Understanding Data: Why CPG Needs VR

Posted by Gina Joseph on August 3, 2017

Business plan image with collage hand drawings.jpegMost of retail is going through an identity crisis of sorts right now, and everyone is understandably a bit on edge. What will the implications be after Amazon acquires Whole Foods? In the future, will everything really be all online? Should brick and mortar stores invest more in beefing up their digital presence, or focus more on in-store experiences?

Depending on what you read and who you talk to, the answers to these questions will vary—if there are any concrete answers at all. The basic model of commerce is changing from all angles; brands are going direct-to-consumer, online-only entities are shifting to brick-and-mortar, and Millennials are dictating the shopping trends. One tactic many in the clothing and beauty retail sectors are trying is to improve customer experience in the store through technology, unique events, and trying out products—think photo booths or augmented reality features. Creating an experience people can’t get online is a benefit of brick and mortar, and one that plays well to the customer out for a leisurely day of shopping.

The consumer packaged goods industry is a bit different. Sure, they could create in-store entertainment; grocery stores like Mariano’s or interactive food halls like Eataly offer customers a place to purchase dinner for the night while drinking a glass of wine or learning to make a fancy dish. But when it comes to CPG, people aren’t going to Eataly. Creating in-store experiences for a shopping trip that might just involve purchases like diapers, dish soap and sugar, is like, as Wharton marketing professor Peter Fader puts it “rearranging deck chairs on the Titanic.”

The center store is on the decline—that we know. But while the trend in grocery continues to skew toward fresh and organic, people still need those everyday items. Many are going online, to Amazon, to get them. So how are retailers and their CPG partners supposed to compete? One word: data. Make that two words: understanding data. Because having data is fine, but if you don’t know what to do with it or how to interpret it, it becomes useless.

For CPG—an industry with tight budgets and under pressure to deliver—being armed with information that clearly shows how in-store concepts will fair can be a game-changer when it comes to predicting the future, and keeping up with the changing times. Disruptive technologies, like artificial intelligence and virtual reality are starting to change the way data is mined and understood. Virtual reality in particular is giving brands a new way to understand how their shoppers will react to new products, new shelf arrangements, and whether or not a new display or signage will catch their attention.

Through VR simulations, companies can gain insights like never before. Virtual allows us to learn if a product will stand out on the shelf before that product is ever created, or if decreasing the number of SKUs on a shelf will create less confusion for the shopper. We can also track the reasons behind why customers make the decisions they do at the shelf, such as substitutability and walk-rate with virtual shopper decision trees. These let us measure the purchasing decisions people make for hard-to-track channels like liquor and convenience stores, or for low purchase frequency categories like cosmetics and consumer electronics. Fact-based data allows brands and retailers to make confident decisions that will increase sales and decrease spend.

Fancy in-store experiences and shopper incentives have their place in retail, but when it comes to those run of the mill, everyday center-store items, the best tactic may be to simply learn exactly what your specific shoppers are seeking, and then make sure they can find it quickly and easily. VR can help with just that.

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Gina Joseph

Gina is the Communication Manager at InContext Solutions

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