WHOLE FOOD MARKET

DEMO POLICY UPDATE

The 2018-2019  Climate Changes In Event Marketing Retail Demonstrations For Maximum ROI

New Demo Trends: Climate Changes In Retail Demo

Through interviews and survey data, we conducted an independent study by querying brands, agencies, and independent professionals within the food and beverage industries regarding their take on the following:

  • The changing climate of retail demos

  • The impact of the new Whole Foods Demo Policy

  • 2019 budgets

  • The importance of incorporating data 

  • Price vs. cost

  • New product trends

  • When to consider RFPs

Using charts, quotes, and graphs, our findings are laid out below. An update from the report published in advance of Expo West—much has changed and much has remained the same. Feel free to add your thoughts to
the conversation. 

Note: To help you glean the essence from this paper, we have gone ahead and bolded areas of particular interest. While all of its contents are solid, those in bold will give you something insightful to say at your next company cocktail or kombucha party.

57% said that retail
grocery shopping is a
fun day out for the family.
Whole Foods and the Shifting
Grocery Industry

The grocery sector as a whole is highly competitive, with significant downward pressure on profits and margins. The Supermarkets and Grocery Stores industry is in the mature stage of its life cycle; however, the industry’s contribution to the overall economy is expected to increase at a slow annualized rate of 1.6%. Comparatively, US GDP is forecast to rise at an annualized rate of 2.0%. Typically, an industry is considered to be declining when industry growth falls below GDP (1). However, supermarket and grocery stores have historically suffered from low profit margins.  

Whole Foods, the vanguard of the organic movement, courted the high-income, food-conscious consumer and grew dramatically, only to see profits shrink as other conventional grocers widened their organic offerings.  CEO John Mackey said in 2017, that the company is “doubling down” on its most loyal customers, continuing to lower prices, and taking other steps to improve profitability and efficiency.  “What has become clear is that we don’t want to compete in a ‘race to the bottom’ as consumers have ever increasing choices for how much and where they shop,” Mackey said. (2)

Then in came Amazon, adding Whole Foods to its overall global vision of distribution and dominance. The playing field drastically changed and what Mackey wanted to avoid—which was a race to the bottom—is exactly what is happening at Whole Foods, with Amazon, the behemoth, at the helm.  

For brands, this information is important as we decide how to market, where our customers are, how to grow, and allocate budgets accordingly.  If your focus is on retail demo as a key part of your brand marketing mix, there is good news.  

A new survey from Nielsen (3) found that while respondents are using online grocery ordering and 55% are willing to use it down the road, 61% reported that they still find grocery shopping at the store to be an “enjoyable and engaging experience.” Nearly as many—57%—said that retail grocery shopping is a “fun day out for the family.” (4) 

While digital retailing has made it possible for consumers to shop anytime and anywhere, high resolution screens and sharp images cannot replace the satisfaction and assurance of being able to hand-pick fresh groceries. It’s safe to say that grocery delivery services still have a ways to go.

Testing the Market Waters: Is the Glass Half Full?

How did our respondent feel about the overall market?  Are they optimistic?  Yes. 70.59% of respondents said they were optimistic about the year ahead, with 5.88% saying they were not optimistic, with more NOs represented in the Other category. Overall, the outlook is greatly optimistic. One contributor from an emerging beverage brand even said, “Every year is different and has its challenges, but the food and beverage category only grows in its product set and complexity. I am very, very optimistic about what the industry is developing, especially the emerging brands and consumers’ willingness to continue to experiment.” 

As consumers continue to seek out more
emerging brands, as well as homegrown brands, the spotlight shines back on Whole Foods. Recent policy changes have affected these emerging brands and the overhaul of the demo program
via a partnership with Daymon Worldwide
had brands, agencies, and demo marketing companies rattled.

Are You Optimistic About 2018?

One thing influencing that optimism may be the continued trend toward more health-conscious living.  A recent survey showed millenials are the driving force behind that trend, but what is also interesting to note is that baby boomers have also shown interest and are demonstrating their willingness to spend more for a better, healthier product. (5)

Brands are very likely to shift budgets to non-WFM retailers in light of the new Whole Foods demo policy.

As consumers continue to seek out more emerging brands,
as well as homegrown brands, the spotlight shines back
on Whole Foods.

Recent policy changes have affected these emerging brands and the overhaul of the demo program via a partnership with Daymon Worldwide had brands, agencies, and demo marketing companies rattled. When asked if the recent demo and policy changes at Whole Foods would cause brands to be more or less likely to shift budgets to non-WFM retailers, nearly 65% said more likely, none said less likely, and 17.65% said they believed brands would be unchanged in
their approach. 

One respondent put things this way, “This will definitely affect overall demo strategies in 2018. Might cause people to shift from WFM. Overall though, demos are bar none the best way to get products into consumers with a direct sales lift.  We all must keep money here.” 

When asked the same question about their own brand, nearly 53% say they were more likely to shift budgets to non-WFM retailers. One person added, “We are split on demos vs events. Our budgets will not change, though exactly where they are spent has already changed.”

