As we heard at this year’s Re:fresh conference in May, the concept of market data is fast becoming a necessary consideration for a growing proportion of UK fresh produce companies. But, for many it is still something of an unknown quantity and likely to spark a multitude of questions, such as what kind of information is available and where from? How do we use it properly? Is it of any real use when we do?
These are pretty significant musings, granted, but the truth is, for anyone interested in becoming data savvy, the opportunities are many and varied. “The agricultural and horticultural industries are well regulated so there is a lot of information available - information about production, trade, exports, and at a country level, yields, consumption..,” says John Giles, a divisional director at agri-food consulting firm, Promar International.
“The first thing to do is invest in facts and figures. B2B research can be a very effective way of finding out what might happen to the market and what is happening in other countries. As well as that, there is the impact of WTO decisions, the issue of supermarket consolidation, organic, GM, the growth in China…Once you’ve started it is difficult to stop but to keep on top of all those things at any one time is quite difficult and people often don’t take the time to stand back and evaluate. That is why people like Promar are here - to do the standing back for them.”
These days data is generated by the retailers every time anyone purchases goods at the supermarket, or, in the case of TNS Worldpanel, every time 20,000 panel members scan their product barcodes with a device at home; and from this, a wealth of information about buying trends can be inferred which can theoretically help retailers and suppliers determine if they are meeting consumer needs and adjust supply lines accordingly.
So, is it worth the while of suppliers to partake of such services? Dickon Poole, group marketing manager at JP Fruit, says the company subscribes to a number of data providers, including the annual Plimsoll Portfolio Analysis, which reports on the financial status of the top 1,500 companies in the industry. “It is our way of determining how we are performing, compared with other fruit and vegetable companies,” he says. “It is useful to see who else is doing well, who our competitors are or possible acquisitions.” The only drawback, Poole suggests, is the gaps in data where some companies have not submitted their returns, and the fact the information is not readily updated.
“The problem is we are still looking at data from 2004,” he says. “We have done pretty well - we are ranked in the top five or 10, but that is based on our turnover for 2004 and I know that it has improved for 2005-06.”
As Poole indicates, the study can be informative on a case-by-case basis but as reported only this week, it is the extrapolated summarising, which makes for the most compelling reading (see page 4). It was from an evaluation of the financial results of these 1,500 companies that Plimsoll was able to deduce that 18 per cent of them are facing financial ruin, and half of them have registered zero per cent pre-tax profit.
According to Poole, having clear facts and figures in front of you when dealing with retail buyers is particularly useful, which is where the data provided by TNS and IGD is extremely valuable. “We are also trying to understand the effectiveness of promotions and minimise wastage. But you only get that kind of information from the supermarkets themselves,” he says.
The launch of Tesco Clubcard in 1995 by database management provider Dunnhumby saw the dawn of a new age in consumer research. Suddenly retailers offering loyalty card schemes had access to detailed information about repeat purchase trends, allowing them to target sectors of society with much more precision. But have the likes of Tesco willingly shared their pearls of wisdom with the people endeavouring to supply them with the goods required to keep shoppers coming back? Sadly not, and this has been something of a sore point within the industry, says Giles. “The Dunnhumby data is very powerful but access to it is limited to Tesco,” he says. “But the HDC has a PhD student working with Dunnhumby to access the consumer data on behalf of various grower associations, which is quite a big step forward.”
While loyalty programmes inarguably afford retailers a strong sense of consumer preferences, much can be interpreted from one-off basket data alone, says ceo of behavioural data analyst 5one, Steven Rose. Married to a former member of the Dunnhumby team, Rose set up 5one four and a half years ago and now counts Asda, Iceland, Boots, and a number of international companies, among its clientele. “We help retailers to analyse their own businesses by looking at a lot of back data to determine buying patterns,” says Rose. “We would take a sample of about five to 10 per cent of shoppers and from that we can identify different customer segments and build models for each one. There will usually be around 10 different shopper profiles, which retailers need to offer a distinct proposition for. But we would profile every product in the store against all of the segments to see how they fit in with shopping preferences.”
Rose says the merits of such activity in terms of retail/consumer relationships are not to be underestimated. “To take Iceland, who we’ve just been working with, as an example, at board level they now discuss the performance of each basket type that we created, which we think is a big achievement,” he claims. “Most boards wouldn’t have a clue.”
One of the most important lessons to be taken away from such analysis is the need for retailers to keep their offers as widespread as possible if they want to appeal to the prevailing consumer interest in one-stop-shops, Rose says. “The other option is to conform to a niche, like the discounters, which are already providing an attractive option for consumers across Europe. We are trying to help people who want to have a mass-market proposition and recognise the only way to do that is to offer as much variety as possible.”
