Connecting up existing data to unlock growth
In order to be successful, most major supermarket retailers need to win across three important battlegrounds – Food, General Merchandise and Household. While the first of these two categories will be familiar to most readers, the third category may warrant further explanation – when a retailer refers to ‘Household’ it is actually shorthand for a number of well-known sub-categories, things like toilet/kitchen paper, pet care, detergents and cleaning products.
These sub-categories are important because not only do they account for large sales volumes, they are also destination drivers in their own right. They attract the shopper missions that drive overall penetration and frequency. And so, when Tesco CEO Dave Lewis, announced his intention to fundamentally overhaul the performance of the business, winning in Household became crucially important.
It was with this task that Tesco first approached The Forge.
Winning in the Household category was not going to be easy. Not only was the category already fiercely competitive but Tesco was effectively under attack from every quarter. All of the major supermarket retailers were fighting hard for share and value retailers like Aldi & Lidl were consistently winning more customers, while discount retailers like B&M were proving highly effective at targeting the overall category.
At the same time there had been a reduction in Household missions which was disproportionately impacting Tesco’s overall business and the impact was being felt on the bottom line – this was a complex and difficult challenge that needed to be addressed and it was a challenge that Tesco literally couldn’t afford to walk away from.
We knew from our prior work with Tesco that the business would already have access to a huge quantity of data and so we started with the working assumption that much of what we needed to tackle this task would already be available to us. We therefore focused our efforts on both interrogating and then connecting different kinds of data in order to elicit fresh insight and understanding.
We took a lean approach, beginning with a rapid resight phase, and used a broad range of relevant inputs including: EPOS data, Tracking Studies, Continuous Consumer Panels, Clubcard Loyalty Data, share information as well as a mix of other proprietary trading data and used this to build and validate a working hypothesis.
It was by looking across these data sets that we were able to develop a much more holistic picture of the challenge – understanding exactly what was happening in Household – where the money was moving and importantly, why it was moving.
Our work was one of the first studies to identify and substantiate the idea that shopper behaviour was fundamentally changing. We could see from our analysis that customers were abandoning the traditional fortnightly shop and choosing to shop more frequently – embarking on different missions with different types of retailer at different times. Household was at the epicentre of this change and we were able to illustrate that it was the big discounters who were now winning in this category across practically all income levels.
Having identified how shopper behaviour was changing, as well as who represented the biggest commercial threat, we turned our attention to determining how Tesco could win in Household. We needed a plan that would be both easy to digest and initiate and so we structured our response around 6 fundamental insights, each accompanied by a series of specific implications and recommendations that Tesco could utilise to face into the Household challenge.
We also demonstrated that Household was now a series of individual battlegrounds each with its own challenges and competitors. We showed how discount stores were ‘winning missions’ and how importantly discounters were ‘winning the shop’ – we also helped Tesco understand which of its competitors to focus on, how important pricing was to the category and how Tesco had an opportunity to refocus and reorganise the way it presented the category.
Our work also went on to influence other parts of Tesco’s business and was a key pillar in the eventual turnaround. Our work on shopper behaviour also helped shape the strategy around both Own-Label and General Merchandise – helping the business to face down its competitors and ultimately return to profitable growth, a powerful demonstration of the power of connected thinking.
If you would like to learn more about how better insight could help you to unlock new audiences, then get in touch.
Photo credits: Photos by Crystal de Passillé-Chabot, Jem Sahagun and Colin Watts on Unsplash