December 18, 2012

Diageo's Customer Collaboration Centre

Diageo_Customer_Collaboration_Centre (photo: Tim Bishop)
Tim Bishop
Virtual reality: A high-tech way to optimise shelf merchandising and sales promotion displays (photo: Tim Bishop)
On an uninspiring industrial estate in a nondescript western suburb of London stands an unpretentious building without a name.

Who would have thought that this edifice belongs to the world's largest spirits group and houses something to make even the most hard-bitten retail buyer’s jaw drop?

In reality, this is the Western European Customer Collaboration Centre (CCC) of Diageo, the maker of Johnnie Walker, Smirnoff, Baileys, Guinness, and various other high-octane refreshments.

After reporting at reception, visitors access the main complex via a long corridor. The walls are punctuated with illuminated display boxes illustrating convivial occasions in the life of the average consumer.

These are entitled "Casual Get Together", "Party Time" etc. but, surprisingly, don’t contain any branding.

Magic box
"We don't talk overtly about our brands," explains Louise Robinson, Head of Category Development Western Europe. "Of course we hope that Diageo will profit from what our visitors see, but we want them to get into the right mindset first."
This is also the reason why there is no Diageo sign on the outside of the building. (London taxi cab drivers please take note).

The corridor leads into the "central work room". What sounds like carpentry for Borstal boys, looks more like something straight out of Star Trek.

The circular room is dominated by a large round desk with futuristic-looking PC screens. The surrounding walls are composed of opaque glass doors. These are used as projection surfaces to show everyday scenes where consumers buy and consume spirits.

Off-trade customers, for instance, can view their own particular store in virtual reality thanks to 360-degree photos combined with building plans. (The same can be done for on-trade environments).

Retailers are able to experience in 3D how a specific drinks facing or stand-alone display would appear to customers anywhere within their store. It is even possible to zoom in on individual shelves and take out individual bottles via drag & drop.

"This enables our customers to work with us on ranges and to optimise layouts," says Ms Robinson.

Apparently, some major trade clients, such as Tesco, have their own centres where they can test and review product displays in a physical store environment. "But it takes them six weeks to do what we can do in only two," says Robinson.

Home and C&C
This doesn't stop Diageo, however, demonstrating virtual reality insights in practice. Thus, the central workroom leads to a suite of "zones" that aim to reproduce customer consumption and buying situations as realistically as possible.

Logically, these start with a typical consumer’s home. Such is the level of detail that one can almost imagine being "chez soi".

A full-sized kitchen and lounge are filled with authentic props, including a fully stocked fridge and freezer, a kitchen sink, and a couch.

Wholesale customers are then taken to a zone that exactly reproduces the spirits aisle of a typical C&C store. Here the ambience is not in the least high-tech and, true to form, doesn’t look particularly client-friendly.

"Precisely," says Ms Robinson. "We want C&C operators to think about how they engage their HORECA and convenience store customers."
Diageo also assumes an educational role. After all, the average c-store owner is unlikely to have the knowledge of a cocktail bar man, and even most hoteliers probably couldn't advise whisky lovers on flavours.

Diageo tries to help, for instance, by sticking information leaflets on the shelf edges. Customers can tear these off in order to learn about the product. They also provide tips on mixing drinks and cocktail recipes.

Maximise your c-store
The next zone recreates a convenience store, albeit a rather sophisticated one. Here the spirits section has been arranged as per the latest market research on consumer buying behaviour in order to maximise sales within the category.

Drinks are ranged on the shelves as customers view them, i.e., in their respective sub-category (whisky, gin, vodka etc.) and then divided again as per brand.

The mock store also demonstrates a new security cap that can only be detached from spirits bottles on payment at the counter. This simple system, which is currently being trialled by Tesco and The Co-op, means that storeowners don’t have to barricade bottles away behind the counter.

Diageo claims that making spirits bottles permanently visible and accessible in this way can improve sales by 40 per cent. However, the company is honest enough to admit that the average c-store often doesn't have the necessary shelf space to display spirits properly.
"But you can bring a shopper-marketing campaign to life even in a small store," claims Robinson. "In fact there are endless possibilities as to what one can do."
The next zone reproduces a duty-free shop in an airport terminal with very sophisticated ambience and lighting. Not surprisingly, this inspirational area is not only shown to Diageo’s duty-free customers.
Intel facial recognition

The next zone, the supermarket, is perhaps the most futuristic of all. At the store entrance an Intel facial recognition scanner estimates with 90-per-cent accuracy the age and gender of all customers who enter the shop.

The technology then tailors the content of the advertising header screens over the shelf fixtures to the predominant shopper mix. This avoids marketing contraceptives to Old Age Pensioners, Babycham to rugby supporters, or beard trimmers to ladies.

Alternatively, the headers can be controlled centrally from head office and adjusted according to the mood of different times of the day.

Hologram drinks sampler
The high-tech is rounded off by a hologram with a sampling person showing how to mix drinks. Any customer can listen to the presentation by standing under a sound cone in the shop ceiling. A sticker on the floor also directs the shopper to the right spot.

