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Sunday, 26 June 2016 10:51

Crowdsourced Analytics: Technologies help retailers gain consumer insight for better beer inventory management

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SpartanNash recently renovated the D&W Fresh Market store at Breton Village in Grand Rapids to include more cold space and expand the overall shelf real estate for craft beer. In an effort to market to more beer connoisseurs, the retailer signed up for Untappd for Business and became a verified venue, allowing it to tap into the group’s community of thousands of local drinkers. The system allows the retailer to publish its bottle list and also access the social network’s data on locally trending beers.  SpartanNash recently renovated the D&W Fresh Market store at Breton Village in Grand Rapids to include more cold space and expand the overall shelf real estate for craft beer. In an effort to market to more beer connoisseurs, the retailer signed up for Untappd for Business and became a verified venue, allowing it to tap into the group’s community of thousands of local drinkers. The system allows the retailer to publish its bottle list and also access the social network’s data on locally trending beers. Courtesy Photo

GRAND RAPIDS — SpartanNash Co. has to overcome a key hurdle in attracting craft beer shoppers to the retailer’s high-end D&W Fresh Market Breton Village store. 

Despite a “significant” $2.8 million upgrade last year that added additional cold space and shelf real estate for the store to stock more than 200 new varieties of craft beer to its already “strong” lineup, the retailer still felt it was not driving consumer awareness among connoisseurs. 

That got executives thinking about better ways to market to craft beer fanatics and make more informed decisions about what beers the store should stock. 

“We looked at how can we better engage those craft beer drinkers, how can we remove barriers for craft beer drinkers who were not necessarily aware of the craft beer that we have and (how can we) provide some insight to our category management groups into trends locally around craft beer,” said Dennis Gamble, the social media coordinator for Byron Center-based SpartanNash (Nasdaq: SPTN). 

Rather than develop a new marketing campaign or customer loyalty program, Gamble looked to his own recreational craft beer consumption for a possible solution. As a user of the social network Untappd, Gamble said he saw an opportunity for outreach to a community of hardcore craft beer drinkers. 

Via a mobile application on their smartphones, Untappd users track the beers they’ve consumed, share their experiences and reviews with friends, and access information about trending brands or nearby venues. 

“I saw Untappd as a real big marketing tactic,” Gamble said.

Earlier this year, New York and Los Angeles-based developer Untappd Inc. rolled out a new inventory management service, Untapped For Business, that allows on-premise and off-premise retailers to publish beer lists, share their menus with consumers and issue push notifications when new products and limited-edition beers hit store shelves. Untappd users who’ve “followed” a beer brand and requested an alert when it becomes available near their location can also receive the notification. 

The service is among the growing number of technology-based applications that local retailers are using to access better data from beer consumers and from within their operations. 

The Breton Village location and the newly remodeled D&W store in Grand Haven were among the first off-premise retailers in West Michigan to become verified venues on Untappd.

“I was looking at it as a simplified marketing tactic,” Gamble said. “For $600, I can put my menu in front of 50,000 local craft beer connoisseurs who can come to my account and see what I have to offer. And if it can establish our reputation as a beer destination, I think that return is worth the investment.” 

Additionally, studies show craft beer consumers are increasingly using online information like Untappd to inform their purchases. A March report from XenoPsi Media Inc., a New York City-based branding and web development firm, found consumers’ use of online research prior to their purchases is the fourth-most important factor affecting their craft beer purchases at the shelf. 

Importantly for retailers like SpartanNash, of the people who said they use smartphones for shelfside research on craft beers, nearly one-third said they were using a beer-related app to find information, reviews or recommendations, according to the study. XenoPsi’s research also determined that people who use smartphones to research their craft beer purchases are 26 percent more likely to purchase craft beer on a weekly basis, and they’re nearly 10 times more likely to try a new beer every time. 

“Even if we have a couple hundred people a week coming to our account to review our menu, I would argue if even a small percentage of those people actually came in and made a purchase — and they’re probably also purchasing snacks and other things for a day of entertainment — it’s worth the small investment,” Gamble said.

IN-KEG INSIGHT

About five miles north of the Breton Village store, The Score Restaurant and Sports Bar was also looking for a technology-driven solution to help with inventory management for its 128 beer taps. 

For Jake O’Rourke, the beer bar’s assistant general manager, performing inventory checks meant “three hours of my life” in which he had to manually lift each keg by hand and document how much beer he thought was inside. The kicker: The labor-intensive, time-consuming process didn’t always produce accurate results. 

Enter SteadyServ Technologies LLC of Carmel, Ind. 

Via a donut-shaped scale that bars or restaurants slide under each of their kegs, the company’s system uses RFID technology to wirelessly communicate the weight of the vessel and the number of remaining pours. The product also integrates into a retailer’s point of sale system to help identify discrepancies, such as a mislabeled tap handle, a leak in the lines or issues with employees giving away products. 

Managers can access the data in real-time via a mobile application on their smartphones, and SteadyServ also breaks down the statistics in a weekly report. 

