Kellogg Boosts Sales, Bolsters Center Store With Virtual Reality Insights

Posted by Patrick Niersbach on April 3, 2017

This article originally ran on cpgMatters.com.
 
Virtual reality (VR) simulation is arguably the most talked-about tech solution in grocery today. It aims to drive faster, smarter and more profitable decisions at retail by enabling customers to ideate new in-store concepts, evaluate with test shoppers, and activate those concepts.Kellogg-VR-Display.jpg
 
These benefits prompted Kellogg Company to deploy enterprise virtual reality software to boost sales, increase efficiencies and take greater advantage of market research insights, says Tom Wozbut, director, category analytic and shelving hub. The food giant uses ShopperMX technology from InContext Solutions. It is a cloud-based virtual store simulation and shopper insights platform.
 
The technology is “a good value,” he said in a presentation at the Western Michigan University 2017 Food Marketing Conference in Grand Rapids, Mich., last month, along with Jason Smith, vice president, customer service, InContext. It is relatively easy to learn, and then teach to others in the organization without much hand-holding by the vendor. “It’s quick, you can execute it fast and there’s a lot of versatility in terms of the research and what you can do with it,” notes  Wozbut.
 
“The biggest challenge we’ve had is we’ve tried to make this part of the way we work, and we are trying for more cross functional adoption, so there’s a little bit of a learning curve with that. As far as capabilities, we are always looking for what’s next,” he says.
 
As far as what came first, in the early 2000s, the company began using physical test set rooms for simulations, but found them limiting and expensive, Wozbut reports. In 2007, the company invested in the first virtual technology, but again found it expensive and time consuming, with inadequate research capability. In 2010, Kellogg tried simulated shopping labs, which were small versions of stores for determining how people buy, but the labs were too small to produce realistic results and there were only three locations in the country. Then in 2012, it invested in ShopperMX.
 
In his presentation, Wozbut cited five examples of how Kellogg has successfully used the virtual reality solution.
 
For back-to-school 2016, the company tested three different in-store displays, designating them as gold, silver and bronze relative to their cost. It resulted in a major savings.
 
“We thought the bigger, better, more expensive display would draw more attention, would lead to purchase intent, likeability, and so on, but the research didn’t show that. What we found was the ‘bronze’ was the winner, and we saved 50 percent on our display costs going with that option,” Wozbut notes.
 
Another time, a retail buyer challenged competitors to improve the shop-ability and navigation in the cookie/cracker/on-the-go aisle. The company used the ShopperMX Virtual Store, Visual Attention Analysis, and video “to illustrate how our concepts drew attention to certain aspects of the aisle,” he says. The video showed a walk-through down the aisle, and the presentation refuted a concept that signage above the aisle was ineffective.
 
The technology was so easy to use “we put it together literally over the weekend.” During the meeting, the buyer made suggestions that the Kellogg team was able to implement immediately by substituting images, he notes. “Kellogg’s concept received heightened focus versus the competition.”
 
In a different usage, the virtual reality technology helped the iPad-equipped sales force achieve an increase in sales by generating a 50-second video for big events that quickly and effectively gave the sales message to busy store managers. “We wanted to create something that made it easier to sell in an impactful way, and that would give more consistent features and benefits to the sales reps, Wozbut says.
 
The video let the store managers see what displays would look like in their environment. “They can get a feel for how big the display and can start thinking about how it fits in their store. It’s much more impactful than walking in with a sheet of paper. It led to us having the strongest quarter of the year. So it’s definitely something we are continuing to do with our retail organization, he notes.
 
Kellogg also has used ShopperMX to address the challenges of Center Store, including basket size and profits. The company took a video with custom research to industry conferences, and held conversations with retail partners about fixing Center Store, Wozbut reports.
 
As a result, the company has partnered with several retailers to guide store concepts, design and related fixtures. Additionally, "Kellogg is seen as a thought leader beyond our immediate categories," he comments.
 
To increase sales of Pringles, Kellogg tested shelf arrangement performance indicators. Previous tests had indicated that the best-selling red can of Pringles Original should be moved to the bottom shelf, but by using ShopperMX Performance Indicator, the company found that vertical ribboning of the popular product resulted in significantly higher sales and a big increase in category penetration, Wozbut notes. Also, it only took two weeks to develop the market recommendation. “So we are rolling this out nationwide right now,” he says.
 
In the future, consumers may use virtual realities in e-commerce to have a real shopping experience instead of browsing a series of pages, Wozbut notes. This could result in additional sales of related items or impulse products. “Seventy percent of e-commerce trips are to buy one item, so there’s not a lot of impulse,” he says.
 
Signage is another area where virtual reality can help companies save money, says Smith of InContext. Typically, there is big money spent to develop a sign, and then, after an executive’s approval, they are produced and sent to stores.
 
“But we’ve found is that on a lot of occasions, people are not even seeing the signage. You are spending all this money for something that really has no effect in the stores,” Smith notes. Virtual reality technology is a quick way of evaluating the signs with a 3M product embedded into the software.
 
Here are many other applications of virtual reality listed by Smith:
 
  • Product or Package: Determine if shoppers notice a concept and quantify its impact on sales
  • New Product Placement: Determine the ideal place to put a new product in a store or category
  • Pricing: Understand the impact to sales of alternative pricing scenarios or promotions.
  • Planogram: Identify optimal category assortment, layout and adjacency
  • Signage or Display: Understand if a new display or sign can alter the path to purchase
  • Store Flow: Understand the impact to store flow from macro store layout alternatives
  • Shopper Decision Tree: Define shopper purchase decision hierarchy
  • Advertising Copy: Close the loop and measure the sales impact from advertising
  • Qualitative Research: Virtual stimulus for focus groups and in-depth interviews
 
“There is a lot of opportunity and, as technology is evolving, virtual research and its speed are certainly going to accelerate this,” Smith concludes.
 
Patrick Niersbach

Pat is the Senior Director of Marketing at InContext Solutions.

Media Contact

Gina Joseph
Senior Manager, Content Marketing
gina.joseph@incontextsolutions.com

 

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