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In addition to altering everyday life for consumers around the globe for nearly a year now, COVID-19 has stunted daily travel routines, shifting billions in FMCG spend in the process. In many countries, the shift in FMCG sales is the biggest change we’ve seen in the retail landscape since the introduction of discounters and the rise of online shopping. Convinced that huge levels of COVID-driven FMCG growth were masking a larger, fundamental change, a team of Nielsen data scientists dug into the data to understand the nuances underneath the broader retail data. And they were right. So, we asked the team, consisting of Frederic Journe, Remi Adam, Leila Yahiaoui and Brian Sinensky, how they knew something larger was at play and how they were able to uncover it.
Q: The team uncovered a massive shift in the retail landscape, and it’s happening at the individual store level. What was the starting point for a project of this scale?
Journe: At the time, FMCG was seeing healthy topline growth, and although there was some movement between channels, it didn’t quite marry up to some of the in-field observations and consumer responses we were seeing. It hinted at something bigger. A larger proportion of consumers reported shopping at different stores than normal, and we knew that some supermarkets in, or near, places like office parks were suddenly very quiet compared to normal. But these observations were being somewhat overlooked by retailers and manufacturers because sales were generally significantly up at a total market level. The team and I felt there was more to the story. We too were shopping in different individual stores compared to pre-COVID, and that helped a lot to conceptualize what we should see in the data and whether it reflected our own changed shopping behavior. With a hypothesis around consumers shopping in different stores, we needed to dive deep into individual store-level sales data. We were not going to answer the hypothesis if we looked at the retail environment using the same lens or metrics that we’d typically use. We needed a different, more granular approach.
Q: Why did it require a different approach? What warranted such a uniquely granular approach to these global datasets?
Journe: The way we usually look at the retail environment for clients during normal periods is to make it as simple as possible to gauge performance. To understand how the total market is moving across hundreds of thousands of stores, so we aggregate it and group similar types of stores together. Usually, this allows for people in the industry to quickly grasp what is going on as there is usually a level of consistency in retailing and very little movement in the importance of individual stores: If, say, the total market is growing by 10%, you would usually see a small range of growth and decline within the universe of stores. Most stores fall within the range of -5 to +20% of sales movement, for instance. But what we have seen in this latest data exploration is markedly different. Here we have seen that some stores are declining by -50% and others are growing above 50%. The retail environment is performing in an abnormal way at the moment where there’s substantial and noteworthy variations from store to store.
Q: Based on what you’ve described, there’s a huge hidden trend behind analysis at the channel level alone. Could you explain further what might be missing from this fuller picture?
Journe: Exactly, what we saw in the data was that two similar types of stores may be performing in completely opposite ways when compared to pre-COVID sales trends. For example, two convenience stores of the same size, with the same retail banner, with similar sales levels are now frequently diverging from those norms. In fact, their sales trends may look like polar opposites. These two stores are not equal anymore, and that is why we needed to look at an individual store level to identify the scale of movement. If we just look at an aggregated level, these two stores would cancel each other out…the fragmented performance would be hidden.
Q: Once you had the data identified, what steps were necessary to be able to scale this approach across the globe?? Leila, you were responsible for coordinating the collection and processing, so maybe you can speak to this?
Yahiaoui: Of course. Each market is different. There are various channel nuances, definitions and inputs. We had to ensure we collected the data in consistent ways to compare across markets without losing those local specifics. With any analysis across markets, there are concerns regarding consistent and clean data. But with store-level analysis, it expanded the potential data volatility considerably. Analyzing this detailed information at a monthly level proved to be a key success factor, allowing us to isolate shifted behavior from the impact of seasonal or lock-down driven demand.” This enabled us to build a very focused set of data that let us interrogate it in multiple, yet consistent ways, across markets.The sales for individual months was one area that proved to be very important as we started asking if the shifts in sales were just associated with periods where there were official lockdowns or if they continued outside of those periods of restricted movement Early on, we were quickly able to determine that the sales continued to drift to lower density areas outside of lockdown periods.
Q: Were there any key challenges with handling this large volume of data?
