Tony Schiano, Giant Food: Stores As New Media

Sadly, TREX NYC is a thing of the past [it's been combined into the In-Store Marketing Expo in Chicago]. I miss having in my backyard so many high-caliber executives [e.g., Linda Fargo and Michael Cape] sharing their passion for and perspectives on retail.

From the December 2006 show come the following comments from Tony Schiano, former [he retired January 2007] President and CEO of Giant Food, part of the Ahold organization, in which he discusses stores becoming the new medium for reaching consumers.

During Schiano's tenure, Giant grew to $6B and 260 stores in 6 states. Not too shabby! I'm familiar with Giant, having lived in McLean, VA as a kid. Giant was the store to go to for everything: groceries, back-to-school, paper goods, flip flops, even clothes. As the marketplace evolved, Giant launched a high end store - fondly referred to as 'Gucci Giant' - across the street.

Schiano's presentation, titled "In-Store Marketing - It's All About Solutions," reexamines not only the retail store experience, but it also takes a fresh look at consumers and their lives.

The retail environment is evolving, rapidly becoming the newest and best medium for reaching consumers when they actively seek information and interaction from retailers. Retailers need to leverage this to sell more goods, as these major trends converge:

+ the consumer is time starved; although health focused, lacks information and knowledge, behaves in a bipolar manner, and differs greatly from generation to generation.

+ at the retail level, channels are blurring; the format is expanding and the retail base consolidating expansion. Who will survive?

+ consumer packaged goods manufacturers are also consolidating. Too busy introducing product extensions; their marketing effectiveness is questionable. They aren't as sure about where and how to spend marketing dollars.

Retailers face a major marketing challenge stemming from segmentation, fragmentation, and the Internet, not to mention economically, socially and politically! In fact, Schiano describes the situation using US Army War College terms: Volatile Uncertain Complex Ambiguous [Vuca].

How to make sense of it all? Accept that the world is different! Competition is stronger, channels are blurring and fragmenting at an increasing rate. Consumers face information overload. We're seeing significant population and demographic shifts, changing consumer buying trends [where cheap is chic], and much faster product life cycles [concept to maturity].

Supercenters in 6 years have doubled their share of the market compared to traditional grocery stores. And food manufacturers are more concentrated. Lack of consumption is not good. Therefore, need to work to keep everyone healthy.

Some major trends that are not fads:
+ Consumer focus on health and well being. Increasingly concerned about health, but don't have what need despite best intentions. They want simplicity, guidance and choices to make decisions.
+ Aging boomers want to remain healthy. But, they face barriers: not enough time, too busy and too much conflicting information.
+ Meal planning has decreased from 49% in 1986 to 32% in 2006.
+ The definition of wellness differs per customer. NO 1 size fits all.

Given these trends, Giant decided to start with the customer and figure out how to get better information into his/her hands, how to be faster, provide value and ideas, and help him/her deal with conflicting information. A challenge when mass research isn't as relevant, and cable and Internet have replaced network television, but one that can be addressed in-store.
Both retailer and manufacturer share mutual goals: they want to sell more stuff so both need to cooperate to motivate the consumer to spend and grow category demand, using effective and efficient marketing efforts, thereby keeping supermarkets healthy and advancing innovative concepts.

The opportunity, then, exists to collaborate sooner in the process. Currently, the two parts gather so late in the process that objectives never align and resources become wasted when the store has become the medium and the point for media convergence. It's more critical than ever before to cooperate and coordinate efforts.

Looking at the grocery landscape, it extends from hard discount [e.g., Aldi] to superstores and supermarkets in the middle [e.g., Giant offering value, organic products and solutions] to the opposite extreme with Whole Foods and A&P Fresh markets.

In the middle space, stores bring together collections of brands, becoming a brand in their own right. Critical though to have excellent consumer insight to optimize the right offering/service, better satisfy needs, create an emotional bond and generate trust, improve the value equation, and generally be consistent.

How to leverage this medium? Certainly not with more signs, sweepstakes or competitive coupons. Customers absolutely want solutions; they respond well to category/store focus and to good communications.

How to leverage the consumer relationship with food? Think of all of the life events that take place where food plays an important role in offering a solution: anniversaries, funerals, birthdays, baby showers, even the day-to-day food need. Important then to offer solution focused communication.

