BRAND SECRETS AND STRATEGIES

PODCAST #6

Hello and thank you for joining us today. This is the Brand Secrets and Strategies Podcast #6

Welcome to the Brand Secrets and Strategies podcast where the focus is on empowering brands and raising the bar.

I’m your host Dan Lohman. This weekly show is dedicated to getting your brand on the shelf and keeping it there.

Get ready to learn actionable insights and strategic solutions to grow your brand and save you valuable time and money.

LETS ROLL UP OUR SLEEVES AND GET STARTED!

Dan Lohman: Thank you for joining me today. Today I'm excited to introduce you to the guy that I think is the thought leader in our industry. His name is Bill Bishop, and for those of you who don't know him, he's the chief architect of Brick Meets Click. Bill Bishop is the thought leader in the industry from my perspective. What I mean by that is that he is the go to guy that has his finger firmly on the pulse of the industry, not only in what's going on in traditional retail; but in online.

Brick Meets Click is the intersection of traditional brick and mortar and online. And with Bill's company, he's able to explore a lot of the new trends that are taking place regarding taking a brand from a traditional retailer shelf and putting it online, and the impact that's having in the industry. Bill has a rich history of working with a lot of iconic brands. I've known Bill for quite a while, and I have the privilege of calling him a friend.

Bill is the consummate professional and industry thought leader. He is one of the most honest, genuine and real people I've had the pleasure of meeting. Bill commands the respect of the entire industry with his thought leadership and his understanding of the challenges facing today's traditional and non-traditional retailers. His thoughts and the quality of his work are unparalleled. He's looked up to and admired by superiors and other thought leaders.

Bill, thank you for joining me today. I really appreciate you being on the show. I'm thrilled to have you. What I wanted to do first is to hear your impression of what trends you see in the industry, what changes you've seen over time, and how you see brands and retail progressing into the online space and still competing effectively in traditional brick and mortar. So Bill, again, thank you for your time; and if you could start with a little bit about your history that would be great.

Bill Bishop: Sure. Well it's a real pleasure to be here on the show today. And I really bring a background of 30 plus probably now almost 40 years of experience in the food retailing space. My background includes being the vice president of research for the supermarket institute, now food marketing institute. And then founding Willard Bishop in the late '70's for [inaudible 00:02:31] consulting. And then five years ago, working with my partner and son Steve to found Brick Meets Click.

So I've been at this for a while. I've seen many changes take place in the industry and just find it fascinating to be living in the time we're living in right now.

Dan Lohman: It's a lot of fun isn't it? A lot of different changes, and a lot of disruptive technologies emerging.

Bill Bishop: Yes. The disruptions that are taking place, I think are probably to be expected. When you step back and take a look at the supermarket, which is still the primary way in which food and groceries are sold, it's an old institution. 75,, 85 years old depending on where you date its beginning. And as such, it's a mature institution. So as I think about my history, and what I've seen over time, the supermarket was originally invented in the early '70's. It's the time when almost everybody gave trading stamps. It was also the time that somebody, folks who've been around for a while would recall when we saw the first sort of new formats come in. It was a superstore proceeded abruptly by the combination food drug combination store.

Simultaneously, there were warehouse stores. And then, the first limited assortment stores appeared on the scene. Then some hyper markets. Eventually the price Clubs hit the scene, at that time as well it became recognizably prominent. So we shouldn't be surprised at the disruption we're experiencing today because it's actually been going on for more than 30 years. What's different now, and certainly has been different for the last, five to seven years, is that the growing use of digital technology has joined the other influxes in causing disruption.

Dan Lohman: Bill, on that note, one of the things that I'm most impressed with, the strategic idea that you came up with was the idea of a personal supply chain. You mentioned digital technology, so what does that mean? Because the idea of a personal supply chain is something I touch on a lot in all my content. The idea being that if a consumer doesn't get what they want at one store, they can go some place else. But more importantly, do you think this impacts the way retailers and brands go to the market, and then what is the opportunity for brands online? A lot of stuff there. Sorry to unpack it so much.

Bill Bishop: That's fine. I think a personal supply chain is one of the acknowledgements that there are no products that everybody in the market buys. And every set of products, every brand, has a core set of buyers. And this is the 20 percent of the buyers. We give them 80 percent of the business they do, and probably a larger percentage of the profits. So what's interesting about that is for that 20 percent that are concentrated on a particular brand, they're very interested in that brand. They're very interested in conveniently accessing that brand. And so they're somewhat receptive to approaching them with a more personalized approach to buying and sourcing that product.

