Last month saw the launch of NPDs new system for tracking retail sales of automotive aftermarket products including engine oil, ATF, gear oil, antifreeze and other fluids. To those responsible for selling to do-it-yourselfers, this came as welcome news. DIYers represent nearly 25 percent of U.S. aftermarket engine oil sales, so brand and product managers need a clear view of the action on store shelves.
For almost 11 years, NPD Group published the Automotive Aftermarket Industry Monitor (AAIM) reports, compiled from scanner data at retail store check-out counters. The reports were an independent source of market share and volume data for lubricant blenders, marketers and retailers themselves.
That is, they were until a few major store chains stopped supplying the Port Washington, N.Y.-based firm with their sales data, leaving the system to collapse in February of this year. The NPD Retail Tracking System, which debuted in August, is its replacement. The shift highlights the role data plays in deciding what to sell, where to sell it, and how to spend marketing dollars in the retail sales channel.
In the August issue of LubesnGreases, David Portalatin, NPDs executive director of industry analysis, described the new market-share-and-volume tracking system. The Retail Tracking Service will have more comprehensive coverage of retail sales of 29 major categories of automotive products, he said, and will include a broad array of retail chains across the mass and automotive specialty channels – more than 80 percent of the DIY market. It also includes sales data from mass merchandisers such as Walmart.
However, he conceded, this system is somewhat less specific than the previous data. For example, mass merchandiser and automotive specialty store chains are now combined; users will not be able to parse them into separate types of stores. Nor are commercial volumes covered in the service. These changes are part of an agreement to ensure retailer participation and protect against individual retailer exposure.
Better Now?
From all accounts, the new system is not an exact match-up with the old one, and lubricant companies will see less-finite information than before. Still, its better than nothing – which is what the market had to endure for seven months. From February to August, lubricant sellers had to live without independent market-share data, something theyd enjoyed for more than a decade. Well, how did that go?
Not so well, replied Lindsay Baker-Hegna, vice president of sales and marketing for Cam2 International, which is headquartered in Golden, Colo. The whole industry is flying blind as a result of this data disruption, she said.
The data hiatus occurred, she said, amidst Cam2s efforts to establish a national retail brand presence in automotive specialty stores. We recently presented to a major retailer, and they wanted certain market information that we did not have, because AAIM data was not available. We provided what we could, and they understood, because the information flow to the entire industry has been disrupted.
Even major national brands felt the lack. However, Mike Lyman, director of category management for Valvoline in Lexington, Ky., noted that larger lubricant manufacturers have more options to plug the information void. With the loss of the AAIM data, we had to focus on retailer internal performance, Lyman said. Valvoline and others have the advantage in some instances to have access to individual retailer data. This access can help us to better monitor and understand the marketplace for our categories, but without an industry data provider, we cannot ethically and will not share that industry view with individual retailers.
The importance of an independent third party reporting data is the ability to have industry-accepted data to share with participating retailers, he said. As far as Valvoline goes, we are certainly trying to stay in touch with market conditions as much as possible.
The Retailer Perspective
While the data gap was a serious problem for lube manufacturers, retailers told LubesnGreases that they saw it as a bump in the road. This may be because unlike lubricant manufacturers, aftermarket retailers have an instant source of DIY sales data: their own cash registers. As for specific trends and data, they can turn to manufacturers, who usually want to cooperate with retailers as much as possible. From the retailer perspective, it seems that the net take-away is that NPDs data disruption was inconvenient but not insurmountable.
Thats the message heard from Joshua Moore, Advance Auto Parts director of finance and investor relations in Roanoke, Va. He said his company is adjusting to the changes in sales data.
Of course we were very disappointed and worked diligently to bring parties together in an effort to maintain the integrity of the [AAIM] system, he said. Once it was determined that the data would no longer be accessible, we have worked to use the very limited internal data set as best we can, but unfortunately the value has been diminished greatly. We had to look to other external reporting and consensus gathering systems and panels, but there has not been a good replacement discovered to date.
Moore and other retailers seemed to intuit that the data disruption would be a temporary situation. They expected NPD would offer another shelf-movement tracking system, sooner or later, to replace the AAIM data. After assessing the current NPD retail tracking system, Moore concluded, It will not replace the previous system and we will need to use it for similar, but different purposes. The capability of the new system looks great; however, the content has taken quite a few steps back, without the same number of our industry peers participating.
Reactions, Adjustments
Whenever sales data disruptions occur, the first to feel the void are analysts assigned by lubricant manufacturers to monitor market share and category information. They are stymied in their efforts to provide reports to senior marketing, sales and other management areas. And – take it from one who has been in an analysts shoes – their pride in providing solid reports is taken away; no data to analyze, no insights to be found.
The impact is less immediate for senior executives and marketing and sales teams. Their initial thoughts generally are, Okay, so I will not get that analysis that Im used to getting each month. The real deep impact comes later, when they need the data to support an important management strategy or a decision that affects product positioning and promotional activity, or when they need to make a critical category management/sales presentation to a customer or retailer. This is when they go back to their company data analysts and cry, What are we going to do?
The seven-month gap in data provided an opportunity for the industry to realize how vital ongoing, independent third-party market share data is to the fiber of decision-making. The industry has become accustomed to having fact-based information to support decisions and provide solid support for successful selling.
This break in data gives us a chance to appreciate the information and reset now while it was gone. Our management team does not take the information at all for granted anymore, remarked Lyman. Meanwhile, we are using internal data to fill that void for now. Valvoline does have proprietary consumer studies. We were certainly using those, along with all means available to fill the information gaps while there was a disruption in market share data. However, we are glad that NPD has come forward with their new system.
Cam2s Lindsay Baker-Hegna echoed that feeling. We will seek information and obtain marketing research services to get information needed to help Cam2 sell into accounts and get onto retailer shelves. I am sure that with this data disruption that each retailer will be open to data sources other than just NPD Automotive. We will have to get information from other sources, because retailers will want us to provide them fact-based data. Without fact based data, it will be more difficult to get Cam2 on retailer shelves.
No Plan B?
Years ago, I had a boss who was fond of saying, You always have to have a Plan B! Once, he wanted funding approval for an initiative and was turned down by the company president. I asked him if he had a Plan B. Long pause, then the sheepish reply: Uh, no.
Right now, the lubricants industry seems not to have a Plan B in case of another disruption. Asked if any other data provider, besides NPD, has come forward with a market-share tracking system, those interviewed unanimously said no. There appear to be only a few other research companies that could provide this level of information, such as Nielsen, IRI or R.L. Polk.
Said Baker-Hegna, Like others within the industry, we are waiting and seeing what will happen. No one has stepped up to provide another ongoing market-share/volume tracking service.
As sole data provider, NPD must strike a fine balance. Manufacturers of lubricants and other automotive products still want and will always want more detailed information. (For an example, see The Ideal Data System, page 20.)
The death of the AAIM data, however, showed that market-share information cannot be overly specific, lest retailers become uncomfortable sharing their data with the industry. This is probably why NPDs new tracking system does not break out the volumes (and subsequently market share) for Auto Parts Stores vs. Mass Merchandisers. It knows it must be respectful of retailer needs and sensitivities.
We have to realize that the data belongs to the retailers, said Mike Lyman. They provide it for the benefit of the industry, that suppliers might be able to help them better meet consumer needs. They expect that in the process, the confidential nature of their specific data will be guarded. Without the cooperation of retailers, Lyman added, the industry would not have solid information. This information is crucial for suppliers and retailers alike. As an industry, we all have a responsibility to operate with integrity and sensitivity in working with the retailer data.
I could not have said it better myself.