This week, leading lawyers, regulators and marketers attended the 37th Annual Brand Activation Association (BAA) Marketing Law Conference in Chicago. At BAA I gave a presentation on how disruption is permeating advertising, media, and marketing today. Over the next few days, I will share with you three video clips from my presentation. Let’s dive into
Kroger has always been an innovator. It was the first store to combine meats and groceries under one roof, and the first grocery store to have its own bakery. Kroger pioneered the use of optical scanners in the checkout aisles and was one of the first grocery chains to open superstores, a move that has helped it weather competition from big box stores like Sam’s Club and Costco. That drive to innovate has helped make Kroger the nation’s largest grocery chain and the second largest retailer in the country after Walmart.
But, what has really driven Kroger’s recent success is its commitment to the customer experience, and particularly how well it has applied its customer loyalty program. Kroger launched its “Kroger Plus Card” program in 2003. In 2010, Kroger partnered with Shell gas stations allowing customers to redeem points earned on their Kroger Plus Cards for fuel. Well over two million customers use Kroger’s shopping app, which allows users to download coupons, sort coupons by relevance, sync coupons with their shopping lists, monitor their Kroger Plus reward points, and even refill prescriptions.
Last year, a study by Maritz Loyalty Marketing found that Kroger had the highest rated loyalty program in the grocery sector, with an overall satisfaction rate of eighty-three percent. In fact, ninety percent of register transactions are completed with a Kroger Plus card, and eighty-five percent of all United States households in markets where Kroger operates have a Kroger Plus card.
The Way I See It
- As behemoths like Walmart and Amazon continue to gobble up market share – in everything from groceries to clothing to consumer electronics – I see more “traditional” retailers needing to double down on the customer experience in order to compete.
- Successful competition is going to be increasingly dependent on maintaining an ongoing conversation with customers via the tools and channels they prefer, namely their mobile phones and social media.
- Data – not just gathering it, but using it in novel and effective ways, and ways customers are comfortable with – may wind up being the biggest difference-maker for retailers.
The Way the Industry Sees It
What’s made your Kroger Plus program so successful? What have you been able to tap into about the way customers like to use these programs that your competitors haven’t?
Our Plus Card program is successful simply because of our ability to deliver real value, and to uphold the trust that our customers place in us as it relates to their shopper data. Through our shopper card program we are able to capture and analyze shopping behavior, and then apply the insights we gather to create offers, discounts, and recommendations that are meaningful and relevant. We are very careful to protect our shoppers’ data and their privacy. Our customers have come to expect us to know them better, and they tell us that they look forward to hearing from us!
What’s the relationship between the Kroger shopping app and more traditional print coupons and circulars? Will the app and social media eventually replace coupons delivered in the mail, by newspaper, or handed out at the checkout counter?
For more than ten years we have been perfecting our ability to deliver highly-relevant, personalized coupons for the products that our customers like and buy the most through our ‘Loyal Customer Mailings.’ We are now applying that expertise to the digital channel through our mobile app, which allows customers to sort digital coupons by relevance to them. By applying real-time insight derived from their shopper profile, we can sort and deliver relevant offers based on what we know about a customer’s product preferences or lifestyle segment. Because we have five generations of customers shopping with us – and because each generation and each customer is unique in terms of their preference for how we talk to them – our aim is to meet our customers and talk with them in the channel or channels that they prefer.
It sure didn’t take long for 2014 to shift into high gear.
Little more than two weeks into the New Year, we’re already knee deep in stories with big implications for marketers in the retail sector (charged anything at Target lately?), sports marketing (the ruling on Alex Rodriguez’s suspension for the 2014 season), and the…
It seems youth marketing has always been a hot topic in the advertising world. As young people move from the “discovery” phase of their tween years to the “experimental phase” of young adulthood, they shift from being motivators of their parents’ buying habits to influential consumers in their own right. But today that demographic is extremely important. Not only are today’s young people the first true digital natives and harbingers of how digital media will influence how we all interact with brands, but also, as baby boomers age and their $400 billion in annual consumption slows, retail, food, and entertainment companies are counting on millennials to fill the gap.
One marketer that has been particularly successful in tapping the youth market is Erin Yogasundram, the twenty-one year old founder of Shop Jeen, an online boutique that sells everything from dollar packs of Ouija gum to $530 filigree sunglasses. Yogasundram launched Shop Jeen in March of 2012, while she was a junior at George Washington University (GWU). She started out with posting cell phone photos of new products to Instagram and filling orders out of her dorm room. The Instagram feed and the business were such an immediate hit that Yogasundram walked away from the remainder of her full-ride scholarship at GWU and moved to New York City, where Shop Jeen now has three offices, nine employees, and half a million Instagram followers.
The Way I See It
- I see a retail industry increasingly focused on millennial and youth marketing. As baby boomers age, their $400 billion in annual consumer spending will fade. The world will turn to millennials to make up the difference.
