Roundtable Report: Shopper Soul Searching

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Watching two young people—who are standing right next to each other—text instead of talking may have some retailers thinking, “What’s the next generation coming to?”

But for Michelle Barry, an anthropologist who helps retailers understand current and future customers, putting people’s behavior in the context of retail evolution is exactly why she’s always asking what the next generation is coming to.

Barry and about 50 attendees at CSP’s Shopper Insights and Engagement Forum spent time understanding consumer complexities as a way to build strategies to keep customers coming to their stores. The topics included studies on specific consumer segments as well as ways retailers can use behavior-based data to shape promotional strategies, tinker with their merchandise mix or lay out new stores.

Millennials, for instance, especially ones in their late teens and early 20s, are tech-savvy but have had trouble finding work during the recession. So they’re digitally connected but probably not on the newest iPhone. If retailers are interested in appealing to this group, value is important, and mobile communication may be a perfect platform from which to convey that value proposition.

And they’re lonely. Even though the world is a fingertip-drag away, they’re more isolated as individuals and long for a sense of community. C-stores can provide the “perfect opportunity” for a community-building experience, Barry said.

For Steve Morris, director of merchandising for SuperAmerica, Woodbury, Minn., consumer research and focus groups led the company to prioritize a core target customer: a younger male, 18-22, whom he randomly named “Scotty.”

“We had to make a decision so we could set a budget and create a marketing plan. ... We picked Scotty,” Morris said. “So if you look at Scotty, he’s just out of college, 22 years old, making $35,000 a year. He’s single, lives in an apartment and his commute is less than 20 miles. Are we speaking to Scotty?”

Morris’ marketing team looked back at several months of promotions and advertising—evaluating everything from price point to color palette—to see if the company’s efforts spoke to that customer. In one example, he showed a “Super Sipper” billboard ad with soda and ice bursting from a fountain cup that had a 59-cent price point. Without revealing conclusions, he said his team reviewed that and other promotional messages as a foundation for future efforts.

“If he’s single, can’t find a job and on a budget, what kind of value proposition can we offer?” Morris said. “How does he live? What’s his social life like? If we can catch him on his way to a bar, what kind of promotion can we give?"

CONTINUED: Cracking Code Millennial (Infographic)

Cracking Code Millennial

In research done specifically for the forum, Barry, president and CEO of Seattle-based Centric Brand Anthropology, spent 200 hours conducting open-ended surveys with 18- to 20-year-olds, a segment she defined as the “digital age.” She defined their personality traits this way:

• Sense of community
• Do-it-yourself attitude
• Socially engaged
• Yearning for the past and wanting products made by “real people.”

For this age group, “happiness” means no “massive compromise,” Barry said. “They see money in the mix, but not a certain dollar amount like, ‘I need to make this much money by the time I’m 30. I can sustain myself on a certain amount.’ ”

Of 50 study participants, she said 25% were living in their parents’ homes; for many of those who weren’t, going back to the family home served a functional purpose such as laundry or a place to store things. This group has an expectation that they’ll always have a place in their family’s home even if they don’t live there anymore, she said.

Many of them still received money from their parents or didn’t own cars because their parents still drive them around. And while expectations of college kids or just-out-of-high-school youth are that they’ll be dependent on their parents for a few years, Barry said there’s a sense that the way they’re living now can go on indefinitely.

“So many things about this group are fragile, not sustainable,” Barry said. After visiting where they live, she said they’re “locked in the past, appreciating things that tell stories.”

This group likes textures, color and things with global influences, she said, not things that are necessarily “cool” or “trendy,” but “shabby chic,” clashing and eclectic—all gathered as a means of self-expression.

And the good news is that this group is more inclined to appreciate c-stores. While older millennials may consider c-stores a place to visit while on a road trip, younger millennials see them as “funky” and give the channel “permission to have fun.”

In a c-store context, millennials are less inclined to view c-stores as places that sell interesting items, but they have appeal as a place to create meals. Millennials like pairing disparate items to create an on-the-go lunch, for instance. Barry said placing items that could go together is a good thing, but too much of it will seem “prescriptive” and off -putting to this segment.

One of the best things c-stores can do to stir interest in younger millennials is offer interesting products. Some suggestions:

• Offer products that “tell their own story.” Millennials don’t expect cashiers to be product experts, but the  products should have well-told backstories.
• Become an expert in at least one area of foodservice. That expertise appeals to the inventive nature and experiential inclinations of millennials.
• Celebrate interesting beverages. Novel brands, possibly in other cultures such as Japanese, or interesting packaging will be of interest to millennials.
• Include at least one high-quality, healthier alternative in your packaged goods. Millennials are interested in sustainability and clean living.
• Honor the past with a nod to the future. Many iconic brands have repackaged their products to provide a retro vibe that this group appreciates.

