Marek Kempka on The Future of Shopping
Just like me or Gerd Leonhard, Marek Kempka is a futurist. He started by studying chemistry and is now Director Shopper Technology Europe with Nielsen.
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From Chemistry to Big Data
When Marek Kempka got out of a high school in the 1990s, he was not sure of what he would do. He only knew one thing: that singularity—already hinted at by sci-fi and exponential growth—was real. This would be the common thread of all his studies. Kempka spent three years studying chemistry, two exploring IT and at least four on economics. All these fields provided him with valuable information, but none could hint towards any answer to Kempka’s favorite question: “what is happening to the world?”
And then came the Big Data.
Hired as a marketing researcher, Kempka was charged with collecting data. Here he would see trends emerging from numbers: a simple loyalty program, rewarding the most loyal customers, allowed him to “uncover insights and turn them into action.” Later, Kempka was able to expand the sources of his data to any type of shopper or customers from various types of stores.
His current focus heads in two directions. The first consists in finding trends in food industry, around which his work now revolves, and the second is about testing and classifying companies depending on how they do.
Typically, Kempka says, a newly created company will be monitored during three years. Most companies close their doors during their first year of existence. But if the company survives, and if after three years it reaches a particular threshold of revenue while covering labor and development costs, it is considered a success and scrutinized as a potentially valuable economic model. “In this case, the company itself is a successful development or invention.” Always on the prowl for new models, Kempka then analyzes and formalizes the company’s activity—and adds it to an already huge databank.
When he started, his motto could have been verbalized as “from chemistry to singularity”; now, it could be formulated as “from concrete success to economic models and back again.”
How Do Companies Succeed—Especially in the Food Industry?
Newly made companies often need to lower their costs to the maximum. Even if they develop an absolutely new idea, they cannot allow themselves to waste too much. You have to be Nestlé if you want to spend $2.24 billion USD a year—this is what Nestlé spent in 2009—in research and development! If you are a young company or an entrepreneur, you must cover the labor costs and ensure most of the development by yourself or close associates. Companies generate a few money initially and only later land on their feet. Eventually, when the first idea has fared well, it can be expanded and refined through development.
When it comes to older companies, Kempka practices a kind of benchmarking he calls “microscanning.” Either he follows a formal, a priori business model, and looks for companies that more or less embody it, or he takes a view of various companies in the same field and reviews their particular procedures. The most interesting feature being the ability to look at how a particular business model fares among a particular context and at the hands of a particular group of people – something important for headhunters!
Focusing on food retailers or manufacturers, Kempka says he noticed a deep trend to cost reduction. Retailers try to cut the middlemen and negotiate directly with the producers who more and more frequently investing in D2C channels. As for the manufacturers, they try to regroup as to gain economies of scale. Both retailers and manufacturers aim at simplificating their own structures while maintaining, or better yet, improving their flexibility.
What is Changing the Most?
When I ask him about the three trends he identifies as most important, Kempka only considers the cost reduction issue second:
- The first trend is convenience. So-called convenience stores earned their name by being closer and more local than faraway supermarkets. This name, however, came before the Internet. Now, with the combined and continuous rise of digitalization, delivery, and mass transit, small retail stores may not appear very convenient. Thus, if these stores want to keep their edge on convenience, they cannot afford to just sell their staple articles at a higher price than supermarkets: they must multiply their distribution channels and specialize in local delivery. As for the supermarkets, they must optimize what they already do: for example by using checkout machines that allow customers to get out with their purchases more rapidly, or delivering as well.
(When I ask him about the rise of pure players on the food market, Kempka replies that he does not see these as a real long term trend: customers want to see, touch, smell… their food, and unless they are already loyal to the company they order their food at, they will want to sense what’s to eat before they buy.)
- As mentioned previously, along with the increased competition comes the necessity to reduce the costs. Retail stores can do promotions when they can, but they must also attempt to discount permanently at least part of what they sell: this is key when it comes to ensure the customers’ fidelity. At the same time, they must ensure a sustainable growth or balance, so, ensuring a local, loyal, regular customer base while living on low costs should be the basis of retail stores. Only when this basis is secured can one invest in development or venture in expansive concept stores such as this one.
- Last but not least, an important trend is the providing of both unlimited choices and filtering. Consumers want to feel like they can choose anything. At the same time, they cannot be let overwhelmed by an unordered abundance of brands and sub-brands, so they need some help. The stores who will help customers to choose according to their needs and wills will succeed. Communicating effectively, creating habits, stores can think of consumer profiles while also allowing their customers to switch brands, to immerse in new worlds even if for a very short time – think of the virtual reality (VR) devises whose cost is diminishing year after year – or even to switch the profile they are classified under. If the store is to last, this blend of flexibility and loyalty-building should be maintained as a kind of equilibrium.
“Commitment, passion, intimacy”: such is the motto any retailer, selling food or anything else, should follow.
Can We Have a Scientific Understanding of the Consumer’s Behavior?
From 2011 to 2013 Kempka was responsible for the development of eye-tracking devices. Now, since 2014, he has been involved in “eye-tracking, path-tracking, traffic intelligence, web usability and virtual shopping.” I asked him if he ever had customers strolling into a supermarket with a mass of sensors in their heads and recording machines on them. This may happen in the future, but for now, most experimentations happen in labs where guinea pigs are exposed with carefully tailored stimuli, logos, colors, smells, even representations of entire environments through VR devises.
Neuroscientific experimentations are conducted with various methodologies. For now, Kempka says, the company he is working at focuses on brainwaves and cerebral areas that lighten up or remain inert—when the guinea pigs are exposed to specific stimulus or parts of the virtual environments they are immersed in.
Today, many supermarkets still tend to scatter their goods as to force the customer into walking through the whole store. This technique was valuable before. Now, however, it only adds stress to already stressful lives—consumers are busy people too—especially since more and more people know about it. Another type of organization is trending instead: making clear paths for the consumers, so that they feel helped and feel like they have more time, not less, to browse the store. Be in a cushier place—shop more! Perhaps working on brains fosters empathy, too.
If one is a young brick and mortar entrepreneur, one should prepare for flexibility in the very organization of the shelves as well as what products one is focusing on. There will be mistakes, trial and error will be the only way to get it right, so, be okay with relying on intuition, direct customer feedback and the ability to change the organization of the store overnight. Only later will the entrepreneur be able to invest into development, especially since he will already have an empirical sense of patterns before he prepares to get them understood analytically by the kind of lab Kempka is working at.
Whatever the products sold, choice should be emphasized. If you run a pizzeria, you should have at least 30 pizzas on the menu, and let the client ask for two half-pizzas with a different pizza on each—say, a four-cheese along with a tuna-and-pesto, in one pizza. If you run an ice cream stand, you should have lots of flavors, not to forget the supplement. Better yet: allow the customers to make their own blends. They are not doing dirty shopping to get anonymous staple food, they are being involved and taken care of.
“Once again: commitment, passion, intimacy.”
How to be future-ready?
As you may know if you have been reading my blog for a while, I always end my interviews by asking the same question: what advise what you give to someone willing to be ready for whatever the future holds? My meeting with Kempka is no exception. When I ask him, his answer is all in elegant sobriety: “focus on initiative, be open-minded, on the look for potentials of development.”
From the point of view of a retail store, this should go along with the proper equilibrium between building customer retention and being flexible. Loyal customer, unlimited choices, help with choosing and strolling, because the store of tomorrow will be more than a store: it will be a social location.