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NIQ Steve Zurek
Jordan Buckner: [00:00:00] Hey everyone, Jordan here with another Start to Scale podcast. As I've been talking to a lot of founders, there's been a lot of challenges in terms of moving into the retail space and growing within that landscape and this interesting kind of. Post pandemic world that we're living in, but still seeing a lot of changes on shelf.
You know, like what are product assortments looking like? What different pressures are there, working with retailers to find success on the shelf and many others. So I want to talk through some of these topics today with the goal of helping you navigate the next few months. So I'm invited on. Steve Zurek, who is the VP of Advanced Analytics and thought Leadership for Nielsen IQ.
Steve Zurek: Thanks, Jordan. Glad to be here.
Jordan Buckner: So I'd love to hear from your perspective kinda what your thought is on the overall retail landscape right now for emerging C P G brands, including both some of the opportunities and some of the challenges that you're seeing.
Steve Zurek: So it's a really interesting time to be in retail right now. The pandemic has created a lot of [00:01:00] different opportunities that just weren't there prior to 2020 opportunities. And I would say challenges are the big things and really there's more pressure than ever on the shelf right now. During the pandemic, we had a lot of shoppers that were pushed into buying online.
They discovered brands that they wouldn't have thought of even purchasing during the supply challenges that we had coming out of the pandemic. Some categories have been opened up as online categories for shoppers that wouldn't have considered buying those online. Then there's the whole convenience piece of the shopping occasion, which has always kind of been there, and that's been evolving over time.
Right? You've had, you know, supermarkets where, believe it or not, a convenience to, you know, a shopper back in the day that would go to a butcher, then go to a produce person and a fish monger and stuff like that. Well, now we have this enormous market, which is. Living both online and in the stores. And how I like to think about assortments in the stores is [00:02:00] really, that's the tangible assortment, right?
It's right out in front of you. And there's no question about what the retailer has in stock because it's all there, but. There's also the intangible assortment, which really lives online, and I would say it lives online. You know, you can have endless assortment online, but really you can't, you know, it's very few people really go beyond page one of their search, but it is unique to that person and how they searched and what keywords they used, and that gives, you know, a different assortment for everybody.
But when it comes to small brands, Small brands, believe it or not, were tremendous winners during the pandemic and especially during the supply challenges because, you know, all the really super high velocity things were flying off the shelves. There were supply shortages. You saw all the news feeds during that time of blank shelves, but if you had stock and you could get it on the shelf, You had a chance to play in a retailer that maybe wouldn't have given you a [00:03:00] shot at that time.
Now, the trick with that is, is that once you got on shelf, you had to figure out how to keep those shoppers coming back to your brand. And that's where forced trial kind of came in and some shoppers stuck, others didn't. But now we've got a different challenge, which is we've got highly inflated prices.
They're probably gonna go a little bit higher for a little bit longer. I don't feel like we're gonna go into a recession necessarily, but shoppers are acting that way. For small brands though, in all these pressures that are on the shelf now, which is, you know, pre pandemic, the shelf had three main roles, support displays, support, feature activity and support, walk-in everyday traffic.
That was it. Then you went through the pandemic and all of a sudden people discovered. Personal shoppers and click and collect came back and everybody had an app, and now you've got all of these additional five or six different pressures. And on top of that you've got a retail labor shortage. So [00:04:00] now that shelf has to do so much more.
And so what we've seen some of our clients do, the bigger ones, is they have negotiated for more shelf holding power because they know that not only is a retail shopper coming in, but the personal shoppers coming in. The person who's working for the store and fulfilling the online orders, they're touching the shelf.
And so there has to be this natural holding power that has to be there. I. The problem with that is that variety is becoming a casualty of that. But for a small brand, there's a couple things that you can do right away that allow you to have a place there. And the first one is know what kind of shopper you're bringing into that retailer and what their worth is to that retailer.
So what do I mean by that? If you've got a shopper that comes in and you've got, you know, a very premium brand, they might come in and buy that brand and not buy anything else in the category, but they spend a lot of money across the whole retail store. That's a [00:05:00] very valuable shopper for that retailer to have.
Now you need to know if that's a shopper that retailer is aspirationally trying to get. And if you know that, then you've got a right to play. The second piece,
Jordan Buckner: I'm curious around that piece just real quick. You know, for brands doing other 10 million, under 5 million, is that a conversation that you think buyers are open to?
Like do they have a sense that they believe. Brands can drive traffic to their stores and individual level, or are they looking at it more of a assortment level across like a four foot set or something where they're saying, how can I build out this assortment to draw more customers in versus relying on like a single brand?