Schiano described the new Giant test store in Camp Hill, PA where many of the concepts resulting from solution-focused merchandising and messaging comes together in the medium of the store. At 91,625 sq. feet, it's quite a large store and reinvents the notion of grocery shopping.
From Retail Spotlight's Grocery Headquarters, this article abstract titled "King of Camp Hill: Giant Food Stores' huge new prototype not only makes shopping simpler and more pleasant, it's a feast for the senses from 12/01/2005 by Richard Turcsik gives you a sense of the possibilities inherent to using stores as new media:

"...The store is chock full of amenities, including a 50-seat cooking school, Panda Express Chinese fast-food counter, Hampden Dry Cleaners, Wifi Internet Cafe, Cook's Corner kitchenware shop and demonstration kitchen, Bucks County Coffee Co. outpost, Toy Zone, a complete Hallmark shop, and three upstairs meeting rooms that community and civic associations can rent at a nominal cost. There are over 43,000 SKUs, about 9,000 more than typically found in Giant's larger units. The store is so packed with extras that it boasts a new banner: Giant Super Food Store."

Schiano says in the article: "It's all about solutions. Our objective here is to really provide our customers with an experience that's going to give them really anything and everything they need related to health and nutrition and convenience under one roof."

So not only does Camp Hill offer traditional solutions [e.g., produce and prepared foods], but it reexamines the whole notion of this destination. I love the idea of community meeting rooms which Schiano said are free for charitable organizations, available at a low cost for civic groups, and can also be catered for private events. How about a daycare center? or valet service? Or nutritionists who can recommend low sodium or gluten free diets? What a way to make healthier living real for people.

Many of the ideas and concepts are ones that Giant has adopted from other retailers. "The in-store Staples department was first seen in Stop & Shop; the illuminated aisle directories in Giant Food of Landover; the cooking school is from Giant Carlisle's own Tops Markets division."

Furthermore, "the superstore is part of a new hub-and-spoke strategy. [Per Schiano, "Giant] will put stores like this in major geographic areas that could support a big store, and then we'll plug and play the most popular elements into our other new stores going forward, and retroactively when we remodel."

Per Ahold's Camp Hill, a Healthy Experience From Giant, the store also provides exercise and weight-watcher classes for all ages, a fully equipped cooking school for lessons in healthy, nutritional cooking, and a health food store within a store - called Nature's Promise Marketplace that offers over 3,400 natural and organic products, including GIANT's own Nature's Promise range. Health & Beauty becomes part of the "Relax, Renew, Revive" prototype, done in collaboration with P&G.

Technology supports the new prototype store and delivers the solutions: easy shop handheld scanners, easy weigh [I've seen in French supermarkets], kiosks throughout the store offering solutions, customer bonus cards with special offers, express orders, recipe print outs... The ability to compare shopping cart items, interactive services in the wifi area. It all ties together for an enhanced customer offering and experience.

All of it based on behavior-based customer segmentation from bonus card data tracking. Uncovered 7 segments; the last four respond to targeted communications in-store: quick fixins, thrifty expressers, active families, transactional families, traditional checkers, empty nesters, and golden socials.

These are the categories of grocery trip 'occasions': household replenishment, food replacement, meals in need, weekly fresh fill in, fresh complements pickup, quick needs, cherry picking, and emergencies. [How do these relate to the carpet category?]

Giant feels strongly about customer centric retailing. Customers have responded well to umbrella programs like gas rewards, extra rewards, and A+ school rewards, and are buying more at Giant as a result. [What kinds of rewards resonate with your flooring customers?]

His closing comments: it's important to work collaboratively. Focus on growing the total category. Figure out how to measure performance and action. Continue improving upon the solution. But, above all start with the customer!

In-store in critical and it's where retailers and manufacturers can really connect with customers. In-store is the new medium.

Note: here is a brief writeup from this presentation titled Healthy Habits Mega Trend: A Tidbit from Store Expo 2006.

If you receive HFN Magazine, check out the 09/17/2007 issue with an article on the front cover titled "Grocery Goes Home" by Barbara Thau. It discusses the trend of grocery stores getting into the housewares, home decor and gourmet kitchenware business... It lists Pathmark, Stop & Shop, Wegmans and Whole Foods as examples. All part of going more upscale and offering total solutions in-store while consumers are shopping.

Technorati Tags: Tony Schiano Giant Food retail experience customer focus
Del.icio.us Tags: Tony Schiano Giant Food retail experience customer focus