So when we talk about the long-term implication for the personalized supply chain, I think what we're discussing here is the fact that for those sort of platinum buyers, those very valuable buyers that every brand has, creating a set of supply chain relationships that are tailored to their needs and that allow those customers to efficiently and effectively access the brands. So that's a new concept. In the past, the only way you could really address those customers is by sort of mass advertising and mass promotion and kind of teasing them into action to buy the product.

But now you can actually create an on-going relationship in this personalized supply chain. So it's sort of white space to compete for these most important customers. And of course because they are most important customers, they justify more investment on the part of the brand or the retailer. And they reward the seller with more sales and profitability. So bottom line, I think you're going to see more and more of these personalized supply chains. A negative aspect of that is that as those personalized supply chains form, they will fragment the market a little bit further, and shrink whatever is defined as the remaining mass market.

So they're part and parcel of this disruption and maturity that we spoke about earlier.

Dan Lohman: When you say fragment the market, Bill, what do you mean by that? And then how do brands and retailers navigate around that? 'Cause that's an interesting point.

Bill Bishop: To me, what we mean by fragmentation is that the customer is who has the personalized supply chain; or is enjoying the benefits of a personalized supply chain is no longer participating in the general supply chain. So you're in effect not really competing for that customer any more. What you're doing is trying to compete for their attention as being their provider of a personalized supply chain. That's very different from competing for their business in a mass market week in week out.

So if that definition works for you and we can use it, then the way people need to navigate here is organizing their approach to the market. Not so much from the standpoint of the mass market and where people are located, but more organized in the approach to the market in terms of investing. This is dependent on how close or distant a particular customer is from the standpoint of that seller's ability to implement a personalized relationship with that customer.

So what does that mean? It means that if you take all of the customers who regularly do business with you, and kind of put them into the traditional desk isles, the goal basically is to obviously move people up the desk isle rankings so that they're spending, even people who are regularly spending with you are spending more with you. And almost everybody, I think, is now accepting the thought process that it's easier to sell something to someone who's already buying from you than it is to ask them to change their behavior.

So then the second question or option would be, for those customers where you're splitting your business with someone else, how do you spend your money to increase the amount of spending that those customers who split with you; or split you and their business with you and another competitor, how do you then increase the proportion coming to you as a customer? As a seller. And then the next question would be, when you get a situation where a person is in effect, in a competitor's personalized supply chain, how do you identify people who are in the others' clutches that have characteristics that they really could be happier, more satisfied, in dealing with you?

Now very few people would start with that third category. They should start with folks who are dealing with you regularly, and work your way through that. Once you're satisfied that you've mined that particularly opportunity., then how do you go ahead and take those shared customers and bring full value out of those? Then even the folks who are part of somebody else's personalized supply chain could be potential customers. But you've gotta use analogies to figure out who they are, where they live, where they're concentrated, what else they've bought? And the probability isn't as good of course. But it is a place to fix.

Dan Lohman: Makes a lot of sense. One of the things that you've talked to me alot about is the importance of content. And basically taking the message that's on the packaging off of the package and beyond the packaging so that you can better communicate the value of the product or what the differentiator is. So how important is that, to both the brand and the retailer?

Bill Bishop: As we've discussed, and I know you're aware, content is much more important than it used to be mainly because all of us have become use to getting more information about whatever we're interested in. All we have to do is type into a search bar and learn a whole lot more than we knew. So you don't have to go to the library. You don't have to open an encyclopedia. You don't to have to read a book. You can just search for it. So what that says is that one of the constraints that mass retailing had operated under, and I'm sure a lot of folks listening to this podcast will understand this, one of the constraints is that the package was fundamentally the only way that you could communicate information.

And there was a lot of contention as to how that space on the package would be used to maintain the appearance, the listening, the product, whatever the requirements the brand were. So the idea of adding additional information, animation, stories, were more difficult to execute when people were struggling with all the different ways we had to use this very limited amount of space. In a digital world, we've tremendously expanded the amount of space word content that can appear on a particular product.

And so there's a lot more you can do. And in many respects, this really favors products and retailers that are differentiated. So if the product has a story, has some features and benefits that they really want to talk about and promote, it's much easier to do online than it is in the sort of traditional physical environment.

Dan Lohman: On that note, what do you see in terms of the trends of being able to maximize the impact of that communication via social media? You were talking about personalizing it and the fact that small brands, something we've talked about a lot Bill, are closer to their end consumer. Have you been able to do any research or what trends do you see in terms of the way the small brands are able to maximize that unique connection and their ability to use social media to effectively communicate beyond the package?

