The Vital Role of Velocity in the Growth of Emerging Brands

Every new, emerging food and beverage brand is a leap of faith for the founders. It’s also a leap of faith for the retailers who put those new products on the shelf. For this reason, a near universal yardstick is used to determine if the product is a winner and thus a longer-term player, or if it’s a bust and headed towards delisting. That unalterable path to traction and success, or lack thereof, is velocity.

Velocity in simple terms is the repeat purchase data that shows what happens following the initial run-up on trial after a product is launched at retail. The question retailers are attempting to answer: are purchases escalating as users come back again and again while new users continue to enter the top of the sales funnel?

For most new successful brands, a heavy category user audience has resonated to the product and fuels the outcome. Getting to this sweet spot isn’t luck of the draw or guaranteed once the product is on shelf.

There are two primary drivers of velocity:

1. Memorability – the consumer remembers your brand name and seeks it out
2. Effectively answering the “why” – every successful food or beverage has a primary ”why” that draws fans in time after time. The “why” can be defined as the primary dietary objective or problem that the product solves.

Both of these drivers are marketing challenges. Yet far too often, we find founders and investors preoccupied with the finer points of securing distribution gains (meeting with distributors and retail buyers), ingredient sourcing and manufacture (getting the product out the door) and financial management of both.

It may appear that the ability to scale the business is best served by adding more retail accounts or driving more traffic to the web site. While in fact, if velocity is not successfully managed, and the memorability and the “why” go unattended, greater risk is injected into the business.

Number one error going in

In the very early going before any brand equity exists, product experience is the primary reason why early adopters come back. Simply said, the promise is fulfilled in the eating and drinking experience. The product taste is a home-run and the expectations on healthier, higher-quality choice are delivered.

This means that in the early periods before any retail scale is achieved, it is vital to seek input and review from the product’s best users to determine if any tweaks need to be made to the recipe, texture or flavor profile. If the product is optimal then added distribution makes sense.

However far too often there’s a false sense of security embedded in the initial product experience win. This may prompt the brand’s owners to mistakenly believe once on shelf the product will sell itself. “If you build it, they will come” is a precarious trail to navigate because other key ingredients in managing velocity goals go unaddressed.

Bandwidth can be a challenge here because there’s already so much on the plate for founders in the day-to-day struggle to get the product made and off to distributors or retail outlets. More often than not, we find that business owners are not expert marketers and can at times assume that marketing consists only of social channel posts or sending out press releases. There’s much more to it than that.

How to manage velocity

Memorability is required to get consumers coming back again and again. This puts greater pressure on the web site, packaging and consumer-facing communication to bring the brand front and center in the context of the consumer’s needs and wants.

However, it is right here where the most frequent fundamental errors are made. Most emerging brands cast the story upside down. They believe the story should be about themselves and their product attributes and benefits. When that happens, the story is embedded with a disconnect right out of the gate, because it casts the brand as the hero.

Every consumer, every day wakes up believing they are the hero of their life story. When the brand presents itself as a hero, it competes with the consumer for that role and people walk on by in search of a guide to help them solve their needs. The construction of the story is paramount, with the consumer as hero and the brand operating as the expert guide and coach on their journey.

The story is about them, the consumer, and their wants, needs, concerns, aspirations, desires and challenges. The consumer needs to find themselves in the story you are telling. Then and only then will they engage and listen.

This is the path to relevance, an essential ingredient in effective marketing strategy.

For the most part new, emerging businesses are b-to-b players, devoting most of their time, energy and communication to investor, trade and distributor audiences. So, it’s no surprise the skill sets in consumer-facing outreach may not be fully developed. The story creation is a top priority and is best done by experienced, creative marketing brains who have the skill sets to build it, and then move the story in earned, owned and (later) paid media channels.

This leads us to the second key element of velocity – the “why”

There’s a key message that needs to be addressed in all forms of outreach from package to outbound communication. What is the primary dietary need or want your product solves that keeps people coming back? Insight research is vital here to determine what the “why” is. Is it weight management? Is it energy? Is it an indulgent reward? Nearly every food and beverage category has a heavy user audience whose purchase frequency is a vital component to achieving velocity objectives. Interviewing these heavy users to get your arms around the “why” is vital to managing velocity because the answer should become a focus of your messaging and hammered everywhere.