For Steve Hershberger, the co-founder and CEO of SteadyServ, creating the tech-driven inventory management system allows on-premise retailers to gain more control over their operations. 

Hershberger was once in their shoes, having co-founded an Indianapolis craft brewery, Flat12 Bierwerks, in 2010. While the partners managed business processes with a “level of precision,” the brewery relied on guidance from its distributors to determine how much beer to brew. 

The problem: Those recommendations were typically off by 30 percent to 150 percent. 

Hershberger fell back on his previous career in analytics for Honeywell and Apple to study the problem. 

“It begins at the retailer,” he said of his findings. “They can’t see what’s in the keg, they don’t know what’s in their cooler, what they’re selling and what they’re wasting.”

ADDING PRECISION

Like most retailers who’ve adopted SteadyServ, The Score started using the application to manage waste. O’Rourke then dove into the data to help him determine whether the bar had the right mix of beers on tap based on what consumers were buying or not buying. 

“It lets me know if we have underperforming styles,” O’Rourke said. “It helps us make decisions. If we see this style is selling and we might try to get a couple more, (the data) lets us know if it worked. SteadyServ helps us make decisions. We get better data on what to bring in.”

Importantly, the system also sends O’Rourke an alert to get a replacement keg ready as an existing keg becomes empty, which saves time and allows the staff to be proactive, rather than reactive, he said. 

SteadyServ empowers bar employees to speak with confidence about which beers are on tap and avoids situations where staffers have to go back to customers and apologize because the beer they ordered ran out, Hershberger said. He likens SteadyServ to an automated calendar system like Outlook that sets reminders and helps bar managers more effectively manage the tasks they need to accomplish in their businesses. 

“I live and die by what goes into Outlook and the reminders that tell me I have a meeting in 15 minutes,” he said. “Being able to tell people, ‘Hey, you have something important that you need to do,’ and then being able to track that and measure how well it worked so they can make more money and and deliver a better experience to their customer … is really the important thing.”

GATHERING DATA

Technology solutions like Untappd for Business and SteadyServ mine for patterns in consumer data to help retailers make better decisions. 

SteadyServ uses data wrangling and machine learning to triangulate and make sense of data from the point of sale system, the RFID-enabled scales, and the company’s proprietary database of beer with 60,000 SKUs, Hershberger said. The cloud-based system gives owners real-time information on their draft lines, the age of the beer in the coolers, and what extra stock they have available. With that data, bar owners can better determine an optimal mix of products based on consumers’ buying habits, he said. 

On the other hand, Untappd for Business provides off-premise retailers with real-time information about what consumers are drinking in the surrounding area, which can help inform their decisions about which beers to stock, said Greg Avola, chief technology officer and co-founder of Untappd. 

“We provide you data about what beers are hot around you and what beers you should have in stock based on the social data that’s going on around you,” he said. “That’s valuable info for a bottle shop that wants to differentiate itself. … You can basically see a forecast of what’s popular in your local area that would be hard to find somewhere else.”

The information could be valuable data for a store like D&W, where craft beer consumers’ behavior has started to shift in recent years, said Joe McQueston, vice president of center store merchandising at SpartanNash. 

“One of the things that we’ve really seen lately is that the craft beer consumer is behaving a lot like the wine consumer,” McQueston said. “What they’re doing is looking for new experiences, they’re looking for broader assortment, they’re looking to impress friends with what they found — the hot new item, the new local item, the great packaging, the new variety.” 

Finding ways to incorporate local items has become an important focus for many retailers, as more than 53 percent of millennials consumers say they value supporting a local brewer when they make their purchases, according to data from the National Beer Wholesalers Association

SUITE OF ANALYTICS

McQueston, who’s currently working in Nebraska where SpartanNash plans to open eight new stores this year, said the Untappd data could help D&W identify new local breweries that it needs to stock. However, since the company had used the system for only about a month at the time of this interview, McQueston said it was too soon to provide specific examples of the technology influencing the retailer’s purchasing behavior. 

He added that Untappd for Business is just one of many analytics the retailer tracks when it comes to craft beer and other products. 

For example, SpartanNash built a predictive model “to show how new products are going to perform long term,” McQueston said. The model tracks how consumers engage with products, how their buying habits are affected after the initial purchase, and how the item compares with similar products in the category. 

“It helps you determine much more quickly, ‘Is this item going to be a winner or is this item a short-term item that should fade from the sets,’” McQuestion said. 

Within the craft beer segment, the model has allowed SpartanNash to tell within four to six months whether it should continue stocking a brand in the refrigerated section, whereas it previously gave new beers a full year to prove whether they’d “win or lose,” he said. 

“(W)e know at six months or four months if this item is long term or needs to go. That allows us to get these new craft items, these new local items, these new trendy items much more quickly than we would have in the past,” McQuestion said. “It allows us to be predictive rather than lagging. With the explosion of growth (in craft beer), it’s been invaluable to us.” 

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