Meijer’s Derek Steele on building a Midwest retail media powerhouse

The Big Impression

Family-owned grocery chain Meijer is using its Midwest roots to stand out in the retail media crowd, according to Derek Steele, the company’s VP for marketing.

Episode Transcript

Please note, this transcript may contain minor inconsistencies compared to the episode audio.

Damian (00:00):

I'm Damian Fowler.

Ilyse (00:02):

And I'm Ilyse Liffreing,

Damian (00:03):

And welcome to this edition of the current podcast.

Ilyse (00:10):

This week we're delighted to talk with Derek Steele, group VP for marketing and customer strategy for Meijer.

Damian (00:17):

Meijer is a supermarket chain that's just celebrated its 90th birthday. Founded in 1934 in Michigan. It started life as a grocery store.

Ilyse (00:26):

It's still a family owned business, but now has grown to 500 locations across six states and employs more than 70,000 people.

Damian (00:35):

Now, Derek has been with Meijer for more than 16 years. He spearheaded the company's shift into e-commerce, his customer loyalty program, and more recently the launch of its retail media network. So that's where we'll start. Dar, you've been with Meijer for 16 years and so it's fair to say you've sort of grown up with the company. Can you tell us a little bit about that journey?

Derek (00:58):

Yeah, absolutely. So I've grown my entire retail career within the company, really the first and only retailer I've worked for. Started off in the merchandising side of the organization. My first real job was a buyer in our consumables area, so really learned the nitty gritty of how do you manage vendor relationships, how do you understand the customer, the trends and the products that they're interested, and then how do you craft a category strategy around that? I've had a chance to work in a variety of different areas within our fresh produce, fresh foods business, understanding the supply chain, and it's just fascinating to understand where that product comes from. And then prior to getting over to the marketing side, I let our dairy and frozen department, which my kids still think is the best job I ever had, got eat a tremendous amount of ice cream, frozen pizza and still recovering from some of the effects of that

Ilyse (01:42):

Man. Sounds good.

Derek (01:43):

Oh god.

Damian (01:44):

More recently you have been looking at customer loyalty programs and obviously e-commerce is a huge growth category right now. Can you talk about that shift and how you spearheaded the move for the supermarket chain into that category?

Derek (02:00):

Yeah, absolutely. At Meijer, we'd been focused on e-commerce and looking at it for quite some time and really the impetus for change with us, a lot of consolidation happening within some of the third party marketplace business. We had some partnerships in that space and really decided that given where the customer was going, it was going to be important for us to really own that relationship with the customer. That's extremely important to us. And so while there's great partners that we continue to partner with through our meyer.com and our Meijer app business, we really wanted to manage that relationship one-on-one with the customer. So we started that effort in 2019. We launched our e-commerce platform in the fall of 2019 with the plans to really steady and slow growth. And then of course March, 2020 hits and it was really all about, Hey, how do we scale? It went from this interesting business idea to absolutely critical in the lives of our customers in the Midwest.

Ilyse (02:53):

Yeah, that was good timing for

Derek (02:55):

Them. Yeah, good timing. There's probably three or four months that I could choose to forget, but really fascinating to see how the entire organization rallied around that and the speed which we were able to develop that business and grow that business for our customers.

Damian (03:08):

And then of course, you had all this incredible customer data at your fingertips. At what point was it inevitable that you launched a retail media network?

Derek (03:17):

Yeah, I mean you talked about it, right? We started in loyalty, moved into e-commerce, right? And I think these three things together along with retail media, all three are foundational from a retail business standpoint. I think really it started with an impetus from our suppliers, the brands that we work with saying, Hey, as we're doing marketing programs with you in that more traditional shopper marketing way, we want to understand more. We understand who the customer is, who the audience is, how that's performing. And so as you start to ask those questions, it really naturally leads you into that space of retail media. And so really our decision to enter it was, Hey, we need to be right for our brand partners and we need to be right for our customers. And really felt like those things were coming together and the opportunity to launch a retail media network was there.

Ilyse (04:02):

Now there's multiple ways brands can work with retail media networks. Can you give us some examples of how your clients are leveraging data on sites and offsite?

