tips to capitalize on the time and attention that customers are spending on the perimeter, to increase their basket size and money spent on the interior.

Customer Service: A great opportunity for building loyalty. Give your employees a chance to have first-hand knowledge of new items to speak to customers about them. Also create an environment that encourages interaction. For instance, during the NCAA let employees where hats or shirts supporting their favorite college team in the tournament. Even if it is a customer’s arch rival it provides the opportunity for a little friendly ribbing.

Meal Planning: Providing meal solutions to customers is a great way to build incremental sales. Promoting fish for Lent? Give shoppers ideas to complete the plate and drive them to other departments such as produce, as well as in the center aisles for pastas, sauces and other items. You can even reach them before they hit the store with recipe ideas in your store circular and on digital assets. Consider your natural store flow and offer secondary locations for some items such as lemons to reduce the need for customers to back-track.

Price: Today’s economy has made consumers more price sensitive, but the perimeter is an area where they are willing to pay more for quality and other attributes. Store margins are also stronger on the perimeter. The center aisles have products competing with competitor retailers and store brands. On the perimeter, you can distinguish yourself from the store down the street with quality and service. You will still have the bargain shopper looking for the cheapest chicken available, but you will also have shoppers willing to pay more for attributes like hormone-free, organic and free-range.

Seasonality: Your first thought is probably produce, but the perimeter offers many other seasonal opportunities, many of which revolve around food. You know it is November when the island case of turkeys is out, and expect hams to be featured as Easter approaches. In the summer, the meat department is focused on grilling. Take it a step further with an integrated merchandising strategy on the perimeter to capture customer interest. It doesn’t just have to be candy for the next holiday. Capitalize on holidays where food and entertaining are a center piece such as Easter, graduation parties and Memorial Day in the coming months.

Quality: As mentioned earlier, the perimeter is a place to distinguish your store from competitors. One reason people are spending more time here is that the quality can vary from week to week. While you always know what to expect from a can of Campbell’s Tomato Soup, the avocado you enjoyed last week may be coming from a different farm or country this week. While apples and pears are sold by variety, many other fruits are comingled. Peaches may be separated by the color of flesh, but berries tend to have one identification, such as strawberries.

You have to fish where the fish are, which unless frozen, will be found on the perimeter. This is where your customers are spending the majority of their time and open to point of purchase influencers. The center aisles have become the battleground for price competition, both from private label and retail competitors. While they are still important to sales, it is the perimeter that is going to convert customers into fans, though if you want face paint and pompoms, I suggest you start streaming from cbssports.com.

Photo Credits: http://www.homemakers.com/

“There is no sincerer love than the love of food.”
George Bernard Shaw

One thing I’m often asked by clients, and potential clients, is “how can you communicate our value proposition to help us get a better price?” A struggling economy heightens the challenge, but we have had success with numerous clients seeing record sales including blueberries, avocados, sweet potatoes, sweet corn and Prosciutto di Parma. I also believe our Vibrant Rioja team had a little to do with the U.S. becoming the number one winos in the world.

Recently my thoughts have been focused on retailers, and the successful chains distinguishing themselves from Walmart, Target and Costco, whose food sales have been strong throughout the downturn. How are they differentiating themselves to be more than just a retailer to their customers and build loyalty beyond price?

Growing up, my mother always shopped at Kroger. Despite our limited budget, she didn’t shop around for the lowest price on every item from the four other chains within a 10 mile radius. She appreciated her familiarity with the store and the staff. Joining her on shopping trips, I was introduced to some of the employee and customer characters I came to know while working there for five years. Now that I’m in New York City, my wife prefers Fairway. Even though we shop at one of their seven locations, she reminisces squeezing through the aisles at their original Broadway store.

Chains with the greatest success have identifiable characteristics you can point to. Trader Joe’s has created a culture (some employees would call it a cult) that promotes fun and individuality. The atmosphere and the compensation have created an environment that employees and customers enjoy. Their private label strategy also has built customer loyalty, identifying premium suppliers with the flexibility and willingness to package under the Trader Joe brand. Despite the fact customers could find the exact same item under the producers brand in another store, it feels like a Trader Joe’s exclusive.

Some of the most successful chains in recent years have gone against the trend of trying to be everything to everyone, and focusing on areas that connect with customers. Whole Foods is synonymous with Organic and All-Natural. They are viewed as a socially responsible company that customers can feel good to patronize. Customers look forward to shopping there, rather than viewing it as a chore.

The Fresh Market was founded around the same time as Whole Food with a store concept that “brought back the feeling of open European style markets.” As they continue to expand, stores have distinguished themselves by offering fresh, high-quality food in a pleasurable shopping environment. They connect with a consumer that doesn’t put the lowest price as the top priority, a customer who understands and appreciates the quality of food, rather than viewing it as interchangeable widgets. I know people who can spend an hour in the store, if only there to pick up some coffee and fresh baked bread.