Brands are rethinking their demo strategies by looking to
non-WFM retailers.

When asked whether they were more or less likely to shift budgets away from demos to events, an overwhelming 64.71% said they did not believe brands would shift more budgets to events from demos, though there was a surprising minor opinion of more than 15% of those surveyed that believed the WFM policy changes would drive budgets toward events.

Daymon/Amazon/WFM has new requirements for demo marketing companies and brands (not all listed in the official paperwork). This includes new/additional insurance requirements, certificate of insurance specs, and a highly detailed listing of products to demo for each individual store.  

All of these make the process considerably more time consuming and can cause a well-designed demo schedule to unravel without warning—a marketing disaster you will want to avoid. Patience and diligence is what’s required—so reach out to those that can help such as product demo companies or brand ambassador agencies. At Attack!, we’ve rolled out programs throughout these regions and the hoops we’ve had to jump through have been many and varied and in speaking with others throughout this study, a few things are clear:

  1. They do not want to go on record.

  2. But they have not lost faith in Whole Foods and are approaching this shift with determined patience.

  3. Their belief in demos and the power of well-trained, passionate people is unwavering.

64.71% said they did not believe brands would shift more budgets to events from demos, though there was a surprising minor opinion of more than 15% of those surveyed that believed the WFM
policy changes would drive budgets toward events.

Post-Whole Foods Demo Policy:
What Now?

With the initial shock having worn off months after the Whole Foods/Daymon/Interactions experience: what lessons can we take moving forward?

  1. Daymon is the middle man. This means extracting
    fees based upon the size of the manufacturer,
    demoing themselves, or—ta-dah—using demo
    marketing companies.

  2. A centralized booking system has made things move slower, not faster. In fact, the system has shown fully booked one day and completely open for scheduling demos the next.  At the end of the day, persistence and confidence will reward those who prevail.

  3. A disconnect persists between the booking systems and the local store’s management.

  4. Big news: You can enlist the help of product demo companies to do your demos. Caveat: They will have to jump through quite a lot of hoops—but take it from Attack!—it can be done.  It is being done and if you are interested, we can show you how to make it happen.

Impact: Brands are moving away from WFM for demos, but not entirely. WFM is too big to ignore, but others have gained ground nevertheless. 

Best advice: Be retailer agnostic when it comes to demos. Follow the sales data and go to the markets where it says you should be. If the agency you use for demos is worth its salt, they should be able to demo at the retailer of your choice. If not, give us a call—we have you covered, regardless of
location or retailer.

Budgeting: Doesn’t Have to be a Dirty Word Field Marketing Budgets
 

Our survey found that budgets for field marketing are split between demos and events, almost exclusively. The graph below shows the annual percentages of budgets dedicated to demos, with more than ½ of respondents saying their field marketing budgets are between 25-50% focused on demos, and another ¼ of those surveyed earmarking over 50%. Budget spending on events are a near mirror of demo spending, in the opposite direction, with spending accounting for 25% or less of their total field marketing budget.  

Field marketing budgets are between 25-50% focused on demos, and another ¼ of those
surveyed earmarking over 50%

Price vs. What it’s Actually Costing You

When asked about how price sensitivity factors into decision making, there seems to be no right or wrong answer. Price still remains and will always remain an important factor. Respondents did highlight though the importance of not having lowest price be the only factor. More than 62% of those surveyed said they experienced significant issues in activation after choosing the lowest priced partner. 93.6% of those same people said they now pay more for demo and events with much better results. Takeaway: Trust your instincts. Choose partners based upon a range of factors, with pricing being one of them. Select the partner that will do the best job and then
negotiate on price. 

Regardless of the split, it is clear that consumer interaction, live demonstrations, and events hold great importance to the community of beverage and natural food producers as a mechanism to gain influence, market share, and
sales growth.  

As you consider your spending, consider this:

  • 65% of brands say that their event and experiential programs are directly related to sales.

  • Live demonstrations and free samples significantly help customers define their purchasing decision. (6)

 

You get it. In fact, over 70% of all participants in our study said that product sampling would be playing a bigger role in their marketing efforts in 2018. Remember, you can contact the right people (hint: brand ambassador agencies/product
demo companies) to help you get the job done
and done well).

Trust your instincts. Choose partners based
upon a range of factors, with pricing being one of them. Select the partner that will do the best job and then negotiate on price.

What Role Will Product Sampling Play In
You Marketing Efforts In 2018?

Data Collection and Sales: Are They Working Together?

This year carries on the same interest and focus on data collection and measurement in field marketing as in previous years.  ROI, CPA, LTV, samples provided, products purchased, and coupon redemption rates are a few of the avenues brands explore to measure the consumer experience. Demos and events are expensive, so it is imperative that success is measured.  Over 70% of those surveyed believed they were doing a good job of incorporating data capture into their events and demos. In spite of that number and the value brands place on data capture and the cost of demos/events, only 18% said they had implemented any sales incentives within their data collection. 

