Mike de Block

Why I don’t aspire to franchise an Albert Heijn or a Wallmart

My dream? Setting up a niche supermarket! Scalable? potentially. Moneymaker? on the long term. What is the ROI? Brand-advocates

So am I pointing specifically at Albert Heijn or Wallmart? No, this post is pointed at the supermarket industry in general. Recently, I was reading an article about a successful supermarket franchisee who declared that the key to success was his extensive assortment. While his answer is probably correct for the years that are behind us, his key to success is certainly not future-proof. Even when the focus is already on online and social media it is insufficient. This is supported by A Forrester research study indicating that 88% of consumers have abandoned an online shopping basket, suggesting that even if retailers manage to stand out and lure the consumer to their online selling points, they still need to place extra effort to close the sale. Why? Because the purpose of a company has changed in our current economy as social media emphasizes the importance of word of mouth: 

• original purpose: Creating a customer
• new purpose: creating a customer who creates another customer

Seth Godin and Jeff Jarvis complement that consumers face an abundance of choices, while the time to actually consider what product to choose decreases. Nevertheless, am I as a 24 year old graduate mocking with a successful franchisor? No, I just think that his vision isn’t sustainable on the long term. Why? Because companies sell us a feeling and not a set of molecules in the form of a product, which complies with the new purpose of a company. However, cash is king and therefore standardization and being mediocre is prioritized.

However, you can’t blame the current Dutch supermarket chains like Albert Heijn (Ahold), Jumbo and C1000 as these companies are forced to endeavour shareholder value, which was like the holy grail in the previous era. Nevertheless, the father of the shareholder value movement, Jack Welch now said “On the face of it, shareholder value is the dumbest idea in the world. Shareholder value is a result, not a strategy”. 

This sounds like the perfect storm for new entries, since traditional supermarkets always have the burden to target the mass in order to deliver the demanded shareholder value. Moreover, the impact of social media is clear:

• Social media has magnified the influence our social circle has on our purchases.

Shareholder value should thus be exchanged for brand advocates as a result.

How?

Niche communities should been taken serious. Marketers already tried to raise brand awareness though product reviews on social networks. 

However, now the consumer is taking the lead. The online communities are now trying  to leverage their influence like US, Twittermoms. The TwitterMoms Seal of Approval is one of the first to leverage the influence of moms to conduct product reviews. Moms trust moms above all else, especially during the point of sale. When a products is approved like the Quickie Microfiber Twist MopIt’s, it receives a seal with an integrated QR code to allows anyone to view detailed feedback. 

Products will therefore be bought based on quality and not on quantity (package deals, discounts). The consumer communities are coming close to become self-supporting, which is why the economy of niches is commencing. 

Use “free” to generate the initial buzz and lure the influencers

Secondly, when focusing on niches it’s vital that the word travels fast among the niche members. The best way to do so, is to blow up existing b-models. Give away products for free, that are used by existing players to achieve profit. While luring the critical niche mass to your store, you can use there presence to sell them other products. The difference between cheap and free is enormous from a customer perspective. With free the word travels fast and communities will get-2-know your store, while a price of 1 cent already makes it a different story as it put consumers to reconsider their purchase decision. Free is an emotional stimulator and a source of irrational excitement. This is due to the fact that people perceive it as a risk when they pay for something, it’s our natural fear for loss. But how can free be a business model? take a look at the picture below and amaze me with your creative ideas. Need examples to be persuaded? read Free from C. Anderson

Exclusivity discounts

The attention for the individual is superior to the content as it’s the people that matter, not the venue. Supermarkets must therefore function as a platform. Follow the example of the Danish gyms, where subscribers pay less when they regularly visit the gym. Discount can therefore been given based on the frequency of shopping and the amount they spend. Exclusivity is therefore given per discount that is offered, while the consumer itself is in control. Brand advocates could therefore been created based on price. 

Review marketing

Thirdly, review marketing must be implemented in your business. Why? Because 76 % of the consumers doesn’t believe that retailers communicate the truth in their adds. 49% listens to the opinion of their social network in order to decide which store they are getting their groceries. Moreover, a recent study from Deloitte shows that 82% decides to purchase a product/services based on a consumer review. Social media comments on recipes, products, sponsoring events etc. can be attached via a price tag to the product. In short, a supermarket is a social gathering place, so embrace the opinion of your customers in order to increase the relevance of grocery shopping. Moreover, embrace the calendar of your customer. Truly function as a platform, where your supermarket approaches customers based on there facebook comments. Is your wine-geek best friends birthday coming up, a suggestion of wine is offered as a present. Moreover, product suggestion are given based on the photo comments or wall chats. Interested? take a look at  Bijgespijkerd.nl  where Ha Vo, CEO of Componence Social elaborates on this concept.

Brand advocates should be the new ROI, or lets name it the Return of Involvement. With this post, I just want to give you a grasp of an idea what the NEAR future will bring. However, my key argument is that shopping is about consumers and not about assortment or other old-fashioned tools to generate a competitive advantage. The new mass are the numerous niches that are being developed as we speak. Create a complementary offline-online customer experience and discover the person behind your customer. The return……. (you probably know it already) a BRAND ADVOCATES ARMY.