Yahiaoui: We are used to processing and examining this amount of data, and we set up checks and balances to make sure that the data always reconciled back to the base data. The amount of data wasn’t a challenge, but the differences in what the data was telling us required regular back and forth with the local teams to confirm that it aligned with what was happening in the marketplace. There were a lot of learnings about the dynamics across the 15 markets we were ultimately able to reflect in our findings.
Q: Brian, you supported a workstream looking at the U.S data. At what point did you start to see patterns emerging?
Sinensky: We knew we were onto something almost immediately. We ran a store-level view across selected cities and the spread of growth—and decline—was huge. It was also incredibly varied in nature, something you typically wouldn’t see. So we started doing some simple ranking change analysis and observed some stores were jumping up as much as a thousand places, while others were dropping at the same rate. That’s when we started looking forward to receiving the next batch of data because we were curious if the numbers would be just as extreme in other countries.
Q: How was this project different from your everyday projects?
Sinensky: We usually do not do analysis like this across so many markets all at once, so the scale was a bit different. But we were encouraged to explore different angles and bring other data sets into our thinking, which made it an incredibly dynamic and creative process. We’re not just number crunchers!
Q: Can you speak to that a bit more? What did the more non-traditional elements entail?
Sinensky: In the U.S., we were looking at store universes across major cities and saw some suburbs that were growing significantly and others declining in total sales. Questions immediately began to emerge for us. With team members residing in many of the cities, we knew from personal experience that the areas in decline were usually the busiest, most commercial, often downtown areas. That drove us to integrate measures of population density for those areas. This exercise confirmed our thinking that it was the highest density postal codes and areas that were suffering. It made sense. People had stopped, or slowed, commuting habits and travel for other activities. They had entirely shifted where they spent their dollars in a matter of months…we’d never seen this scale or speed of change.
Q: So how were you able to show areas where retail sales were growing and declining?
Sinensky: Through store location on the map and plotting the sales growth and decline vs. the same period last year. The objective was to make decisions around how to group stores in the analysis that enabled us to deliver a clear, consistent narrative across the work. As a consequence, the results are so consistent and compelling that it clearly shows the impact of the changed movements as people go out less often, go to offices less often, and shop in stores closer to home. Grocery sales are migrating away from central high-density areas and toward where people are living.
Q: Remi, you created the heat maps that show these dynamics at play in cities around the world. Did you have a similar experience?
Adam: Yes, it was similar in the sense that we overlaid things like locations of tourist hotspots, office parks and transport hubs to help explain why we were seeing areas that were declining in sales. As a general rule, we were seeing that sales were drifting from the center of cities to the suburbs and beyond but sometimes we would see these patches of red (declining sales), representing decline in the outer areas. Once we plotted out data that reflected actual activity or movement of people, we could see that it started to correspond with sales and ultimately explain why we were seeing the decline. That really made us confident in our hypothesis—that just by looking at a red spot on a map representing sales decline, we consistently find they correlated with things like office park locations.
Q: And that’s a different approach to what you have done in the past?
Adam: No, we have often mapped locations such as transport hubs or recreation centers to help identify potential areas for retailers in the past. But this is the first time we have been able to get a sense of how important it has been to be in the right location at given moments in time where spending patterns are influenced by larger factors; in this case the impact of COVID-19.
Q: Brian, What made this sort of work possible?
Sinensky: At the end of the day, it came down to an ability to access this rich data, make sense of it, give it context and and use industry knowledge to address the implications of our findings.
We worked across many areas of the business and were involved from the VERY beginning. We worked with the Nielsen Intelligence Unit on an almost daily basis to walk through where we were at and we continually had to check in with local teams, so the open communication channels were essential. I think that there was a sense that we were on to something quite revealing that made everyone very responsive and the collaboration we received was extraordinary.
Q: What has been a key takeaway from this project?
Journe: The power of data to identify these big changes going on. It’s been interesting to see the reactions to this work from people and especially clients who felt something like this was going on but didn’t grasp the scale or the importance because they were just looking at the topline numbers and direction. They were seeing things like changes in their market share and couldn’t put their finger on what was happening. The data clearly tells the story and they now understand the implications. It’s powerful.