- I see a demographic increasingly inclined to shop at multi-brand retailers and to do their shopping online. According to recent research by Piper Jaffray, roughly eighty percent of teens shop online. Piper Jaffray’s research also confirms millennials’ growing reliance on peer recommendations when making buying decisions.
- I see a social media market in continued flux as young people gravitate toward new platforms; according to the latest semi-annual Pew survey on teens and social media. While Facebook still has the largest number of teen and millennial users and those users have their largest networks on Facebook, the percentage of teens citing it as their most important social network has fallen by half, from forty-two percent in the fall of 2012 to twenty-three percent in the fall of 2013. In that same period, the percentage of teens citing Instagram as their most important network doubled.
The Way the Industry Sees It
I sat down with Shop Jeen’s founder, Erin Yogasundram, to discuss her brand and how she uses social media to build a customer base.
Where did your initial vision for Shop Jeen come from? What niche or need did you want to fill?
I started the company, junior year, in my dorm room at The George Washington University. I had worked a few internships in the fashion industry in high school as well as during my winter and summer breaks in college. I was working three part time jobs in retail, and one day I thought, I could do this myself. I have always been an entrepreneur, and for example I sold autographs online when I was twelve and owned a shoelace selling business in high school. While working retail, I found that I had a keen eye for what would sell well. I was always suggesting new brands for the stores to carry and had an invisible hand in the buying process. I had about $2,000 saved from working retail and blew it all on a Celine bag (the bag was very rare, and had a wait list process at the time). I have always been a workaholic and never a bookworm, so I quickly realized I could have used that money to start a new venture for myself. I then sold the Celine bag for $3,000, yielding a $1,000 profit! I decided to pool my money into wholesale purchase orders to fund my new venture. Initially the site was to be a hub for the “best of Etsy.” Etsy was gaining popularity, but it was very difficult to navigate and find the good stuff. I used my keen eye, combined that with my researching skills, and I was able to find the cream of the crop on Etsy. I negotiated wholesale terms with the sellers on there – most of which did not know what wholesale even meant when I approached them – and Shop Jeen was born. I coded the original website from trial and error CSS writing. I sold on campus at every event possible. And I slowly started bringing on more well-known brands to gain traction and reputation in the industry. Though we do carry some of the same brands as Bloomingdales, Urban Outfitters, Hot Topic, Bergdorf Goodman, Nasty Gal, Spencer’s Gifts, and ASOS, our curation is what makes us unique. So unique, in fact, that those retailers would not normally be mentioned in the same sentence.
What’s your curation process like? How do you decide what makes it on ShopJeen.com, and how have your decisions affected revenue?
Our Creative Director, Amelia Muqbel, and I work very closely to decide what products are sold, our marketing strategy, our social media voice, the look of our graphics, etc. Everything Shop Jeen stands for is a true representation of the two of us. Luckily, we somehow managed to find each other in this massive world. We share a very unique sense of style, thought-process, and outlook on the world, which is why we work so well together. I think our cohesive mindset comes across when you visit Shop Jeen. We approach everything from a different angle than everyone else, and I’d say this has aided our success. We quickly pull apart “competitors’” strategies and try to do the exact opposite. It sounds crazy, but it’s been working! A lot of retailers are trying to mimic each other in order to come out on top, but if everyone is doing the same thing, how boring is that going to be for the consumer?
In the futuristic world of Minority Report, Tom Cruise’s character walks into a Gap clothing store; his eyes are scanned and a 3D hologram of a saleswoman welcomes him by name and inquires about his satisfaction with his previous Gap purchases. The movie is set in 2054, but this scene may not be too different from the world we live in today.
Those objecting may not realize that location-based targeting has been around for some time. For example, GPS-based apps can determine whether you are in a particular store and immediately offer products and deals available at that retailer through your mobile device. While this practice may have turned some consumers off initially, it is increasingly an accepted practice. One notable difference, however, between app-based targeting and brick-and-mortar tracking is that those who download these theoretically apps expect location-based tracking, whereas those who walk into a store likely do not expect to be monitored and targeted.
The Way I See It
- I see that, after a period of time, we will increasingly adjust to the use of these technologies by brick-and-mortar retailers and become desensitized to this tracking, as we did with e-commerce sites tracking us online.
Cash and credit and debit cards are certainly dominant in the payment space today. Some think change will never happen, but they are dead wrong. Mobile payment is in its infancy, but the benefits are clear: simplicity, convenience, relevance, and targeted offers and rewards. No more wallets with multiple cards, just one device. And this is only the beginning.
Consumers and retailers are eager to participate. Starbucks – a market leader – already offers a popular payment app. It has now moved further into mobile payments by partnering with Square to allow mobile payment at all of its 7,000 U.S. stores. Customers may soon even be able to pay with their phones while they’re still in their pockets. With Square, a cashier can see your photo as you approach the register, and you complete the purchase by stating your name. Continue Reading Are Mobile Payment Apps the Next Big Thing?