People are interesting creatures – we all are – and we never tax our brains if the message is too complicated or dense. Far too often new brands turn their packages into a Heinz 57 variety of claims and benefits in the hopes that one of the many bullets will register. However, consumers will not invest the time and energy to wade through all of that to find something – anything – meaningful to them.

Instead they move on.

Simple, clear, concise messaging is incredibly important especially in a retail setting where the consumer may allocate only a second or two of brain time before they walk past. This explains the importance of the “why” and how it becomes a core area of messaging focus in an effort to simplify what’s being conveyed.

The role of emotion

Another key insight – people are not analytical, fact-based decision-making machines. We are led by the heart over the head. It is the feeling people have in the presence of your brand that impacts whether they are drawn closer or repelled.

Emotional storytelling is important because it respects what we know about people and how they operate. The emotional stories of improvement or change experienced by users can be a vital component of bringing this insight to life. Authentic, real stories are more powerful than the old “that’s why we” tropes of traditional, self-promotional advertising.

“Trusted” is the desired result – and that is best earned through honesty, transparency and a brand voice that is human and real, not ad-like.

Video is an excellent medium for emotional storytelling because words, pictures and music can be combined to achieve that effect. Unscripted testimonials can be valuable here because they’re authentic, relate-able, and honest.

Intentional message design

Words matter. Dialing in emotion, the “why” and a more human, conversational voice are important when creating consumer-facing outreach. It’s harder than it looks and must be done with intention.

When memorability and the “why” are correctly brought to life, velocity outcomes can be managed in earnest. When you know that your heavy users have found themselves and their needs in this incredibly exciting brand and its mission – and are responding as hoped – real velocity management has begun. The scale will come.

We can help you build the right story.

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The hot ticket networking experience at Groceryshop

In a food industry now preoccupied with algorithms and digital platforms, it’s remarkable when reminded that personal, human connections still inform the beginning of most successful business relationships.

Nowhere was that shown in greater relief than on Monday night at the recent Groceryshop convention. An “A” list of food retail executives gathered at the sold-out Friends of the Future reception to network with key industry players – many of whom are working feverishly to help solve the transformational changes now unfolding in the food and beverage world.

• Groceryshop has firmly established itself as the leading food industry conference centered on the digital race to answer upheaval in how families select and shop for food. No surprise much of the conference agenda in 2019 showcased emerging technologies in e-commerce, food delivery, digital marketing, supply chain management and robotics.

Yet the Friends event served as a potent reminder that business, whether between advisers and suppliers in the food business, or with consumers themselves, is driven by the high-touch resonance of conversations between people.

“Friends is exactly that, an opportunity to truly connect on a personal level and get better acquainted. It’s in the moment when we talk and look each other in the eye that we find common ground, mutual interest, and most of all trust,” said Bill Kies, President of Kies Consulting and executive producer of the Friends of the Future event.

In its second season, Friends of the Future promised an informal atmosphere of exceptional food and beverage as grist to facilitate relationship building between food retail business leaders and decision makers. No other agenda except sharing experiences and ideas.

The event’s top sponsors including Accenture, Nielsen, Inmar and Shipt, helped press the call to action, with 250 executives gathering at The Venetian’s Yardbird restaurant, closed down to accommodate the crowd. Nearly 40 food retail companies were represented, evidence of an industry in transition while facing the rise of e-commerce challenges and new competition from the ascending restaurant food delivery business. Other event sponsors included Planalytics, ShopperKit, Label Insight, FlyBuy and the Food Marketing Institute.

“It was an amazing evening,” Kies reported, “friendships were initiated, and solutions explored among retailers looking to navigate an increasingly complex business environment.” Kies promised a return for Goceryshop in 2020 with an added dimension: the event will expand to include CPG food executives alongside the legacy list of food retail leaders.

For more information contact Bill Kies – [email protected]

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Perhaps the most important convention in the food industry

From September 15 to 18 the food industry convenes in Las Vegas at the Venetian Hotel for the second edition of GroceryShop, Anil Aggarwal’s novel answer to a lingering gap in the meetings realm for food business and related technology companies.