Bill Bishop: Well small brands still have the sort of catch 22 in that there's a cost to getting on the shelf. And there's a cost and a skillset required to getting into the social media. So they've got to figure out how to sort of break out of that catch 22. And I think the way to do this is to think, not exclusively of social media, but to think of social media and the retailing activity simultaneously. So I think one formula, one approach that I've seen work pretty well is once a brand, and now I'm in a product brand rather than a retailer brand; once a product brand has got its act together in terms of what sets it apart, what story makes it unique, why it's aspirational, where it fits, why people should love it. Once all that's figured out, then probably the most important thing to do is to find a retailer who's target customers align with those appeals.

And what I think is necessary here is to find those retailers and get them to agree to put their product in and to use that content on their own media in their own advertising, on their own signs, on their own websites, in their own email; in return for the brand giving that retailer a degree of exclusivity, at least from a geographic point of view, at least for a period of time.

So that quid pro .is we'll give you a unique opportunity to have exclusive opportunity to sell this product if you will give us a bit of a share of your potential. So I think breaking through that way, and then being sure that those retailers who have signed on to the program are continually supplied with content that's fresh and then trusting. And they see the value of promoting this brand, mainly because it's attracting exactly the customers they want to attract. And when they do that, they can then sell additional products to these customers that they want to attract that were first attracted or first came to everybody's attention by virtue of this new brand that got to the attention I just described.

So it's a very positive way of a brand helping a retailer identify, cultivate, and build business with certain customer segments that they want to go with. And of course natural and organic products are perfect to fit that particular paradigm.

Dan Lohman: That is an excellent strategy. I'm always talking about the importance of helping a retailer build their market basket. And the idea of having the brand effectively become an affiliate marketer for the retailer, and then leveraging their relationship to drive sales, that's the best of all worlds.

Bill Bishop: One of the things that I think needs to happen here is we've got to focus our attention on where the significant growth is versus where the significant size of the market is today. One of the complaints, I think, that consumers have about their experience in almost all stores is that the assortment. When when they go into a store, they don't find what they want.

Dan Lohman: Right.

Bill Bishop: Well the reason they don't find what they want is, and I know I've heard you speak about this, but the retailers are busy selling things that they want to sell to them versus what the customers want to buy. But the other side of the point is the retailer's tendency to update their assortments. Is it what it needs to be in today's fast moving world? .Retailers need help identifying the important trends earlier. They need help identifying the customers that will respond to those trends.

Those are both functions that well defined smaller brands in fast growing categories can provide to a retailer. Now you also have to help the retailer see that, A, these folks are now responding more than they would've because you're in there with your brand. And B, there probably are opportunities to expand the basket size, to expand the kind of shared wallet by talking about other products; complimentary products that those customers in the segments wanted to buy in addition to your own.

So it kind of opens things up in a way that's very exciting, and allows both the retailer and the categories, concentrate on the single most important job, to grow the business. And in this particular case, we're talking about growing the business by taking the customers you already have, bringing them closer to you so they spend more with you, and being more responsive to what their current needs are.

Dan Lohman: Absolutely and very well said. One of the things that we always talk about is the opportunity for small retailers that are agile and nimble, to be able to compete effectively. A question that I'm always asked and we've talked about this, is how does the small brand help the small retailer, specifically the natural products retailer, compete head to head, toe to toe with the big guys? And you hit the nail on the head. The big guys can't change their assortments as quickly and as easily as the small retailers.

So I think this is an excellent strategy. How do you see this playing out in terms of the transition between a brand on a retailer's shelf and an online service store like an Amazon or a Jet?

Bill Bishop: Well I think that when you compare the basic activities of shopping online versus in store, what we find is that the online experience is generally a really great way to buy what you were planning to buy, to replenish. It's a very efficient way to search. You can shop off your last shopping list and increment that way. You can set up a subscribe and save program almost to go on autopilot.

I call those left brain activities. What the online experience doesn't do nearly as well is help people browse. How do you browse a website? Not that easy. It doesn't give you a chance to sample the product. So I think what we need to do here is recognize that those two activities, the store and online are actually complimentary ways to serve the customer. And if we're not careful, we can get so preoccupied with the efficiency and logic and structure of online as a way to sell products that we may lose our ability to grow consumption.

And so as long as we start with the idea that we need to both replenish the items that people want to buy that they used to buy, and want to continue to introduce them to new items so they can expand their consumption in new and different and hopefully stimulating and rewarding areas, then you've got to do both at the same time. You need to work both angles at the same time. So one of the ways in which this can be done, and I think your smaller stores have a chance to do this, most, through in store events.

There are many resources today that can be brought to bare through in store events. The marketing of which can be done through social media and electronically at a relatively low cost. But then all the energy and creativity and sort of browsing and discovery, reinforcement, will take place in store in the context of the event. So that's one example. But what I think is tricky here is that all small natural and organic retailers are not created equal. We have one right down the street from where I'm sitting here.