Steve Zurek: Well, what a lot of retailers are suffering from now is actually a reduced footprint. And so instead of bringing brands in, they're rationalizing brands out. So that kind of brings me, it's a nice segway into the second point that I was gonna make, which is you have to be incremental to the category.
You can't be a me too brand. You can't be trying to knock somebody off that's already there. Most large retailers and even regionals, they want [00:06:00] you to come in and one, be relatively easy to deal with, know the category, know their business, and be incremental. So that's where small brands really have the right to play, is providing that incrementality.
And then if you can have a slightly, and I'm talking about a slightly more sophisticated conversation with them, which is how well you know your consumer and present that in a way that it just shows value to that retailer and it projects that because some small brands are fine staying small. Some naturally wanna get bigger or they wanna get to a mid-size brand or a large brand.
And the way to do that is really to be acting that way with, in, in terms of the process and the kinds of concepts that you're coming in and talking about, doing that right at the beginning. And that will put you on a path to growth.
Jordan Buckner: In looking at , the conversation around incrementality to the shelf and that consumer, are there particular ways that you've seen brands doing that might've [00:07:00] been more successful?
Right. Is it talking about here's our customer demographics online and they're looking to buy us in your store? Or is it like we're selling at these other retailers? I'm wondering like how. Brands should go about, one, getting that data on their customer and like what demographics or psychographic information , is key. And then how do you kinda wrap that into a story for a retailer?
Steve Zurek: Yeah, so , there's a misconception that data is really, really expensive, but there are different solutions that all data providers have, and we have 'em too. Can provide small brands and are specifically geared towards small brands, knowing more about , their categories and their retailers for not a huge amount of money.
And that, you know, depending on what their needs are, you know, , they can figure out what works for them and what doesn't. But really data it's table stakes at this point. You really can't. You know, unless you've got something that's just caught on fire some other way, you know, , it's caught on fire at TikTok or, [00:08:00] you know, there's been some user influencers on YouTube that just organically said something about your brand.
But that is such a rare thing. Coming in with even just a little bit of data about, you know, what kind of demographic you're pulling, what kind of market baskets that your shopper has or your, your consumer has. Those are all very basic things that, you know, you can come in and talk about.
Jordan Buckner: Okay. That totally makes sense. What else do you have in terms of other. Other things brands should look at or there's a couple other directions that can go as well.
Steve Zurek: Yeah. You know, what I think is the most important thing right now is really understanding the pressure that the shelf is under.
And you know, there's getting distribution in retailers is. A pay-to-play sport. There's just no other way to say that. It's a pay-to-play sport. You've got slotting fees, you've got all different kinds of fee structures for promoting and things like that. The thing that's been really, really interesting about the pandemic is that I would say, a once ever [00:09:00] Kind of situation, which was it shut off promotions across an entire industry.
Very few people were promoting at all in the last three and a half years, and the reason for that was, first it was a pandemic and people were just buying whatever they could. Then there were the supply challenges. So you don't want to promote in that situation because then now you're creating an out of stock scenario that doesn't bode well for your brand and leaves the door open for somebody else.
Now, and then you've got inflation. So three big events have happened and the shopper that you have now that's in the marketplace is, all they know is they know that prices went up, but they haven't seen a lot of promoted prices. So, you know promoting now is, we've got many, many clients that are saying, well, we don't know where to start.
You know, we haven't done this in a while. , you know, we feel like , if we go into the market too strong, then we're in this race to the bottom. But if we don't go in light enough, you know, or if we go in too light, we're gonna be not attractive. But right now, the one thing that shoppers are doing is we're seeing them [00:10:00] reengage with retail.
And by reengaging with retail brick and mortar retail, you've got all the generations that participate in the economy. So baby boomers all the way down to Gen Zs. They're in the stores. And they're in the stores for a lot of different reasons, but one of the main reasons is they're in there for discovery.
And that's where small brands really get to play, is if you have a display that you've put out or somehow you've negotiated to have a blade sign in the aisle, or you know, you got onto a four by four, that's, you know, here's at new today or new whatever, and you can call yourself out. There are shoppers that are in those stores now specifically for discovering new things, and that's one of the many things that came out of the pandemic is that, you know, during the pandemic we all wanted to discover something.
All of a sudden we became cooks. All of a sudden we, were looking at recipes and creating things on our own, or we discovered, you know, that, that shaving is, you know, a much more relaxing experience than we thought. All of those different things [00:11:00] are happening. And that has driven a new approach to retail that is a little bit of entertainment.
It's a little bit of self-care. It's a little bit of you know, mental health and things like that. But that's really, you know, if you can communicate quickly and boldly at retail. That's one of the ways that you can really drive trial for your brand. And, you know, it's either through displays, signage you know, or you can do things organically.