Unlike most industry meetings focused on presenting a vast ocean of booths where company sales and marketing staff feature their latest products and services, GroceryShop is more focused on the sea changes, business model disruption and consumer shifts impacting one of the nation’s most important and robust industries.

E-commerce and digitization of the food business has buffeted the value propositions of traditional supermarkets, supported the emergence of new, higher quality food brands with mission-oriented story to tell, and witnessed the rapid rise of e-commerce channel shopping as consumers increasingly acquire food from the comfort of their dining room table.

Packaged food marketers and retailers alike have sought to better understand how to manage the transformational changes occurring around them. Mr. Aggarwal stepped in with a conference concept long on content and insight presentations more so than a straight buyer-meets-seller proposition.

GrocceryShop’s rapid rise can be attributed to creatively answering the thirst for guidance and direction in a rapidly changing business environment. Unlike the food business conventions of yesteryear where global food corporations such as Nestle and Mondelez held court with retail buyers, GroceryShop connects the likes of Google and Facebook to the conversation on how consumers will operate in a digitally-enabled world and what trends in fresh and prepared food will get traction at retail outlets.

GroceryShop presentations examine new technologies in supply chain management, while brand marketing discussions look towards the shift from traditional ad media and promotions to engagement based on relevance to healthy living and lifestyle aspirations, fed by digital forms of outreach and social media.

 The Future of the Food Business

The content forward approach Mr. Aggarwal has landed on serves as inspiration and best practice showcase to retail and CPG executives alike on how to remain relevant and inject deeper meaning into their brand and banner propositions.

The food business is in a state of rapid transition as consumers increasingly shop for menus rather than stock ups and the rise of super-convenient restaurant delivery makes out-sourcing dinner a viable last-minute option on a busy weeknight. Food has never been more competitive as quality choices are within arms-length from virtually anywhere.

• According to Accenture, the 80 million or so Millennials, now in their prime spending years, wield roughly $600 billion in annual spending power. For the grocery industry that ladders up to about $2,300 per year on average spending at food retail. According to a recent national survey by Sweet Earth Foods, this cohort will try at least 46 new foods each year, helping drive the emergence of new food and beverage brands now gaining additional in-store real estate at supermarkets.

Meantime the grocery industry is reacting to the significant moves by Amazon into their territory through Whole Foods and its own Prime delivery, by bolting on outside e-commerce ordering and delivery solutions from Shipt and Instacart.

So much change and so quickly for a retail business that for many years was fueled by selling boxes, cans and bags off shelves at high velocity and razor-thin margins. Now the perimeter fresh departments hold the magic and in-store groceraunts are popping up to satisfy the inevitable last-minute rush to answer the pounding question, what’s for dinner?

All of this helps explain why GrcoeryShop has traveled so far so fast as business model disruption impacts Big Food and small grocery chains alike. If you haven’t thought about where you need to be this September, might be good to check it out: http://www.groceryshop.com

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Emergent announces retail transformation services

After a year in beta test, Amazon today opens its new high tech retail concept – Amazon Go — to the Seattle public. With it a new era in food retail begins, one that we believe will be transformational on more than one level.

Undoubtedly most of the coming media feeding frenzy will be focused on Amazon’s Just Walk Out technology, and the computer vision, deep learning algorithms and sensor fusion capability that sits underneath their no-checkout-line innovation. Importantly though, at Emergent we’re watching closely how the store is designed and curated to reflect consumer preferences for higher quality, fresh products for either immediate consumption or at-home meal execution.

Food retail has followed a familiar formula for decades, built around a focus on packaged food and pantry stocking. This has defined the shopping experience for a generation. Amazon Go at 1,800 of retail square feet is more convenience store than grocery. But the entire platform is edited to optimize and leverage shopper interests:

1. Everything matters — and consumer insight informed merchandise selections are critical to match the consumer’s desire for fresh foods and upgraded snack and meal experiences. Carefully edited choice is a good idea.
2. An on-premise display kitchen conveys the fresh, culinary inspired fresh preparations people prefer.
3. An array of four to five rotating meal kits brings grab-and-go to full meal solutions.
4. Integration of Whole Foods 365 store brand products offers its own, embedded quality cachet to packaged shelves.