Sinensky: For me, it reinforced the need to continually try innovative ways to use data to gain insight and look at things in new ways. We often use data to measure and recognize change but this project was a great reminder that it lets you understand WHY change is happening—what’s driving the change. For our clients, and for us as a business, this was just a great example of how you can make data work incredibly hard.
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Consumers’ buying journey for pet products is changing as omnichannel shopping becomes the new norm. As shoppers increasingly turn to e-commerce retailers for their pet product needs, simply being a part of a local pet retailer’s assortment is no longer enough.
Even if shoppers aren’t completing their purchases online, they’re still researching and comparing products they expect to find on their next in-store shopping trip. To be successful in this environment, your pet brand must master both the physical and digital shelf.
Identifying online and in-store growth opportunities based on consumer insights, sales trends and competitor analysis is the key to increasing your sales. Here are three actions you can take to expand your share of the e-commerce space using data:
#1. Identify key trends and growth opportunities
Online sales are very important to pet product manufacturers—perhaps even more so than other retail categories. In fact, 30% of all pet supply sales in a 52-week period (ended 10/24/20)* occurred online. As an early mover in e-commerce, many pet-centric online retailers are already well established. That’s why finding opportunities to grow sales on these major platforms is crucial. Measuring online sales by monitoring consumer shopping behaviors can reveal trends and opportunities for growth.
PRO ADVICE: Monitoring e-commerce sales by e-receipt capture is the most accurate and stable way to measure performance across platforms. Analyzing overall sales for your category and segment on a monthly basis provides insights into growth opportunities, for example, by introducing a new product or marketing existing products in a new way.
#2. Analyze performance relative to competitors
For pet product manufacturers, online competitors may be growing faster and representing a greater threat than competitors in brick-and-mortar channels. Identifying those competitors and comparing your products’ performance to theirs is important for developing effective sales strategies.
PRO ADVICE: Analyzing monthly e-commerce data helps identify which brands and banners are leading your pet product category and segment. You can spot which are growing fastest and might be a potential threat to your sales. Comparing competitors on the e-commerce report to those in traditional RMS reports highlights which brands are more competitive in each channel, allowing you to tailor your sales and marketing strategies accordingly.
#3. Understand how consumers shop across online and in-store channels
To motivate consumers to purchase your product, you’ll need insight into their online and offline decision-making processes. Understanding what goes into the buyer’s journey—for example, their pre-trip preparation, browsing habits and research—can help you influence behaviors at both the digital and physical shelf.
PRO ADVICE: With insights based one-commerce panel surveys, you can learn how consumers are shopping and understand what’s driving their purchase behaviors. Analyzing Omnichannel Shopper Fundamentals leads to understanding the path to purchase, including shopper motivations, barriers and purchase influencers.
How Nielsen Can Help You Master the Digital Shelf
Nielsen provides the fast, flexible and agile tools pet product manufacturers need to grow both online and in-store sales. Monthly e-commerce measurement provides accurate tracking of online sales as well as shopper insights, while RMS data provides the most current and comprehensive snapshot of in-store retail performance available. Omnichannel Shopper Fundamentals offer insights into the consumer path to purchase, motivations and sales drivers both on and offline.
A Suite of Products to Support Your E-Commerce Strategy
Monthly E-commerce Reporting: The most comprehensive view of both online and offline sales, plus online shopper data and behavioral motivations, so you can make better data-driven decisions.
RMS: Complete, current data on market shares, competitive sales volumes and insights into distribution, pricing, merchandising and promotions.
Omnichannel Shopper Fundamentals: A top-line understanding of the online and offline path to purchase with survey-based insights, including shopper motivations, barriers and purchase influencers.
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Maintaining good relationships with retail partners is a must for emerging pet manufacturers. Effective collaboration with retailers can help you develop the best possible pricing and promotional strategies for your product—and amplify your success.
By accessing specific retailer data, you can identify key accounts and understand which promotions have worked effectively in the past. You can also learn which pricing structures will drive product sales for both you and your retail partners, and establish a collaborative approach together.
