By Terry Soto, Author and CEO, About Marketing Solutions, Inc.
A few years back I along with some colleagues were contracted by the Coca Cola Retailing Research Council of North America to help the council tackle what had become a critical issue among U.S. food retailers: how to successfully market and merchandise to ethnic consumers. The result was the actionable “Grow With America Best Practices in Ethnic Marketing and Merchandising.”
As I thought about how I would begin this 10-month consulting project alongside ten major retailer CEOs, I decided that valuable insights would come from interviewing various stakeholders outside of retail to understand for example, observations among trade publications and trade associations of the state of ethnic marketing among US retailers as well as the experience among CPG manufacturers when attempting to gain retailer support for ethnic consumer programs at retail.
The result was a very frank conversation of the obstacles which directly impact retailers’ ability to successfully plan and execute ethnic trade programs, but the bottom line was that retailers were still in a nascent stage when it came to ethnic marketing and merchandising. Some of the most critical include:
- Limited top-level supermarket management commitment to prioritize ethnic marketing.
- Relatively scarce dedicated management resources to drive ethnic marketing and merchandising initiatives.
- Inability to reconcile efficiency models and the capability to customize offerings to ethnic consumers.
- Mainly centralized assortment decisions versus those that address local needs.
- One size fits all category management volume benchmarks drive assortment decisions with little room for ethnic assortment adjustments.
- Heavy reliance on vendor partners to mine ethnic sales data.
- Mostly tactical store level ethnic initiatives, rather than integrated into the retailers’ strategy.
- Sporadic vendor funded ethnic initiatives comprised mainly of revenue-generating promotions and events.
- Ethnic marketing and merchandising is limited and focused on trade advertising and promotions with minimal focus on ethnic customers.
- Culturally and generationally homogenous retail decision makers and diversity initiatives related to staffing and suppliers are not common.
As I stepped down from the stage at FMI after presenting the results from this behemoth project, I was swarmed, not by retailers, but rather by CPG companies.
Shortly after, I proceeded to make the rounds at major CPGs where brand managers and business directors saw the following opportunities in the findings:
- Top to top meetings between CPGs and retailers to make retailers aware of the wealth of information available through their CPG partners.
- CPG companies identified dedicated and cross functional resources to help retailers understand the ethnic sales opportunity possible through turn-key CPG ethnic programs.
- CPG companies helped retail partners create ethnic store clusters and respective category management filters that consider ethnic assortment requirements and ethnic velocity benchmarks.
- CPGs optimized distribution systems to facilitate efficient DSD distribution systems to help retailers overcome centralized decisions and distribution hurdles.
- CPGs proactively mined Hispanic sales data to help retailers overcome uncertainty about ethnic consumption and size of the opportunity.
- CPGs created yearlong ethnic marketing trade and consumer marketing calendars with proactive retailer input meetings to deliver continuous strategic programs in support of key sales drive periods.
- CPGs pursued more robust diversity goals across their own marketing and sales functions.
Today, retailers continue to struggle with the same hurdles identified eight years ago while being evermore focused on operational efficiencies not the consumer.
However, CPGs have grown increasingly proactively about understanding their retailer customers about their ethnic marketing needs. In doing so, they’ve gained the insights to develop programs which deliver on what retailers, consumers and CPGs value and which are well executed, and isn’t this the true measure CPG and retailer alignment.
Terry Soto is President and CEO of About Marketing Solutions, Inc., a Burbank, California – based strategy consulting firm specializing in helping her clients dramatically improve overall business performance by optimizing their strategies to succeed in the Hispanic market. She can be reached at firstname.lastname@example.org or 818-842-9688.