In terms of foodservice, younger millennials are more inclined to try food prepared at c-stores, especially mom-and-pop places or small chains. (See infographic, below.) So if done right—though many don’t think c-stores can do it right—the interest exists.

Look to food trucks for inspiration, Barry suggested: “They want interesting food … comfort food with a twist.”

CONTINUED: Attracting Women

Attracting Women

In addition to Barry’s insights on millennials, speakers dissected other consumer demographics, including gender nuances.

When it comes to cleanliness, low prices and safety at convenience stores, women and men come from the same planet, said researcher Suzy Silliman, senior vice president for data integration and analysis for Management Science Associates (MSA), Pittsburgh.

But regarding customer service, store ambiance and the amount of time spent shopping, the “men are from Mars, women are from Venus” hypothesis applies. According to MSA, one-quarter of female shoppers are bypassing the convenience channel, raising questions of how c-stores can attract and convert women into regular shoppers.

“Females have a greater expectation for customer service and knowledgeable employees,” whereas men are more strategic and go directly for the intended product, Silliman said. Also, females on average purchase more impulse products such as mints and gum, implying that women are more open to suggestive sales tactics.

Other findings from MSA studies showed females are more interested in having items they want in stock, organized displays and a modern-looking store with atmosphere.

“Women are more likely to spend time looking for exactly what they want,” she said. “And if it’s not there, they’re more likely than men to leave the store without buying anything.”

With these insights in mind, it’s important that retailers having popular items and brands in stock. Store displays may be more useful targeting females, who have a greater tendency to spend more time in the store than mission-focused males, Silliman said. Retailers may find better results with displays that have a more feminine aesthetic, incorporating more colorful and emotionally engaging themes or causes.

The female consumer accounts for $20 trillion in annual consumer spending, with that figure going to $28 trillion in the next five years, she said; a whopping 93% of food and grocery purchases are made by females.

“Women find themselves playing multiple roles in their households,” Silliman said. “C-stores have the opportunity to serve the female shopper.”

Foodservice Opportunity

As c-stores look to exploit the high-margin opportunities of foodservice, Sara Monnette, senior director of consumer insights for Technomic Inc., Chicago, offered several trends and emerging preferences that will influence c-store foodservice programs:

• With the recession ebbing, employment stabilizing and fuel prices dropping, retailers can expect higher traffic and more interest in on-the-go meals.
• People want to customize their meals.
• Technology is important and expected, applying to ordering, payment, rewards and social media.
• People are moving away from three meals a day to a continuous “grazing.”
• Foodservice is appearing across multiple channels. Monnette suggested focusing on differentiation.

In terms of defining the c-store shopper, Technomic research showed that high-frequency customers tend to be male, younger and employed. Moderate-to-light customers tend to be female, baby boomers and upper-income. Light visitors tend to be female and unemployed. Traffic drivers are gas (70%) but also beverages (66%), suggesting that foodservice can be an opportunity if paired with a beverage offer.

Beyond the food—or maybe aligned with trust in the food—c-stores must be clean.

“For someone to want to order a salad, you need to have a clean floor,” Monnette said.

Start Making Sense

As Morris and other retailers shared, gathering data is important, but using the data to a tangible end gives that research purpose.

CONTINUED: Real World Experience

For Joan Hoenninger, market research manager for Wawa Inc., Wawa, Pa., research was used as a tool to keep Wawa’s signature hoagie sandwich No. 1 in the Philadelphia market. It was no small feat because that type of sandwich is an area staple. But the chain was already a top-rated spot for hoagies, so it was an attainable goal.

Wawa used several methods to gather data, including customer surveys, social media, existing research, feedback given at the company’s call center and syndicated data.

After analyzing the research, Wawa identified an opportunity in a crucial element: bread quality. So it began baking fresh bread in the stores. It tested 19 ovens and began a 30-store test. The research continued, using customer surveys on the product and audit reviews of store-level execution.

Initial reviews were mixed. Many consumers spoke of texture concerns. After stepping back and examining operations, Wawa found that employees were leaving open the holding cabinet, which allowed bread to turn stale faster. Solving this problem led to higher approval ratings.

And since rolling out the program in 2013, the chain has seen its hoagie soar to its highest market share in 10 years.

Attendees of CSP’s Shopper Insights & Engagement Forum, held Dec. 2-4, 2014, in Phoenix:

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