Here are three tips for working with your retail partners to develop pricing and promotion strategies that create win-win outcomes:
#1. Identify key accounts and access their data
The pet retail landscape is broad, but top-heavy—big name retailers with large geographic footprints can have an outsized impact on your product’s success. Know who your key accounts are, and study their point-of-sale (POS) data to learn which pricing and promotional strategies may work.
PRO ADVICE: While internal sales figures can show you which of your current retail partners are your biggest accounts, market-level RMS (retail measurement) datacan help you identify which pet retailers sell the highest volume of other products in your category. A data provider with direct access to your key accounts’ POS data can help you gain more specific insights into store-level performance.
#2. Pinpoint retailers’ keys to success
Not all promotions are created equal. Some might work for a specialty pet retailer but will be less effective in a grocery setting. It’s important to identify promotions that will be most effective in your key accounts. By learning what drives retailers’ revenues, you can identify promotional strategies that will benefit both sides.
PRO ADVICE: Analysis of key account sales data shows which promotions have worked for your retail partners in the past in terms of individual product performance and overall store sales. When you’ve identified which promotions created win-win outcomes, you can work with retailers to replicate them through a retail collaboration platform.
#3. Deploy marketing dollars where they will have the most impact
Trade promotions are a powerful tool for manufacturers and their retail partners. But to be effective sales drivers, promotions must be well-planned and targeted. Analyzing the sales lift resulting from promotions in your key accounts shows where your trade dollars will have the most significant effect.
PRO ADVICE: Because there are so many variables to consider when developing a promotional strategy, having the most accurate and current information is essential. Revenue management optimization tools provide the analytics you need to plan efficient trade promotional spending.
How Nielsen Data Can Help You Develop Win-Win Pricing and Promotions
Nielsen’s data provides the insights you need to work effectively with your retail partners. Our exclusive key account RMS data lets you drill down into shelf-level performance at your most important partners’ stores. Revenue Management Optimization (RMO) provides advanced analytics and predictive modeling, so you can get the most return from your promotions. Retail Collaboration programs offer a shared platform for you to work with your retailers to develop mutually beneficial pricing and promotion strategies.
A Suite of Products for Effective Pricing, Promotion and Retail Collaboration
Revenue Management Optimization (RMO): Provides the analytics needed to improve pricing decisions, enhance trade spending efficiency and ensure product availability
RMS: Gives you comprehensive and current data on market shares, competitive sales volumes and insights into distribution, pricing, merchandising and promotions
Retail Collaboration Programs: Simplifies and streamlines collaboration between FMCG retailers and manufacturers/suppliers to deliver consistent mutual growth
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When hair and nail salons temporarily closed their doors during shelter-in-place ordinances earlier this year, Americans looking to maintain their personal care routines had little choice but to adopt a do-it-yourself (DIY) approach to beauty and self care. But this trend didn’t stop at the human consumer level. As shoppers became more invested in their DIY routines, many pet owners placed an added importance on maintaining their pet’s health and hygiene at home, especially when temporary (and some permanent) business closures left consumers with few other options.
Personal Pet Care Enters the Spotlight
More than 11 million U.S. households adopted a pet during the pandemic, according to the American Pet Products Association’s (APPA’s) “COVID-19 Pulse” study. This sparked notable sales growth across all pet care categories (i.e., pet supplies, pet food and pet treatments). Pet supplies have been the fastest-growing category in pet care throughout the pandemic and pet grooming has been one of the fastest growing segments within the category.
In tune with consumers’ recently developed DIY health and beauty habits, pet parents haven’t limited their efforts to themselves, as many have familiarized themselves with at-home pet grooming this year. While the sales growth rates for grooming necessities like brushes and combs, grooming supplies, shampoo and conditioner have slowed since the peak purchasing period back in May, sales remain substantially above pre-COVID levels, with total pet grooming sales up 27.4% since the outset of the pandemic. This far outpaces the 3.2% growth generated by the total pet care category.
