A new marketing blitz for Knorr soups and side dishes could eventually help change the way consumers do their grocery shopping.
In a dramatic shift, consumer-products giant Unilever Canada Inc. will soon move almost all its marketing spending for its Knorr products – about $5-million annually – to in-store initiatives such as displays, signs, samplings and chef appearances while ditching television, radio, digital and other media ads.
In a race to breathe new life into the 174-year-old Knorr brand, Unilever president John LeBoutillier is trying to grab shoppers' attention at the store aisle where most – 76 per cent – of today's purchasing decisions are being made, compared with 70 per cent in 1995.
Unilever's effort reflects the growing importance of in-store pitches at a time when trumpeting a message in other media is becoming increasingly fragmented. It underlines the urgency among suppliers to win back some control over the store aisle from retailers, who call the shots not only on product placement but also marketing and merchandise offerings. In an uncertain economy, consumer product titans feel a growing pressure to find new ways for their inventory to stand out from merchants' own private labels, which get prime shelf space.
For Unilever, its Knorr in-store marketing move could serve as a road map for its other brands, such as Becel margarine, as well as those of other packaged goods vendors.
"It's a big bet – it may work and it may not," Mr. LeBoutillier said. "But we're at the point where we don't have a choice."
Suppliers increasingly are shifting resources to nab customers where they say it counts more – at the store shelf. In the process, companies are handing over more money to retailers for prominent aisle space. Merchants appreciate the payments because, in a highly competitive market, they're forced to step up discounting, which pinches profit margins.
Today suppliers are wagering that more eye-catching marketing in stores, coupled with payments to retailers, will give them a bigger presence in supermarkets and give shoppers another reason to buy their products, other than a discount.
Consumer product companies are gearing up for the shift: most of them (56 per cent) plan to bolster their "path to purchase" spending – mostly in-store marketing – by up to 10 per cent or more in 2012, according to research by the Path to Purchase Institute in Skokie, Ill.
"The point of [consumer] concentration is ultimately in-store – that is the one place where you can be guaranteed to get your shopper," said Martin Rydlo, a strategy director at Campbell Soup Canada.
The marketers focus is the centre of the supermarket, where packaged goods are carried. Shopping trips to centre aisles dropped 3 per cent in the past year, representing $238-million of lost sales, according to Carman Allison, insights director at market researcher Nielsen.
Both suppliers and retailers feel the pain: Centre-store business generates more than 40 per cent of a grocer's sales, Mr. Allison said. Grocers have paid less attention to those aisles and more to higher-margin perimeter departments, such as fresh fruits and vegetables, meat, fish and takeout fare.
To redirect customers to centre aisles, suppliers are pitching their products in perimeter aisles alongside the beef or carrots, making it part of a wider meal solution. Or they're touting their merchandise right at the shelf, with recipes and photos of a barbecue rather than their previous strategy of offering just a coupon or a picture of the product.
In the post-recession age, companies are trying to reduce customers' reliance on discounts. "You can't build equity by just doing discounts," said Jack Hewitt, vice-president of marketing services at Kraft Canada Inc.
Getting away from discounts is part of Unilever's motivation in its in-store marketing strategy with Knorr, Mr. LeBoutillier said, giving shoppers a recipe idea that involves several items carried at the grocer.
The companies are approaching retailers with suggestions of how to dress up their stores in an attempt to flex their muscle amid a sea of private labels. For example, in a bid to rev up its "underdeveloped" summer soup sales, Campbell Soup last month launched an in-store "summer's on" campaign tied to seasonal activities such as barbecuing, Mr. Rydlo said. Instead of showing a picture of a can of tomato soup, posters depict someone barbecuing a hamburger using the soup as an ingredient.
Unilever plans to tout its Knorr soups and cooking ingredients in the meat and produce sections. The goal is to spur shoppers to buy both the Knorr products as well as the retailer's beef strips or onions, Mr. LeBoutillier said. It's a strategy that has worked well for Unilever in other markets such as South Africa and South America in the past two years, resulting in sales increases in the "double digits" for Knorr and "high single digits" for participating retailers' meat and produce, he said.
The effort also taught Unilever that if it is to work, it needs the retailer to give it four high-traffic locations for its Knorr displays, including the meat and produce sites. The retailer also needs to have enough products on hand. "Out-of-stocks would kill the program," he said. "If a recipe calls for beef strips, they need to have inventory of beef strips."