Customer Management Award 2018: Coca-Cola
Once a year, Walgreens executes a beverage category reset, and it’s critical to get it right, according to Emily Miller, the retailer’s senior category manager.
“It’s inexcusable to not merchandise appropriately for the [shopper who] comes into brick-and-mortar, because you are so lucky that they are coming into brick-and-mortar,” Miller said, during a presentation at the Path to Purchase Expo last October.
“We knew we had a challenge. The customer is in the store for a very short period of time and for an even shorter amount of time in front of the category,” said Liz Picariello, senior category advisor for Coca-Cola Co. “So when you do something for the customer in placing product, you want to make sure you’ve got the placement as perfect as possible.”
To bring stronger insights into the annual activity, category leader Coke worked with Walgreens on a testing strategy that Miller called “a simple addition to the reset process – with big impact.” That addition was virtual store experiences, via online environments created by VR specialist InContext Solutions. “This was part of a collaborative business planning process that we have with Walgreens. And it really starts with the shopper,” said Picariello.
Knowing that “transaction pack” SKUs such as mini-cans work well among Walgreens shoppers (especially Millennials), the partners used the virtual tests to identify optimal shelf placement for this packaging option. Was a dedicated transaction-pack block within an existing brand block the way to go, or would a distinct vertical block merchandising transaction packs from all brands together be more effective? “We wanted to make sure that [the placement] drove category sales and also resonated with shoppers,” Picariello said.
Ultimately, Coke and Walgreens wanted the ability to measure the impact on shopper behavior as well as sales, to understand the why behind the metrics.
The testing process comprised an online survey that targeted beverage-buying Walgreens shoppers and included a link to an immersive virtual store tour. Hundreds of test subjects “walked” through the environment to experience each shelf set variation. Walgreens and Coke then compared the results between the brand and pack-type blocks. The key findings were:
• The vertical block drove the highest total category dollars, with a double-digit increase in dollars per shopper for transaction packs.
• Transaction packs overall and mini-cans specifically performed best (in terms of dollar sales) in the vertical block.
• The vertical block scored higher for preference to shop among all respondents and especially among Millennials — who almost unanimously preferred that option. “To see almost 100% preference of a particular set is very, very significant,” Miller noted.
Based on those results, the partners decided to roll out the vertical block to stores. “The in-market results are nearing what we saw virtually,” noted Picariello.
When compared with traditional in-store testing, the use of virtual environments dramatically reduces costs, improves speed to market, provides richer sales and attitudinal data, eliminates store disruption, and lowers the risk of resets that won’t work and will cost the retailer even more, Miller and Picariello explained. It also provides a flexible, collaborative testing method that facilitates faster decision-making.
“It was very exciting for me to see such a positive outcome as a result of the work that we did together,” said Picariello. “It’s important to use an innovative way (like this) to validate what you need to do for the consumer, who you’re very lucky to have in your store,” concluded Miller.