You know, one of the things that big brands have a little bit tougher time with is pivoting quickly. You know, you're talking about Steering a ship that has a lot of different processes and marketing programs and things like that, and trying to get them to pivot quickly versus a small brand, which there may not be a lot of layers between the marketing manager and the president of the company.
And you can shift very quickly and pivot and that's the opportunities that are really available to small brands.
Jordan Buckner: So Steve, that was one of the things I was gonna ask around is, you know, how discoverability has changed. So you're still seeing that. I [00:12:00] know it's probably less than peak kind of pandemic, but people are still going into the store looking to find new products and discover things over.
Maybe just people buying what they're familiar with. , are we seen like, A lot of tastes have been reset again, or are people still looking at trying new products every week?
Steve Zurek: Well, , there's been some regression back to the brands that people might have been loyal to, but there's been some stickiness to that discovery.
And it could be a, for a variety of different reasons. It could be for value, it could be taste profiles. There's lots of shoppers that. Have really you know, they've been sort of forced economically into private label, but some of the private label offerings are pretty decent. And then there's some price stratifications or quality stratifications within private label.
So even private label is doing what brands have done, which is set up premium value and opening price point. Tiers or PO within their portfolio. And so you know, , we've seen some shifting between, you [00:13:00] know, those shoppers that are buying premium brands. You know, they might shift down in the portfolio to, you know, mid-tier or they might shift to another brand.
And what we're actually seeing that a lot in our price elasticities now, where competitive. Pressure is becoming more dominant. And that's a direct outgrowth of the fact that inflation , is a dominant thing , in our economy right now. So, you know, when shoppers are forced to do something different, you know, they're either gonna move for value or they're gonna move for quality.
And if you can, you know, put those two together, you really have a powerful place to be in the marketplace.
Jordan Buckner: Do you get a sense that brands will have to look at reducing their base price in store anytime , or one more promos or consumers has adjusted to the new price inflation?
Steve Zurek: Consumers have adjusted to the prices that are out there?
I would say there's not much more room to go higher. We probably peaked out there. We're starting to see promotions become more common, but we're not [00:14:00] seeing that they're driving incrementality. They're not being very efficient. So we talk a lot about subsidized volume when we talk about promotions, and it's something that, you know, we encourage our clients to look at because it tells you are you spending money against a promotion when you don't need to?
You're gonna get that transaction no matter what, if your base price or your promoted price, all you did was you just gave them money off, but they didn't buy more. Right? They are already coming in thinking I'm gonna buy this category. And so when they got to the shelf, when discovered it was , on deal and they got it anyway, but they didn't buy two or they didn't buy five or whatever.
Jordan Buckner: Okay. That makes sense. And then looking forward, are there other things that brands should be doing to really find success on shelf or making sure that they are positioning themselves up? Well, you know, one problem that I've seen on my end is brands selling on. Line and selling D two C. There's a little bit more transparency in terms of all the costs of doing the [00:15:00] business, right?
You can see how much you're spending on Facebook and meta ads. You can see your approximate conversion rate. You see how many sales you're coming in directly and retail. I think some brands, a lot, some of those numbers are a little obscure, right? Because they come back in the form of deductions and chargebacks through distributors, and you can, it's hard to measure that exact lift.
But any thoughts on ways that brands can better manage either, you know, what the efficiency of their promotions or basically, you know, how they can make sure they're seeing a return on their investment in retail?
Steve Zurek: Yeah, well, you know, there's a little bit of , a nuance in that, which is how expensive that brand is, so, and what the purchase cycle is for that brand.
So, you know, if you have something with a really long purchase cycle, and you know, this is the only example I can think of at the moment, but say, you know, you're in the marketplace looking for ibuprofen. Most households buy ibuprofen once a year and they might buy a hundred pills at a shot.
So if you offer a promotion, what are you really [00:16:00] doing? You're just buying forward a transaction that would've happened later in the year. That doesn't necessarily happen with things like toothpaste and stuff like that. So, you know, what you can do is you can look at What types of offers drive incrementality and they tend to be things like, Buy one, get one free, or buy one, get one 50% off or whatever.
So it's, you're creating, the shoppers coming in to buy one, but then you're giving 'em an offer to buy two. And some of those categories, we know that when they're in their medicine cabinet or in their pantry, they use 'em up quicker. Mm-hmm. And then they get very frugal towards the end until , they buy again.
So, if you have bonus packs that you're offering or you're doing the buy one, get one programs, those are expensive to do. So you don't want to do a ton of them. You also have to be mindful of the fact that you don't wanna train your shoppers to be bridging from deal to deal.