Sales measurement is included in the vast majority of data collection efforts, more so with demos where there is a direct transactional impact to efforts.  Surprisingly though, only 18% had connected the dots and put an incentive in place to drive more sales and achieve sales targets.  

Note: We build incentive programs for our client’s demo programs. On average, incentive programs are 1-3% of total demo budgets, but have been found to increase sales by more than 25%.

Trends that Connect with Your
Target Audience: Follow the
Yellow Brick Road

When asked about the one area where additional budgets would be earmarked, if they could be earmarked, respondents were split between Social

Media & Mobile Marketing Tours, with Digital a close third, and VR garnering some interest as well.  

In all cases, our expert panel of respondents expressed interest in these areas for similar reasons: the desire to create meaningful, memorable connections with their core consumers.  

  • Social Media. It has and will always have value as it is not geographically specific (though it can be used locally and regionally). For your consumers that are more online than off, social has great promise. In nearly all cases, brands looked to external social media partners to achieve their digital goals. Note: A major shift has taken place and its towards Instagram. Will it sustain itself or burn out? Too soon to say, but for the moment, Instagram is a powerful marketing tool for Social Amplification and brand extension (and can have a transactional revenue impact as well).
     

  • Mobile Marketing Tours. They hold the same attraction to connect with those that are more offline than on. Largely sourced via external third party partners, Mobile Marketing vehicles/tours manifest themselves from modified airstream trailers to fully-modular, fully-functional retail showrooms that can be set up and torn down in 30 minutes. They are the choice for those who want to create a memorable connection with their consumers, elevating the brand beyond the 10x10 tent and table. This investment is well worth it. Takeaway: An integrated approach is what will drive sales, brand awareness, and loyalty.  Mobile marketing or mobile sampling tours may not have the direct sales
    lift that a pervasive demo program will deliver, but what
    it will deliver is awareness, and when done right, social
    lift and brand loyalty.  Demo + Events = the winning
    One-Two Punch.

Instagram is a powerful marketing tool for Social
Amplification and brand extension (and can have
a transactional revenue impact as well).

  • Digital. Representing blunt force marketing in the online space, the technology and the algorithms associated with digital advertising today are so sophisticated and intelligent that targeting your consumer or the person you believe is your consumer is absolutely doable, for a price.  Is it experiential? No. Is it exciting? No. Can it be an amazing tool to complement other more significant marketing efforts? Absolutely. It’s definitely not something you want to attempt on your own though—and hiring a professional isn’t difficult.
     

  • Video. Definitely a trend to watch out for (pun intended), videos nowadays are being produced more easily and absorbed more quickly—and at a considerably lower cost basis. We expect to see video continue to take off as the currency for social and digital.  Better tools will make the difference between user generated content (UGC) and professionally created content seem almost imperceptible.

  • VR (Virtual Reality). Blending both worlds and continuing to gain traction within field marketing, VR has proven to be a powerful medium for storytelling. With the advent of Google Cardboard and other similar VP players, brand experiences can go beyond the event and even bring the event to those who are more online driven. Conversely, VR represents such a unique and immersive experience that if married with a brand experience will leave a lasting impression. A little gimmicky, but it still garners the interest of 3.23%, proving there is still interest. 
     

  • Demos/Sampling. Respondents said if they had more budget to work with beyond their existing demo/events budget, they would spend more on demos.  Transactionally, little compares, draws consumers in, gives them a solid, quick, convincing intro to your products, and rewards them with a taste.  Whether that be at an event or mere steps from the register, demos convert consumers to your brand.  Whether it be WFM, conventional, or other non-WFM natural retailers, keep investing. Keep looking. And if you’re not happy with your current partner, don’t worry—you have options. Put your business up for RFP.  Include us even.

Respondents said if they had more budget to work with beyond their existing demo/events budget, they would spend more on demos.

Conclusion

The future is bright. As one respondent said, “Every year brings its challenges, its unexpected obstacles. We intend to continue focusing on our consumer, their experience with the brand, and build that bond every way possible. That is our true north.” 
 

The consumer experience is front and center. As brands, the only decision we’re sure we can make is that we must continue to invest in our relationships with our consumers and always keep introducing more and more to our brand.  

To conclude, the Whole Foods policy changes have made 2018 a mess for demoing within WFM. But will it get better and easier? Certainly. Has it pushed
demos to other

retailers?  Absolutely.  At other retailers, manufacturers have access to new consumers without the schedule and financial hassles that have come to be synonymous with the WFM/Amazon/Daymon experience.   
 

So what should you do?  
 

Demos?  Yes. New retailers?  Yes. Events?  Yes. More data capture?  Yes. Incentive plans?  Yes. Mobile marketing tours?  Yes. At the end of the day, persistence, patience, and hard work pay off. And if you’re not happy with whom you’re working with—find someone new. Widen your horizons and consider including partners such as brand ambassador agencies and demo marketing companies into the mix. Bottomline: keep searching, keep testing till you find what works for you.

References