The data driven future of FMCG – why there’s no good reason to have anonymous customers
Tim Mason has over 30 years’ experience within the grocery and retail industries, with various roles at UK supermarket giant Tesco under his belt. Throughout his career at Tesco, he was renowned for being in touch with the customer, and was instrumental in the creation of some of Tesco’s most successful marketing initiatives including Clubcard, Express, Personal Finance and Tesco.com.
Tim chatted to Inside FMCG about the importance of data analytics, how customer loyalty is changing and the future of FMCG, ahead of his talk at the Food and Grocery Australia conference in Sydney later this month.
INSIDE FMCG: Australian supermarkets have been ramping up their online offerings of late. How can retailers make the omni channel work to get the best of both worlds?
TM: Well I think the first thing is that you need a good competitive e-commerce format, that’s where a big chunk of the money is going. If you don’t have an e-commerce format then there is a growing percentage of sales that people want to spend in that e-commerce way that they can’t because you haven’t got the format. So they have to go to a competitor.
Our lives have been completely transformed since 2007 by the smartphone, led by the iPhone. It’s only just over a decade but the extent of change is staggering. Yet when you go when you go to your local shopping centre, your local supermarket or restaurant, you probably use your phone to find your way there but when you get there you put it in your pocket and you rely on the human search engine to get the most out of that experience. Well it’s just leaving an enormous gap and an enormous opportunity to use the phone to personalize that experience, to make it better and richer for the customer.
INSIDE FMCG: Do you think that the physical retail space is going to become a thing of the past?
TM: No I absolutely don’t think that physical retail will become a thing of the past. I think that it is ultimately convenient. A lot of what people do they like to do where they are – immediacy. The other thing is when you go around the world what you find is that a lot of shopping is actually a leisure activity. And so I think for those reasons it absolutely isn’t a thing of the past. I think it will change a lot.
One of the things that is worth thinking about is the great supermarket businesses of the world – Woolies Coles, Tesco, Carrefour, Walmart – they came to prominence by moving the carborne shopper off the high street where there were no car parks to out of town stores and shopping centers where there was parking for the new cars and that absolutely destroyed a certain category of small retailer. Twenty or 25 years later [supermarkets] invented express formats designed for modern living and for the last decade it’s been one of the fastest growing sectors of retail.
I think there is always ebb and flow destruction and regeneration – it’s the nature of the beast.
INSIDE FMCG: Many Australian retailers have raised concerns about the entry of Kaufland into Australia for this reason, that it could drive shoppers away from town centres. Do you think its arrival could threaten smaller players?
TM: It will be interesting to see in the world of discounting and online whether hypermarkets still work because in other countries in the world hypermarkets are under a lot of pressure. I don’t think there’s a hypermarket operator in the world that does electronics as well as JB Hi-Fi, for example.
The issue with the hypermarket is they’re incredibly convenient but what you get is the jack of all trades and a master of none. So they’re a mile wide but are they an inch deep? And when the consumer can more readily get to category specialists, do they want that convenience of a mile wide and an inch deep? I’m not sure what the answer to that is but I think retail formats have a moment in time when it suits the mood of the nation, it suits the way the consumer wants to live their lives, and when the consumer moves on, you better bloody well move otherwise you’ll get left behind.
INSIDE FMCG: How has customer loyalty changed in recent years? Are loyalty schemes still a worthwhile investment?
TM: If loyalty schemes drive loyalty – some do, some don’t – then they are fantastic. But actually what a loyalty scheme is fundamentally doing is giving your customer a reason to register and then identify themselves when they shop. You’re then capable of analysing what they do.
Once you’ve analysed what they do you can then use a direct marketing channel to communicate stuff that is more relevant to them than the generic. But you no longer need a loyalty scheme to do that. There are other ways of doing it: promotions, subscriptions, the way that you pay, e-receipts, all sorts of different digital techniques for getting consumers to believe that there is value in registering themselves and identifying themselves. The point is that in this modern world there is no good reason to have anonymous customers.
You really don’t need to be Warren Buffett to work out that you can do a better job for your customers if you know who they are and what they’re doing.
INSIDE FMCG: Are that portion of customers that walk in off the street, without registering to any program, falling through the cracks then?
TM: Yes, absolutely. If you don’t know who they are, what are you going to do? There is no excuse. It’s not like this is impossible to do, it’s absolutely there for the taking. It just has to get higher up people’s priorities because they have to accept the fundamentals that knowing who your customers are understanding how they shop with you and then having a direct marketing channel to be able to talk to them about what interests them is the modern way of doing marketing.
What many people don’t realize about Amazon Go (no checkout store) is you can’t get into the building unless you’ve downloaded the app and swiped it at a registration point to get into the building. So in effect, what they are doing is they are treating their bricks and mortar store like a like a physical website. If you are not registered you can’t get on it. If Amazon are prepared to pass up on the passerby because they’re just not interested in customers that they don’t know, that they can’t understand or market to, think how valuable they regard customer identity and customer data as being in order to run their business. What they’re actually saying is without it we can’t run our business.
The only thing that you have to illuminate your customers in the digital world is data. Everything is data driven, then measured and then rinse and repeat. Because you can do this now you really have to because otherwise you will end up looking very flat footed against businesses that do.
Tim Mason is CEO and chairman of Eagle Eye, a platform created to help brands connect with consumers. He will be speaking at the Food and Grocery Australia conference in Sydney on May 28-30.