Personalize to Sway Consumer Targets: Catalina

Personalize to Sway Consumer Targets: Catalina

March 26, 2014

We are all part of the 1% - but it’s not the exclusive financial club that political dialogue would have you believe.

Rather, we are all picky shoppers who ignore 99% of items on retail shelves because they don’t suit our individual “buyergraphic.”  We buy on average less than 1% of what we see in the supermarket, depending on the category.  So says comprehensive research of more than 32 million U.S. shoppers conducted by Catalina, which reported findings in a newly released White Paper, Engaging The Selective Shopper: Why Today’s Consumers Expect Personalization.

The company analyzed more than $55 billion worth of purchases in 9,968 supermarkets across the nation for 52 weeks ended June 30, 2013.  These stores averaged 35,372 UPCs apiece; individual shoppers each bought an average of just 260 different items, or 0.7%, during the year.

Even top shoppers, who account for 80% of all store purchases, buy just 1% of UPCs available.

Choosy shoppers act consistently across key areas of the supermarket.  They buy 1.7% of dairy products, 1.2% of cookies/crackers/bread, 1.0% of frozens, 1.0% of snacks and carbonated soft drinks, 0.9% of center-store grocery, 0.5% of center-store nonfoods, and 0.2% of health and beauty care items, the data show.

Therefore, to move velocity, retailers and brands need to segment precisely to reach the right pool of interested consumers – and message them persuasively to be relevant and induce trips, purchases, trial, and a higher share of wallet.  

In a dramatic example of how “one-size-fits-all promotions and ads don’t resonate with a majority of today’s selective shoppers,” the report notes: Despite a Memorial Day shopping circular by a major retailer, two-thirds of all shopping baskets didn’t include a single item among the 1,172 advertised; another 17% of baskets included just one.  A week later, the figure was 74% without a single circular item; 15% of baskets included just one.

Since shoppers are selective in their media use too – they use DVRs as filters – the report urges personalized marketing by brands and retailers to effectively reach and influence the smaller target audiences for each item.  This is especially true for new products, which “are becoming more granular in the consumer preferences they target” and therefore appeal to narrower population segments.  The report cites Procter & Gamble’s Tide, which was once a single-product brand, but now has 43 highly differentiated SKUs, each with different benefits and values.

This has significant sales implications.  Of 1,900 new CPG products launched in 2011-2012, 68% failed to generate $7.5 million in year-one sales; in nonfoods, the figure was 75%, according to IRi New Product Pacesetters data cited by Catalina.

It also creates friction in display-space discussions between brands and retailers.  Brands need to segment and offer varieties to induce purchase, while stores want to rationalize SKUs and rid their shelves of slow sellers.  But chains, including Walmart, have backed off this position to some degree, understanding that some slow-selling items might appeal to their best customers, who might be tempted to shop elsewhere if they are out of stock.