Connecting with customers is not limited to niche concepts. A recent survey of shoppers by U.K. supermarket chain Asda, a Walmart subsidiary, showed that 71 percent of men believe grocery stores are a better place to find a date than a bar or pub. Nearly half said they examined the contents of fellow shoppers’ baskets to determine whether they were single (and possibly to see if they have cats). Their “Shop For Your Dream Date” Valentine’s promotion complete with an online dating service to match compatible customers showed they are more than just a place to buy milk. Whole Foods and Wegmans have had singles meet-ups spring up naturally, encouraged by the feeling of connection and belonging that customers feel with the chains and each other.

In today’s environment, price will always be a factor, but by differentiating yourself and connecting with customers on a personal level you can get them to look beyond the register and build loyalty. One thing that all these retailers have in common is outstanding customer service. Taking care of their employees through pay and benefits helps them attract dedicated individuals, but even more, creating a culture where employees are committed to the brand fosters an environment that keeps customers coming back.

What stores do you see distinguishing themselves to build customer loyalty?

Not surprising to most of us in public relations who labor daily to help brands achieve loyalty, the favorite car, TV show and soft drink brands of respondents faired better than their employers. Lessons learned from this and other recent polls? Employers should be spending more time deserving employee loyalty. It’s become unfashionable to talk about loyalty to company lately, I suppose, but isn’t it just a tad sad that employers don’t come across better than the survey indicates?

freedigitalphotos.net

Brand loyalty is an inside-out proposition and employees are critical to creating excitement and enthusiasm in customers, shareholders and other external audiences. Business Pundit’s interview with Dianne Durkin is a recent statement of this point of view about customer loyalty (which she distinguishes from brand loyalty). And while others may discount employee loyalty, arguing that there is plenty of supply and fairly low demand for employees lately — a buyer’s market –  I’m not in their camp.

My intuition won’t let me come down on the side of the supply-siders’ point of view because people are particularly important to businesses like ours that derive their value from fielding good, smart, engaged, competent, confident and caring teams for their clients. The closer-to-right point of view about employee loyalty probably was delivered by Jack and Suzy Welch in a post last year for Business Week The Loyalty Fallacy. They pointed out that the only way to play fair with employees is to focus on results. 

To acknowledge the obvious, Mr. Welch as the former head of GE has his detractors. In fact, the GE organizational development scheme of firing the bottom 10% is downright repulsive to those of us who are just so happy that our freshman year universities didn’t take the same approach. People are redeemable, and it sometimes looked as though GE was operating on that “there’s plenty more where they came from” thesis. (Kris Dunn, the HR Capitalist, put up a great post earlier this month 10 Bitchin’ Facts About Jack Welch…in which he lists as #4 fact: “Chuck Norris can drink an entire gallon of milk in thirty-seven seconds. Jack Welch doesn’t drink milk. Milk is for sissies.”) Lately, though, even Mr. Welch seems a more benign presence in the business landscape, and his take on the importance of companies clarifying which values and behaviors matter has always been right on.

The importance of loyalty is evident in business in so many ways that it’s important to nurture and encourage it. From small main street banks to large fast food chains, companies are at least professing their interest in building loyalty within and outside their walls. But, there’s a big difference between deciding and doing. Here are some steps to move the loyalty ball forward with employees:

1. Research what employees want to learn to do their jobs better. This is NOT employee satisfaction surveying, but employee curiosity and continuous learning polling.
2. Train. Train. Train. Whether it’s better application of specific knowledge or a more expansive result employees are after, one of the best ways to encourage their engagement and loyalty is to help them grow in their jobs.
3. Formalize your mentoring, even if it is informal. Employees enjoy being brought along by other employees. Make sure mentoring happens in a way that fits your organization and its culture.
4. Reward good performance. As Jack and Suzy would probably say, you have to make sure you reward the people who are bringing the organization its future.
5. Make work flexible. As a service company, we are always trying to balance the “be at the office” time with the “working from home” time. This and other issues are vital to employee comfort and support of the enterprise. Part-time, shared jobs, flexible work hours and other approaches are all worth a try.
6. Support retirement security. In a nation with such a low savings rate and such a high demand for stuff, we have a continuing problem (started by us boomers) of getting our people ready for a time when their work will be behind them. Help your employees make this happen.
7. Give kudos. Often.
8. Reach for greatness. When you establish a high standard, people feel challenged to meet expectations. When they do so, the reward of accomplishment is sweet.

Let’s hope part of the new reality that is being discussed with regard to our economy includes a healthy dose of loyalty. Some of the foundations seem to soften when we hit good times and lose track of the fundamentals. Loyalty is one of those foundations for good business, and the best foundation builders surround us every day at work.