The Five Tools Necessary for Playing Retail Hardball

Consumer products manufacturers who seek distribution at hypermarkets, big-box, or club stores would be well advised to become big-league hardball players, because every day a new megastore opens somewhere in America.

Ever since Sam Walton promised to lower the cost of living for everyone, retailers of all stripes have followed in Wal-Mart’s footsteps—Home Depot, Kroger, Target, Costco, Walgreens, and Lowe’s, to name a few.

Five of the top 10 U.S. retailers in “Stores” magazine’s annual list are big-box chains—Wal-Mart, Home Depot, Costco, Walgreens, and Lowe’s—up from two just 10 years ago. They can offer low prices and great selection because they all play retail hardball by using sales and inventory data to dictate which products gain admission to their shelves.

This accelerating trend presents major challenges for consumer products manufacturers. They must recognize that retailers have gained the power of life or death over their brands and that placing a product in these stores, increasing facings, or getting special displays takes something special.

Only manufacturers who know how to create value for their customers can get beyond the reach of competitors to hold shelf space. Creating this sort of value means making a difference in consumers’ lives, meeting both functional and emotional needs. When consumers feel good about their experience with a product, they feel good about the brand, which strengthens its competitive advantage. Today it all comes down to how the customer feels.

There’s never one single product feature that magically creates a distinctive experience. Rather the experience is the result of layering insights throughout an integrated design so that customers respond by feeling differently about the product rather than consciously classifying it as “unique.”

Layering the right insights to achieve the desired cumulative effect requires companies to enlist customers as their partners in the value-creation process. Certainly much of the consumer experience is unconscious and emotional, because each individual designs his own feelings and thoughts. The only way to take this into account is to hear from consumers directly.

Out of our years of experience partnering with leading consumer goods companies to develop products and packaging, we have evolved five tools that create value for consumers—value as they perceive it, not as the manufacturer, the designer, or the engineer sees it.

Essential to the effectiveness of our toolkit is the active participation of an innovation team composed of market-oriented industrial designers, customer-experience-sensitive research analysts, and business-savvy innovation strategists. Such a team can enable manufacturers to play hardball with big-box stores…and win.

The goal is new products that compel purchase and repurchase. The challenge is to create such products and then convince the retailer that they can indeed lead to purchases and repurchases. The secret? Start from the product user and the retailer’s perspective, not with the industrial designer or engineer, but involve the industrial designer every step of the way.

Tool no. 1: Observation
Observation is key to understanding the experience of shoppers, merchandise managers, stock keepers, and product users. It involves closely observing people buying, working with, and using products in stores, in hospitals, at home, in schools, on the street, and observing how retailers merchandise their stores and display products.

Tool no. 2: One-on-one field interviews
One-on-one field interviews serve the same purpose by providing an understanding of the user experience, but they add an important dimension. They involve talking informally with individuals in the field about the type of product, about what they experience when they shop for the product or use it, and what they wish could be different.

Tool no. 3: Collaboration with product users
It’s not enough to observe and interview product users. The key is to interact collaboratively with them to fully understand their personal experiences and individual visions of what could improve their experience.

Fundamental to generating preliminary ideas in collaboration with product users is the creation of a relaxed, nonthreatening atmosphere where everyone feels free to think beyond familiar boundaries and to build upon one another’s ideas. Equally important is the creation of real-time sketches by professional concept developers trained as industrial designers. Such sketches enable product users to build upon concepts and company reps to document what was expressed for executives who were not present.

Tool no. 4: Brainstorming
Brainstorming is an important technique for collaborating, not only with product users but also among innovation team members. Brainstorming builds concepts from preliminary ideas and develops them for production.

The rules of brainstorming are strict:

* No judgments are made during the session. Everyone is open to all ideas, the wilder the better.

* Any idea can become a building block for any participant.

* Generate as many ideas as possible in one hour.

* Each concept is sketched by a trained designer.

* Participants show respect for one another and speak one at a time.

* A facilitator keeps the session on focus and maintains order.

Tool no. 5: Concept prototyping
The four tools just covered—observation, one-on-one field interviews, collaboration with product users, and brainstorming—generate strong strategic direction, a rich supply of real-time sketches, and a deep understanding of the existing customer experience and the desired experience. These become the basis for originating new concepts for products and packaging with compelling appeal.

When the best of these concepts have been winnowed, physical models are created to refine how parts fit, how forms are shaped, how the product functions, and how the user interacts with the product. Finished prototypes become important guides for production.

The unfinished state of the prototypes stimulates users to continue to envision what might be. Introducing each prototype with a photorealistic illustration of that concept on shelf helps one to understand the prototype more fully. Brainstorming directions for final product development with users leads not only to stronger concepts but also to insights into what might motivate consumers to buy and to buy again.

Gary Grossman is president of Innovation & Development (www.IDIusa.com), an Edgewater, NJ-based product strategy and packaging firm.