So if you think about the orange juice category, nobody on the face of [00:17:00] the earth buys orange juice at full price. It's just doesn't happen. You know, there's always. A deal that you can find. And if you don't find the deal, well, you just have to wait a week because it'll pop back up. You don't wanna create that because every year it gets incrementally more expensive for you to run the same promotion and get less and less lift.
So knowing how to drive incrementality with your promotions, don't give away the farm, either test some things, or better yet, if there's a way to You know, model a scenario that gives you some insight into what your potential risk is gonna be, what your return on your trade investment is gonna be or what the return is on, you know, putting a display out and driving sales that way.
And I would say, The traditional ways are coming back in terms of driving sales. So the one thing that brands will be able to see pretty quickly is if they put a display out in the marketplace, they will see a bump in sales. It just happens that way and you will see it [00:18:00] pretty quickly in whatever dataset you're getting.
If you're buying, you know, weekly data, you'll see it much more so than if you're doing some kind of. Longer reach marketing program that, you know, there's so much other noise that's in the marketplace, you won't know if that's actually paying off or not until you start looking at a very, very long trend line.
But putting a display out or putting an end cap up. You'll see that I used to call 'em little heartbeat charts, you know, and it's, you'll see the heartbeat, or you'll see the bump. And, you know, looking at bump charts over a 52 week period, which is just base volume, incremental volume, and Promo price or everyday price.
Just looking at those and knowing what happened during those times and understanding, you know, what your competitor might've been doing and what you might've been running. You know, were you dark and your competitor was bright? Were both of you on at the same time. That gives you tremendous and insight and quite honestly, the rudimentary insight [00:19:00] sometimes is the best for small brands especially because you can keep.
That close of a pulse , on what's going on.
Jordan Buckner: No, I appreciate that and I think one thing that I've also seen. Helpful for brands that a lot aren't doing frankly, is having a clear goal of what your intent is with the different promotions and strategies, right? Are you looking to move a higher volume because you want to your new product, you just want kinda discovery?
Do you need to move volume so that your retailer buyer's happy? Right? Maybe you're doing so at a break even, or maybe even a slight loss over that period, but you know you're going to. Be in for the next reset. And like you mentioned, if they're looking for skew rationalization and looking for brands to kick off the shelf, do you wanna be on there for another year and wanna show that volume?
Or are you doing things to move your top line revenue because you're meeting with investors and wanna show your growth? Or are you looking for profitable growth? Right. There's different, each of the marketing and promotional strategies in store. Have slightly different tweaks on which leverage those pull.
And so for brands, right, like having a clear idea of what your [00:20:00] goal is, using the right promotion, old tactic, and then being able to measure that to see if it match your hypothesis or not, probably makes a big difference.
Steve Zurek: Yeah, and I think having clear goals is really one of the most important things.
And quite honestly, I, I've seen brands fail and fail pretty. Pretty badly by not having goals and having this idea of I'm just gonna take a shotgun approach to the whole market and I'm gonna be everything to everybody. Very rarely do brands work out to be appealing to that broad of a market.
Everybody, you know, one of the concepts that I think you know, YouTube creators and talkers and all of those content creators , have coined this phrase of niching down. Mm-hmm. You know, when you niche down and you get very focused, you know, that's sort of a, that mentally gets me in a state of mind where it's like, okay, I understand exactly what I'm focused against and. It becomes less overwhelming. So, you know, if you're a [00:21:00] small brand that's, you know, has a very specific taste profile, for instance, and you know, you know that this shopper is in Whole Foods and they're in Mariano's and they're in you know, all of these niche retailers, well, there's no reason to be necessarily going to Walmart and Kroger.
Initially, because you're not gonna gain traction there. It's gonna be ridiculously expensive to try and get in those retailers, and you're probably not going to recoup your investment. But , if you understand where you are in the marketplace and what your brand , is what you've designed your brand to do.
Then that will get you very targeted and focused in on the retailers , that you need to be in and the ones that you don't have to worry about.
Jordan Buckner: I think that's incredibly smart. Steve, thanks so much for being on the podcast today and talking data with me.
Steve Zurek: Yeah, absolutely. Jordan. Glad to come back anytime
Jordan Buckner: and everyone listening in.
If you are looking for data to understand how you or the category is doing at retail, [00:22:00] definitely check out the link in the podcast notes. Nielsen IQ is offering all Foodbevy. The entire community, three free reports for your brand with no stranger attacks. You get in so you can actually get the data that you need for understanding your business.
And they're doing that because they want to see emerging brands succeed. So definitely check out the link in our show notes and sign up for your free three free reports today.
Thanks so much, Steve, again. All right.
Steve Zurek: You're welcome. Thanks for having me.