Q&A: Nick Theodore, Founder, Virtual Store Trials
RTIH: Tell us about Virtual Store Trials
NT: We help FMCG retailers and manufacturer brands test retail scenarios faster. We’ve built some great tech that allows us to test ideas and concepts in front of real customers, just like a traditional in-store trial but far faster. We get answers to important questions. Questions like, “what is the best shelf layout for my category?”, “does adding signage increase spend or dwell time?”, and “where should my new product sit on shelf to maximise its chance of success?”
We use a virtual environment in order to test quickly, affordably and robustly compared to traditional in-store trials. Rather than having to wait for as much as 26 weeks for answers from an in-store trial, we can show you which scenario works best in just a few days, which has really been a game changer for our clients. We’ve been going for just over a year, working with the likes of Reckitt Benckiser, Sainsbury’s, Birds Eye and Carlsberg.
RTIH: What was the inspiration behind setting the company up?
NT: My co-founder (Josh) and I met whilst working in the FMCG industry. We saw a real problem and equally a really valuable idea. Conventional in-store trials are great in principle but often incredibly expensive, time-consuming and error-prone in practice; why not take this online and get the answers back in days rather than months?
So we applied some technology to the problem and built a virtual environment, which allows us to test shelf layouts, signage, pricing, promotions, NPD and packaging that’s no longer dependant on time or budget constraints, or even having physical stores to test in. With consumer behaviours changing quicker than ever, a six month process to evaluate relatively straightforward ideas is insane. By the time it’s complete, you might need to update and start the process all over again.
RTIH: What has been the industry reaction thus far?
NT: Over the past year, we’ve been lucky to work with some great, forward thinking businesses. We piloted with Reckitt Benckiser in March 2017 and have been working with them since which has given us a platform to go on to work with other clients such as Birds Eye, Carlsberg and Lindt as well as with a number of data science agencies.
The FMCG industry has come on leaps and bounds with a readiness to understand and use data to make decisions, rather than basing these on opinions. Virtual Store Trials provides our clients with answers and clear actions, and there’s a great appetite in the industry for a tool which provides great results. Our speed and ability to scale is our key differentiator so we’re always keen to see how we can test more retail scenarios for brands and retailers. Partnering with dunnhumby, has allowed us to reach out to more clients in 2018 and we’re really excited about some of the future opportunities there.
RTIH: What has been your biggest challenge/setback?
NT: Our biggest challenge to date has been getting in front of as many potential clients as possible. We have been busy testing retail scenarios for our existing clients, and with a team of just two, it’s often difficult to spend the time finding and engaging with the right contacts at potential clients.
We’re looking to hire a Sales Director over the coming months to help lighten this load and to increase our client base even further. If you happen to know anyone with a passion for the new and innovative (and can put up with us two), please point them in our direction.
RTIH: What are the biggest challenges facing the omnichannel retail sector right now?
NT: One of the questions we get asked most frequently is about the difference between retailer and manufacturer opinions on price and promotion strategies. Many retailers are adopting EDLP strategies to provide shoppers with consistently low prices and compete with the discounters. This makes sense for them as they don’t have to spend money on the admin of constantly changing promotions which can confuse customers.
However, for brands wanting to drive volume, promotions can work so much better for them. From our research, we know that some customers far prefer promotions as this is a better deal for them, particularly on dry grocery items that allow them to stock up. Factor in more premium private brand products launched to provide alternatives to branded products, then retailers and manufacturers are set up for some big arguments over the coming years.
Where we see this going is manufacturers starting to launch online stores to go directly to consumers. The barriers to launch an online store are so low through platforms like Shopify, that any brand of any size can launch a direct to consumer business. What we may be left with are more stores (online and offline) where the best deals are in shopping in many different outlets. It may be better for the businesses and their own control, but it’s certainly not easier for customers.
RTIH: What's the best question about your company or the market asked of you recently by 1.) an investor and 2.) a customer?
NT: As a team of two, we often get asked about our ability to scale. We’ve built great technology that allows us to run hundreds of trials simultaneously. Not only is there no limit to our number of trials, we’re also able to ‘plug-in and go’ into any country in the world. Our panels of shoppers are available globally so no matter your question and no matter your market, we can get you great answers in just a matter of days.
The question we get asked most in the industry by customers is how a virtual trial mirrors a traditional in-store trial. We worked with Sainsburys to answer this exact question, evaluating some of their in-store communications via our methods whilst a conventional trial was run in parallel. I’m sure you can imagine the reaction when we were able to deliver the same answers in under five days rather than the usual months.
RTIH: What can we expect to see from Virtual Store Trials over the next 12 months?
NT: After the last few years have been filled with range rationalisation, we’re starting to see the upturn in new products being launched. This is super exciting for us as we’re able to predict whether new products are likely to be successful based on its positioning on shelf. We’re looking to partner with a number of big FMCG manufacturers to help them maximise the success of their new product launches by the end of 2018.
We’re also looking to build out our virtual trials to make them completely self-serve. Whilst this brings down the price even further, most importantly it cuts down the time to get virtual trials from under a week to within a couple of days and will allow us to get them seamlessly integrated into our customers’ existing workflows.