Elimination of the check-out immediately removes friction from the shopping experience. So, yes, we believe this leap will be greeted warmly by people who have better things to do than stand in line.

The most important shift from our perspective is the product curation itself. Grocery stores ask the consumer to conform to its business model, to serve its supply chain relationships and its legacy shopping format – which is more about stock-ups in an era when consumers increasingly shop smaller baskets looking for just-in-time fresh ingredient meal solutions.

With Amazon Go we now have a food retail concept that religiously follows what the consumer wants in addition to how they want to shop (more convenience). The future of food retail must be centered on consumer relevance rather than just a mirror of routine retail infrastructure and traditions.

So today Emergent also announces our retail transformation services, intended to help food retail bring the consumer to the center of business and strategic planning. At a time when Amazon once again changes the game to secure a greater share of food shopping, Emergent’s transformation services for food retail address improvements to brand mission and go-to-market strategies.

Why does it matter? As Kevin Coupe wrote in his announcement story in his special edition of Morning News Beat, as Don Quixote’s sidekick Sancho Panza opined, “Whether the stone hits the pitcher, or the pitcher hits the stone, it’s going to be bad for the pitcher.”

Amazon is the stone. You already know who the pitcher is.

We’re here to help.

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Thoughts on Food Retail Reinvention

Here in Chicago it’s that time of year again when Farmers’ Markets start popping up all over the city. When growing season kicks in, people gravitate to locally-grown and made foods in search of what they believe is better quality, freshness, flavor and a chance at chatting with the producer.

According to the “Firmly Rooted” local food movement study by A.T. Kearney, local product assortment at food retail is no longer a nice-to-have. It’s now a competitive advantage. Why? Because shoppers increasingly value it, will pay more for it, and it’s a driver not only of purchase but also store visits.

Kearney reports that local was a $12 billion business in 2014, with an annual growth forecast of 9 percent a year through 2018. If anything the local movement is accelerating as fresher becomes a significant factor in consumer preference.

The Kearney study revealed:

96 percent of respondents define local as produced within a 100-mile radius. While various classes of food retail may expand this to anywhere from 400 miles to statewide. Of note, consumers believe the circle is tighter.

93 percent associate local with fresher, a primary purchase driver.

78 percent are willing to pay a price premium for local of anywhere from 10 percent more to upwards of 21 percent (local eggs) in certain categories.

63 percent say they believe retailers are starting to offer wider assortments of locally-produced products, including prepared and packaged foods.

71 percent say by offering local products, retailers are doing more to support small businesses and help the local economy.

Barriers to Business Growth

What’s standing in the way of buying more locally-produced items? Shoppers say they don’t know where those products are in the store due to inconsistent signage and lack of cohesive display. Merchandising and marketing need to catch up.

63 percent say they will visit a retailer if notified about in-season, in-stock products. Doing so will require an investment in social and digital marketing to get the word out.

More importantly, this helps shed light on a cultural shift now influencing retail best practices. In the past, a food store existed primarily to drive transactions. Traditional metric analyses of sales and profit per square foot and average transaction/basket size would certainly attest to that. While these remain important assessments of performance, is it the only measure that should be applied?

As food retail evolves we can expect to see disintermediation of shippable commodities that will increasingly go online, while food and culinary experience becomes a bigger business and priority.

Reimagined food retail must work harder at creating an immersive food experience, bringing the farm and flavor adventure to the store. Yes, even some fresh products may migrate to e-commerce and delivery. However, we believe there is a significant segment of the market that prefers the tactile, visual, emotional and sensory-satisfying familiarity of hands-on food experiences.

Measurement and profit models will evolve with this change as stores further invest in perimeter businesses, commissaries and locally-sourced products.

Food is an emotional category. This sensory appeal can be harnessed to great effect by retailers who understand the era of selling boxes, cans and bags at velocity is narrowing in favor of real, fresh and prepared food options.

Those still trying to compete on price will increasingly face a “race-to-the-bottom” challenge with the arrival of low-price specialist Lidl, and the battle between Amazon and Walmart to leverage scale for difficult-to-match efficiencies.