Derek (04:13):

Yeah, absolutely. So at Meijer, we really believe in the relationships that we form with our CPG partners. I think if you were to ask within the industry meier's ability to work and tailor those programs, it's really the key on what we're built with. And so as we launched a retail media network, that's really how we think about, it's really an extension of that relationship with the brands. So we partner closely with our merchants to understand what is key, what are the categories, what are the trends that are happening and driving. And then we really work alongside with the marketing sides of those organizations, with the brands, with the agencies to craft, okay, how do we come to market and how do we specifically drive that strategy in Meijer with our Midwestern customer and our audience? So really focused on that relationship building that kind of one-on-one, and the ability to be nimble and responsive to the community as they have opportunities that they want to tackle at Meijer.

Ilyse (05:03):

Yeah. How does that really fill that regional need, as you say?

Derek (05:07):

Yeah, certainly as the retail media space has become filled with a number of retailers, and so we get this question all the time, clearly there are players out there where if you're looking for size and reach, there are bigger players in the market, but when we look at our territory within the six states we compete, we really dominate within those areas. We understand that customer. I think our data would show that over 50% of the households within our trade area are shopping at a me store. And so we would argue that you really can't reach that audience, that unique audience that we have if you're not engaging with me. And so we feel like we play a very important role within those states and those territories that we serve.

Damian (05:47):

One of the things that's very interesting about the space is the talking points around what is retail data and what is retail media. Could you unpack that a little bit, that distinction for us a little bit? How do you think about those two things?

Derek (06:02):

And we might use slightly different language than you do Damien, but I think the world of marketing and retail has been a part of our strategy For a while, we would call it shopper marketing. So the activations that we're doing in our stores, the opportunity to provide some branding in some of those locations, we would call that shopper marketing. It's really top of the funnel impression based, but still at that point of purchase. But just by its very nature, we've not always had the ability to target and measure that, so we would distinct that as shopper marketing. When we think about retail media, we really think about the ability to define an audience, target content to that audience, and then measure the performance all the way through the point of sale, whether they're reacting on our website through our mobile app or if they're completing that transaction in the store, that measurability that ability to get to closed loop reporting. That's what we would define as retail media at Meier.

Damian (06:51):

In terms of the different channels off site that you use, where does it show up?

Derek (06:56):

So today we have the ability to do display ad. We do closed loop tv. We're working through YouTube, a number of channels along with the different social media channels, meta, Pinterest, and a handful of others that we're working on lighting up as we speak.

Damian (07:11):

So it's like a very omnichannel experience.

Derek (07:14):

Yeah, we understand we need to be where the customer and the audience is at, and so as that continues to evolve and change, we know we're going to need to continue to evolve and change along with that.

Damian (07:23):

Now, you recently announced a new closed loop measurement capability. Could you talk a little bit about this? What capability does that bring and how does that help drive better outcomes

Derek (07:32):

For your partners? Yeah, absolutely. As we partner with brands, one of the things we heard front and center as we began this project was that measurement is absolutely key. And I think there's a number of retail media brands that have started just from an impression basis and an audience basis and then bring the closed loop along. After that, we really focused on at launch, we wanted to have that capability, and so our focus from a technology standpoint is however that customer and audience chooses to complete that transaction. We want to be able to measure that. That's not easy. We've gone through some of the challenges and growing pains along with that, but at Meier, regardless of what channel that customer chooses to complete that transaction, and frankly many of our customers complete that transaction across multiple channels, we want to be able to measure that. And so that's what we've built out from a closed loop reporting standpoint. So when you put that message in front of an audience at Meier, whether it's online or in store, no matter how they choose to transact, we're going to be able to measure that and provide that reporting and insights back to our brand partners.

Ilyse (08:30):

What would you describe as some of the challenges there that you brought up?

Derek (08:35):

From a technology standpoint? At any retailer, when you look at all the different channels, a customer can complete a transaction. Historically, those have been very different streams of data. Aligning those streams of data along with all the customer information that we have to really measure that end to end a lot of different parts of the organization, a lot of different pieces of technology to bring together along with a number of partners in the industry who help us make that all work. So that's probably been the biggest challenge is coordinating all the different technology pieces to make that happen.

Ilyse (09:03):

Yeah, I think the industry overall, the retail media industry and retail media networks are all coming together to try to figure that out.

Damian (09:13):

I wanted to ask one more question here just in terms of the opportunity of the retail media network. Has it allowed you to expand as it were, brand partnerships?