Clearly, all this costs money and would be beyond the range of the average independent c-store operator. "But one should also remember," says Louise Robinson, "that it would cost around €200 a day to hire a real sampling person."
On a more practical level, wines are chilled on shelf, and there are pre-mix displays (Schweppes with Gordon's Gin etc.) for those shoppers not confident about doing their own mix.

The core merchandising plan behind this store again divides spirits by sub-category, but it is also occasion-based to help the shopper.

High-tempo & low-tempo bar

The next zone represents a large bar area, divided into two "high-tempo" and "low-tempo" bars, where lighting and sound can be adjusted to the mood of various "key occasions".

This is more important than one would think. Many a bar finds itself catering for senior citizens who want tea or coffee mid-morning, professional people at lunch, and trendy young things in the evening.

The "high-tempo" bar is a joy to see. Bottles are ranged on shelves at the back of the bar against a plain white wall where the lighting captures their aesthetic silhouettes.

A resident bar keeper helps with tasting and training and teaches customers how to serve Diageo products properly.

The bar area runs into a seated restaurant space where, for instance, menus can be studied. "A lot of things can be done wrongly with menus," explains Robinson. "Just think how time consuming it is for a drinker in a bar to have to calculate for themselves the total price of a spirit and mixer."
The bar scene is complimented by a snacks section, a "working" cellar, where visitors can see the beer barrels etc. through a glass wall, and a mock outside area for those pub owners who want to make the most of the smoking ban.

Future lab

A "future lab" represents the penultimate zone within the CCC. Here Diageo tries to involve customers in the innovation process at the earliest possible stage, but refrains from pushing brands on them.

Instead, the company aims to immerse customers in the product itself, even to the point of removing brand labels and packaging.

This is partly achieved by getting customers to understand the key components of brands such as Bailey's. They are taken on a mental journey from the growing of crops to the creation of the final flavours by company scientists.

"If a customer wants a specific flavour, we could potentially work on this," says Robinson, pointing to the future.

High-tech meetings

All the zones culminate in a central meeting room that, again, is anything but standard. Table consoles in iPad format are linked to a large projection screen so that customers can view, for instance, brand websites, YouTube videos or Facebook pages online.

Comfortable low seating is provided to enable a real conversation with visiting customer teams. "It is particularly important to have quite sophisticated conversations in saturated Western European markets because growth is relatively slow," explains Robinson.

Discussions are aided and structured by creating a so-called priority matrix. Here both parties use Post-it stickers to focus on the small, practical steps without which it is not possible to drive category sales together.

Clearly, some real effort has gone into the making of this impressive project. Although the individual zones have an intimate feel, the overall 2,600-m² complex is as large as two Olympic swimming pools. The CCC also counts 13 miles of electric cable and 116 m² of screen projection area.

London is the hub

Since opening in September 2011, the CCC has hosted more than 140 customer meetings. Around 70 per cent of the visitors, who include Edeka, Metro C&C, or European retail buying group Coopernic, have come at least once.

Although Diageo sells its products in more than 180 countries, the CCC is essentially oriented towards western European customers. In fact, 70 to 80 per cent of the visitors are from the UK. This is partly owing to the still significant differences in international retailing.

However, international travel costs for the repeated visits required to fulfil what is ideally a joint "five-year vision" are prohibitive. They haven't, however, stopped, for instance, Sam's Club coming from the US.
Three of our key global customers, i.e., Carrefour, Tesco, and Metro Group, are based relatively near to London in terms of global distance," explains Ms Robinson. "The only exception is Walmart, but even they have an important UK subsidiary with Asda."
The visitors usually bring a cross-functional team of between five and ten people. These will often include researchers as well as CM and marketing managers. However, even financial staff are said to have profited from the meetings.

"On our side we contribute a maximum of five to ten experts because we want the meetings to be customer-centric," says Robinson.

The CCC is also used for internal training, for instance, to hone the capability of Diageo's sales teams. "But customer needs and venues always come first."

Million-euro payback

Where, though, is the payback on this multi-million-euro investment?

Originally, Diageo had hoped that the CCC would increase projected retail sales by 4 per cent. According to the company’s own estimates, original targets have been exceeded twice over with incremental business opportunities identified of around 8 per cent.

Clearly, the CCC's high-tech approach takes a little getting used to. "Virtual reality is not complicated to use, but it is often perceived as such. Inevitably, some of the first visits turn into demos," admits Robinson.

However, the opportunities provided do offer the chance to bring category management discussions to life. And at the CCC trade partners are immersed in a whole new experience.

Above all, one must compare this with the classic way of selling. In the old days account managers simply used to turn up at the buyer's office with a couple of presentation bottles and a spreadsheet. Feel like turning back the clock anyone?

Podcast microphone (photo: Gerhard Seybert-Fotolia)
(photo: Gerhard Seybert-Fotolia)

Podcast. Click arrow to listen to an audio version of the text:

Lebensmittel Zeitung print and digital (photo: LZ)
photo: LZ
Our German B2B newspaper, Lebensmittel Zeitung, in print & digital
Read in German: By international editor Mike Dawson in 
Lebensmittel Zeitung, no. 50, 14.12.2012


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