You have to think differently about the retail business you’re in. If retail experience counts, then rethinking the actual presentation of these products in tactile, informative and experiential ways would follow. Where:

Food retailer = local culinary adventures

Electronics = hands-on demo depot

Fashion = the style guide

Toy = the playroom

Experience is the new battleground, and content is the marketing play to tell the powerful and valued stories of local sources, supply chain transparency, ingredient integrity, culinary inspiration and FRESH.

Go Local!!

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Not yet…time to commit to better culinary experiences

Being the home chef and lifelong fan of all things culinary, I find myself in the supermarket regularly. I LOVE IT. This is my favorite form of retail, where need and personal passion will drive behavior. That said, it can also be one of the more all-too frequently disappointing destinations due to the same old, same old aspects of what’s found inside the front door.

I love it enough that when traveling I try to get to the local food emporium just for a look-see in my ongoing fascination with everything grocery. Food is an adventure and I’m a journeyman explorer.

So, in my neighborhood in Chicago, I gravitate to the higher-end options including Mariano’s nearby, Treasure Island is also close and an array of specialists from VIN for wine, Dirk’s for fish and Gephardt’s for butcher. Even with my lean towards better retail banners, I still find supermarket prepared foods and Deli to be often uninspired.

FMI Study Says Deli an Underachiever

A recent report entitled, “The Power of Fresh/Prepared Deli,” from the Food Marketing Institute revealed that only 12 percent of shoppers are regular Deli visitors across all banners and channels. That’s leaving a lot of business on the (hot) table!

In parallel, we have increasing evidence that time-strapped consumers, especially of the Millennial variety, are hungry for more home cooked meals, if only they could get some help with side dishes, partially prepped options (meal kits) and general inspiration (easy-to-do but interesting recipes).

What’s wrong with this picture? A clear and present need followed by a retail opportunity disconnect. Well, I tend to side with consumer preference on this one.

Let’s see, over here at the hot table what do we find? Hmmm…something that looks strangely like high school cafeteria food (apologies to cafeterias that work hard with limited resources and funding). Yes, we have fried chicken probably now entering its especially dried out leather phase, meatloaf (again), mac and cheese (also again), grey green bean casserole (also too much time under the heat lamp) and some scary-looking starches.

In the nearby case we have five varieties of macaroni salad and similar options of potato salad, green bean salad, maybe even Jello® salad. Salad bars are their own unique fantasy food experience where the word wilted is an active verb.

We have shoppers pining for new meal solutions, looking to outsource some or all of their cooking to grocery – that’s missing the bar on prepared foods beyond traditional comfort fare.

If the objective is to lift Deli visits from 12 percent of shoppers to where it should be around 80 percent, what’s the answer?

Better, more interesting food…

If a restaurant served this over-cooked lineup would it still be in business? Probably not. Taste expectations and culinary knowledge is advancing at break-neck pace as everything from food truck to C-store works to improve their fresh offerings. Consumers can tell the difference between good cooking and bad, chef-inspired and pedestrian, so the expectation keeps going up. This just opens the competitive door wider to subscription meal kit companies who begin with higher standards on ingredient quality and innovative menus.

Strategic Mission the First Hurdle

You simply can’t advance on the culinary continuum if your business strategy is first focused solely on moving boxes, cans and bags off shelves (we know center store business matters to the bottom line but it shouldn’t be the sole agenda). Balance sheet issues and velocity will be the primary business model, unless the management team falls in love with food and food experiences. Whichever it is, everyone else on the staff will follow suit.

Culinary Inspiration the Second Hill to Climb

Who’s in the commissary kitchen? Is there a Chief Culinary Officer reporting directly to the C-suite? Is delivering on food adventure a dominant factor in weighing success in terms of shopper experience and menu?

When food culture changes it is imperative to change with it.

Better Deli performance will follow if better, more interesting, and dare I say more exciting food is offered. Ingredient quality is already on the upswing in a big way. Kitchen talent and management just need to get behind the incredible cost advantage that supermarkets enjoy over foodservice and decide, once and for all, that their Deli prepared foods are going to be on par with a restaurant experience.

Just go ask Wegman’s about how that’s working.

I, for one, will be there cart in hand, ready to buy.

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