Dr. Romesh Wadhwani of IRI on Next-Gen Consumer & Shopper Insights

There appears to be a seismic shift underway in the consumer goods (CG) industry relating to consumer and shopper understanding. Dr. Romesh Wadhwani, managing partner, Symphony Technology Group, and chairman, IRI, shares his predictions for the future of consumer insights and offers recommendations for how CG manufacturers can best leverage new solutions and business processes to take advantage of the wealth of information that is available today.

Why do today's CG manufacturers and retailers need to gain a more in-depth knowledge of shoppers when there are already mountains of data available?

Wadhwani: The economic transformation that has transpired over the last year has completely changed how shoppers learn about, purchase and use CG products. Most of the data previously collected is useless in today's changed environment. Manufacturers and retailers alike are scrambling to keep pace with these rapidly evolving shopping behaviors and are seeking new capabilities in the areas of new product lifecycle management, pricing and promotion optimization, assortments and layouts, and new sources of deeper insight to drive their businesses. They must be able to create exhaustively detailed profiles of the shoppers they serve and then have this new information used across their entire business, not just market research. Furthermore, they need to create these profiles quickly, so that they can leverage this new knowledge in near real time. Take today's sales organizations as an example. They are undergoing a fundamental rewiring of how they gather, synthesize and use consumer and shopper insights to compete more effectively. Before, this task was some other department's job -- now it is squarely in front of the chief sales officer.

How can new consumer and shopper insights solutions help CG companies better understand the volumes of data they collect?

Wadhwani: While the CG industry collects extremely rich and granular data, the capability to understand and leverage insights has been way behind the curve, and in some cases, non-existent. IRI recognized this tremendous gap and has been working diligently to fill the "white space" with its next generation IRI Liquid Data technology and supporting business applications. These capabilities came online last year, and clients are already leveraging new insights in dramatically different ways. For example, Shopper Insights powered by IRI Liquid Data is helping one major snacking manufacturer integrate disparate sources of deep consumer and shopper information, then make it available to multiple departments across its organization in formats that are easy to access. It can now generate information in real time, which enables managers across the entire company to create insights on demand. This information is more complete, more integrated, more current, more local and provides faster, better and more relevant insights.

What makes these new approaches to consumer and shopper insights truly "transformative"?

Wadhwani: Today's progressive companies have recognized the value and the power of insights that are based on integration of near real-time access to all store, UPC and shopper-level data.  They are working to leverage shopper insights across three different but interconnected fronts -- strategy, technology and implementation. Traditionally, people were working with fragmented pieces of information about a particular category, region or store versus taking a holistic approach to the shopper across a multitude of factors. This new approach arms sales and marketing executives with the ability to create new attribute-based measurement that is built around the person, family, household, promotions, assortments and channel.

What role is micro-segmentation of consumers playing today?

Wadhwani: Successful CG manufacturers and retailers today are dividing their target markets into increasingly minute micro-segments, creating experiences differentiated for very small target groups. Traditionally, with today's solutions, these companies can, at best, focus on 20 percent of their most loyal and profitable market base. The new capabilities coming online now provide accessibility to information that enables companies to focus on a much greater percentage of critical micro-segments. Instead of focusing on 20 percent of the most attractive shoppers, we're now in position to arm companies with the ability to focus on 40 percent or more, which directly translates to significant sales lift.

How is today's economic turmoil impacting CPG and retail? What does the future hold?

Wadhwani: We see the U.S. economy evolving through three phases. Phase one represented the initial shock of rapidly rising food and energy prices coupled with a credit crisis. Phase two consisted of prices leveling off, but consumers reacting to earlier shocks with extreme cost cutting. Phase three, which we are currently in, is characterized by a permanent shift away from the shopper rituals on which many CG manufacturers and retailers built their businesses. This permanent change is driving the market need for solutions that empower innovative CG companies to identify trends early and rapidly collaborate to create new solutions. The ability to quickly adapt products, promotions, pricing, assortments and layouts is absolutely essential for increased growth and profitability.

How can these new solutions specifically help CG companies compete in today's volatile economy?

Wadhwani: As I've shared, shoppers are continuing to change their purchasing patterns as the economic transformation continues. While some shoppers are backing off their most extreme cost-cutting behaviors that took place in quarters two and three of last year, they are still significantly focused on affordability. But, affordability takes many different forms, depending on the shopper's income, ethnicity, family composition and job situation. IRI Shopper Insights Powered by Liquid Data helps CG companies uncover how different shopper segments define "affordability" and then act immediately to create solutions that help them.

What does the future of innovation in CG look like?

Wadhwani: The future of innovation in CG will continue to be driven by an increasingly deeper understanding of consumers and shopper behaviors - who they are, what they buy and why.  Leveraging this highly-individualized information, manufacturers can then design marketing messages, pricing, promotions, assortments and loyalty programs that are uniquely relevant to consumers. The only way to achieve this level of true consumer-centric innovation is by integrating all the knowledge about consumers and shoppers into a single source, then applying predictive automated analytics to drive new insights.