As shoppers stocked up on what was newly deemed essential, increases in the average number of units purchased per shopping occasion and average spend per buyer contributed to pet grooming category growth. In addition to driving increased grooming sales, the pandemic has boosted household penetration by 5.1% across all Nielsen tracked channels during the 52 weeks ended Oct. 31, 2020.
But there’s still a massive opportunity for retailers and brands to capture new buyers. According to the APPA’s 2019-2020 National Pet Owners Survey, over 106 million households own a cat or dog, but Nielsen Homescan data shows that only 12.3 million households purchased pet grooming products in the year ended Oct. 31, 2020. To drive increased adoption, brands need to educate consumers on the importance of personal pet care with comprehensive deliverables that inform shoppers on how to maintain their pet’s health. By offering pet-friendly products that make clear connections between consumers’ reprioritized sense of self-care and pet personal care, brands and retailers will be able to tap into the large segment of households that have yet to purchase within the pet grooming category.
Online Captures the Majority of Pet Grooming Purchases
Pet care products had strikingly high omnichannel adoption rates before the pandemic. However, as COVID-19 pushed more than 18 million Americans toward the online CPG landscape for the first time, e-commerce accounted for more than half (53%) of all pet grooming dollar sales between April and September 2020, up 11 percentage points compared with pre-COVID levels. Within this 53% figure, roughly 5% of e-commerce purchases were fulfilled via click-and-collect, but click-and-collect sales heavily declined after the peak pandemic purchasing period in May. By offering exclusive in-store savings, special click-and-collect promotions, in-store product education and contactless payment and pickup methods, retailers can entice online shoppers to visit brick-and-mortar stores and convert additional sales.
Pet grooming shoppers will become further entrenched in their online shopping habits into the ‘new normal’ and e-tailers need to enhance their customers’ shopping experience through easy-to-use personalization tools as consumers continue to seek out convenience. While pet shoppers continue to shift toward the omnichannel landscape, retailers need to create comparable experiences both in-store and online by providing diverse product assortments, offering promotional sales and price points to accommodate different budgets and educate consumers on pet personal care needs. Retailers should focus on their omnichannel capabilities and make products available through multiple vehicles like home delivery, subscription services, click-and-collect and curbside pickup—all of which will become even more appealing amid rising COVID-19 cases.
Personal care brands are offsetting losses through pet product lines
The total pet grooming category has consistently seen substantial growth throughout the pandemic, and private label brands continue to dominate as much as 75% of total dollar share in some subcategories. Given the lack of diversity in products and brands, consumers looking to cater to their pets at home are limited in terms of innovation, and it’s possible that not all shoppers’ needs are being met.
More human-centric personal care brands are entering the pet grooming space, with Hempz, Wet Brush and Waterpik all releasing successful pet product crossovers. Many of the top pet grooming brands got their start in human beauty and personal care, including Burt’s Bees and CHI, and these brands have experienced highly accelerated growth as consumers stocked up on at-home pet care. Outside of the health and beauty care space, tool manufacturer Dremel has expanded its expertise into pet grooming with a nail grooming kit. With an “if it’s good enough for me, it’s good enough for my dog” mindset, pet owners have shown that they’re highly inclined to purchase grooming products for their pets from brands that they trust for their own personal use.
These aforementioned brands, traditionally known for their human products, experienced steep sales declines in beauty and personal care throughout the pandemic. Their pet grooming product lines, however, helped insulate a great deal of those losses and capture growth from an entirely new shopper segment. Beauty and personal care brands looking to enter the pet grooming space will be able to attract pre-existing customers to their pet product lines as they seek out familiar, trusted brands for their furry family members. As the outlook for beauty and personal care remains bleak, moving into pet grooming products can capture additional dollars from DIY-lovers looking to care for their pets at home.
Pet brands need to take advantage of the growth in DIY and get consumers excited about taking care of their pet’s grooming needs at-home. The majority of pet owners have yet to purchase within the pet grooming space, and retailers and brands need to offer easy-to-use, comprehensive product kits that satisfy a variety of grooming needs as consumers familiarize themselves with at-home pet care. In addition, brands and retailers need to teach consumers about the benefits of routine, at-home pet care and make clear connections between their reprioritized sense of self care and pet care.