I don't trade there anymore because I just didn't get the professionalism that I would've expected from the standpoint of I make very specific requests for a particular product. There's no reason why they couldn't give it to me. But it was not there half the time I went in. Even though I personally made the request that it would be. And this is not a short shelf life product. The shelf life was well over a year, and I'm buying it maybe four or five times a year.

So I was disappointed and having come from some of the expo meetings, and so forth, and listening to some of the leaders in this field, there's a big difference between the leaders in natural organics and all retailing and some of the average, not to mention, below average. So what was working in this space, I think, has to be prepared for the fact that some significant portion of these stores will not survive. They just can't do it. They love the product, but you and I have talked about a person, not to name anybody, who's really enthusiastic about the product as I'm sure they want to be in the business. I think they're going to find a significant number of people who are retailing today in natural organic who really don't belong in the business.

And the sooner they arrive at that conclusion, the better it's going to be for them and for everybody else. Certainly I wouldn't have the bad taste in my mouth from my retail experience, which frankly bleeds over to other small retailers had I not had that happen. So I'm sure it's not a happy topic, and maybe one that doesn't make the cut of your edit of this interview.

But I think it's a truth that needs to be addressed.

Dan Lohman: Well I think that's important, and that's why I'm doing what I'm doing, and you're . doing what you're doing. To help these small brands, figure out how to make it work. And I guess what I'm getting at is that the big brands are famous for doing what they've always done. And continuing the same path with blinders on without thinking about new and strategic different ways of doing things. And I think, if I hear you correctly, the challenge is that this particular store is trying to look for a way to continue to do things the way they've always done it, rather than trying to be innovative as we talked about in the beginning of this conversation.

The consumer is looking for, not necessarily for disruption, but more importantly a brand and a retailer that is flexible. A retailer who will listen and pay attention to them. A retailer that's going to keep them coming in their store and get them to spend as much of their share of wallet within their store, maximizing that personal supply chain to really make them be the focus for that consumer journey.

Bill Bishop: Dan, you've nailed it exactly. And there's lots of wonderful opportunity to do this that's not being exploited today. And there's really no excuse for that because the cost of all of the digital services have dropped dramatically. I mean you can make your own website. And obviously there's suppliers who want to work with these people. It's really a mindset kind of a thing that-

Dan Lohman: I think you're right.

Bill Bishop: Yeah. That is a way to think about it. Are there any other questions you wanted to cover before we finish up here?

Dan Lohman: Unless you've got something else, not really. The only thing I was going to add to that is it reminds me of standing in a long checkout line, money in my hand waiting to give it so someone, and not having someone there to take it from me. That's kind of the scenario I always look at in terms of why are people allowing this to happen? Customer service is the easiest thing to do, but it's something that isn't done very well by a lot of different retailers and brands.

I really don't have anything else I wanted to cover on this podcast, unless you do.

Bill Bishop: No, I think we've probably, covered it for today. Maybe we'll do this again in a few weeks and hone in on another set of topics. But I think this is probably as much as we can put in the basket at this point.

Dan Lohman: Sounds great. Well Bill, thank you again for making time for me today and my audience. I cannot thank you enough for your contribution, not only to this show, but to the industry and for all that you've done over the years. So again, thank you and I look forward to our next conversation.

Bill Bishop: Dan, it's been my pleasure and I do too.

Dan Lohman: Thanks, Bill. Bye for now.

Bill Bishop: Okay. Goodbye now.

Dan Lohman: Thank you again Bill for joining us today. I hope everyone enjoyed this episode. I look forward to having you back on the show. I'd like to encourage everyone to check out BrickMeetsClick.com and subscribe to Bill's weekly newsletter. It's full of insights from Bill and other thought leaders in the industry.

I wanted to touch again on something Bill said earlier during the show. He was talking about a retailer that didn't have the products on the self. An out of stock issue is what it sounded like. This is an issue I've talked about a lot on this show and through all my other content. You never get a second chance to disappoint a customer. And not having a product on the shelf is the quickest way to invite your customer to shop your competition.

The point being is that retailers and brands need to work hard together to help make sure that the shelves are full of the products that consumers want to buy. The show notes for this show can be found on my website at BrandSecretsAndStrategies.com/session6. The freebie this week is strategic solutions to grow your brand. It outlines the core fundamentals of true category management, a lot of what we spoke about today. To download this, you can text strategicsolutions to 44222 or go to my website to download your free copy.

As always, I look forward to seeing you the next episode.

This episode's FREE downloadable guide

This short guide levels the playing field between small brands and their more sophisticated competitors. It highlights the advanced strategies the big brands use called Category Management - what retailers want.

CLICK HERE TO DOWNLOAD YOUR FREE STRATEGIC GUIDE: Strategic Solutions To Grow Your Brand

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