So how is this enterprise any more effective than bog-standard consumer research? “From research you can see what people say they do but from data you can see what they actually do,” Rose says, although he accepts there is a place for general research as well. “Once you get a good feel for what people do you can do some research to validate that - whenever we have done that our findings have always been correct.”
Tapping into the consumer psyche is clearly an invaluable resource, but, even with loyalty cards, a retailer will still only learn what their customers are buying in their own store, rather than what they choose to go elsewhere for, not to mention the preferences of people they have not yet enticed. However, Rose says retailers should be wary of trying to run before they can walk. “A lot of retailers want to know about people who don’t shop at their stores but it is still easier to understand that within the context of their own data. And they should be trying to retain their appeal for the people who do shop with them rather than worrying about those who don’t.”
Despite the many and varied forms of information available, a significant proportion of the industry is still hesitant to dabble in it, which often comes down to financial deficiency. However, Giles says it is a question of prioritising. “It is an attitude of mind,” he says. “For a lot of SMEs any investment in market data is often seen purely as a cost but it is a way of understanding the current situation and the future so it is definitely worthwhile.”
However, Georgina Pickford of TNS Worldpanel, says there is still room to develop a greater understanding of how best to use the data in the trading environment. “The one thing that the fresh produce industry probably suffers from is not having the budget to employ someone who can really crunch the numbers to create opportunities,” she says, highlighting the mutual benefit of investing time in this way. “As a market information provider, we have a responsibility to continue to educate our customers. Once companies feel confident in understanding how to use the basics of consumer purchasing data, there is a lot more TNS can offer to understand the reasons behind purchase and consumption of fresh produce.”
Giles agrees that interpretation is the key to harnessing the power of information, suggesting fresh produce companies could profit from benchmarking themselves against other industries, as well as their competitors. “After looking at other food companies it would be worth looking at other consumer facing industries, such as cosmetics, which have developed very high levels of consumer understanding, and access expertise and technology from the best possible source regardless of where it comes from,” he says. “The best in class of the produce industry have made strides in this direction over the last five years or so, but many still lag behind.
“The biggest gap in data and knowledge is the ability of fresh produce companies to really look in to the mid-to-long-term future and have a robust view of where all these incredibly dynamic forces for change might be taking them and what the implications might be.”
Pickford suggests some companies may not be using market information to its full potential and says the team is keen to hear from suppliers and retailers who feel there are gaps in their knowledge which TNS could better cater for.
Poole is quick to highlight one important shortcoming in the selection of data currently available, which is the ability to evaluate the success of industry-wide campaigns. “One of the key questions with 5 A DAY and Eat in Colour is how do you measure how well these schemes are working?” he asks. “TNS measures what is being bought but not what is actually consumed which is quite key for the industry. People will be consuming fruit and veg out of the home in various formats so how do you monitor that?”
In such instances, it seems there is little substitution for direct communication with consumers themselves. Ben Lainton, a produce buyer for Somerfield, agrees that introducing real changes is often the result of a combination of approaches.
Lainton says he regularly profiles his categories - soft fruit, exotics and prepared produce - against the company’s internal data and takes an interest in both the AC Nielsen’s data to which it subscribes and any data which his suppliers may present to him. However, he emphasises that the facts and figures are far from the be-all-and-end-all in determining how best to improve his categories.
“I am looking for the reasons behind the numbers, and that comes from getting our suppliers into stores, walking the fixture, and listening to both store managers and the customers themselves,” he says. “We need to be reactive and I need suppliers to work with me on the root causes, which doesn’t necessarily always come from the data. “Our store managers are the ones who talk to customers on a daily basis and they have some fantastic ideas. It was one of our store managers who came to me and asked for Somerfield to sell raspberries for 99p. So I talked to our suppliers and the growers got behind it and we did it, and we’ve sold record volumes of raspberries this year already. We identified from last year’s data that there could be a good opportunity for raspberries this year and then it was by talking to our customers that we were able to give them the product at the price they wanted.”
Data analysis is by no means a quick-fix solution to any problem but if used well, many agree it can be a definite advantage, if not a point of difference, for suppliers in appealing to their retail customers. And for those put off by the daunting task of working out where to start in acquiring statistics, there are a number of consulting firms on hand to walk them through the experience at a suitably leisurely pace.
However, as Giles points out, people should be prepared that the results of data delving may not always be easy to stomach. “If you do any type of research you might get a nice warm feeling at the end but you might also find it flags up issues that need addressing so it is necessary to appreciate that first,” he concludes. “You have got be quite brave, but the worst thing companies can do is just sit there and hope their problem will go away by itself because I can guarantee it won’t.”
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