Derek (09:22):

Yeah, I think it's allowed us to enter different conversations with brands than we've been able to enter before. And so there's messages, there's channels, there's tactics, there's places in the customer journey before they make a purchase that with a traditional shopper marketing funnel, we shouldn't have a good way to enter and be part of that conversation. And now whether it's on our own channels, within our app, on our website, or using our audience information to reach those customers wherever they're at, we're able to have a richer conversation about a more full funnel approach to how we can bring those brands to market at Meier.

Ilyse (09:53):

And one thing we talk a lot about is how that has increasingly become omnichannel and an omnichannel environment where all these customers are spending their time. Can you talk a little bit about that and what channels you're excited about?

Derek (10:08):

Yeah, it's interesting. When we look back at our data around our customers, more than 50% of them and an increasing percentage of them, regardless of where they complete their transaction, are coming to us to search for a product within seven days of making that purchase. And so we're seeing that behavior and it's no longer this distinction to the customer between, am I having a digital interaction with Meyer or am I having an in-store interaction? From a customer behavior standpoint, those two things are blending together. And so it's no longer is this an e-commerce transaction or is this a in-store customer? It's a Meier customer, and so we need to meet that customer wherever they're choosing to gather their information and then make that purchase.

Damian (10:50):

Do you see the same customer shop online and then come into the store? Are you able to kind of measure that and observe that?

Derek (10:58):

Yeah, we see that We have our digital loyalists who they've made that transition fully, and so that's part of their life now, that's how they interact with us. But I would say most of our customers we're seeing engage with us in a digital and in a physical store. I'll take my own family, for example. We are heavy digital shoppers at me, but there are those instances in those times where it's either more convenient or I want that exploration, I don't know what I want, and I'll leverage the store in that regard. And so week to week, day to day, based on the what's going on in the kids' activities and the family life, we'll see that switch. And I think that's true for our customers as well.

Ilyse (11:31):

Are you doing anything to personalize that experience and bridge the gap between that digital experience and in-store experience?

Derek (11:38):

Yeah, I mean, personalization has been really a part of how we've thought of going to market even before we started media. We think about personalization in every one of our retail channels, whether it's organic search, whether it's the mailers we're sending into your home and offers, whether it's servicing promotional content. We have thousands of promotions that are running every week, but what's the most important thing for our customer, that individual customer? That's part of what we're doing. We're looking at how do we allow brands to interact in some of those personalized experiences, both through audience targeting, but also then in that moment where I'm serving up promotional content or items that you've purchased before. Well, how do I let a brand influence where in that experience, that item may show up, never inserting an item that a customer hasn't purchased because we want to honor that personalization for our customer. But if there are stories or items or times where it's more important to a brand to get that purchase, we're trying to find ways to enable them to be able to do that.

Ilyse (12:34):

Very interesting. Is there an example that you can share?

Derek (12:37):

Yeah, so I mean one of our most used features by our customers is our buy again, right? I mean, it's a very quick way to make a cart. And when we're building carts in the grocery e-commerce world, there's a lot of items to get in there. Historically, we've used sort of a frequency recency model for what shows up in that, and we're starting to allow sponsored products within that. So allow brands to invest to kind of boost up where in that carousel, their product may show up.

Ilyse (13:01):

Very cool. Well, I would love to dig into your background a little bit because it's fascinating. So you were a flight controls engineer for the space shuttle program, and obviously now you're in marketing. Could you talk about that transition and then I guess how that background has really helped you in your marketing career?

Derek (13:22):

Yeah, absolutely. It's a question I get all the time in getting tired of the conversation about retail media not being rocket science, because obviously it takes one, but no, I mean, first five years of my career, that's what I did. So I had the opportunity to work on the space shuttle program, absolutely a dream come true. In fact, in fourth grade for Halloween, I dressed up like an aerospace engineer

Ilyse (13:44):

And

Derek (13:44):

No one knew what I was, right? I was in tears. It was actually the last time I ever dressed up for Halloween. But really enjoyed the technology side of that, enjoyed the adventure and the intrigue of it, but also found I had a passion for leading and a passion for working in a competitive industry. There was only one space shuttle, so there's no other one to compete with. So made a career change. 16 years ago, retail wasn't on my radar screen. I continue to run into people that have stories like mine where I never thought I would get into retail, but what attracted to me about it was just the pace of change and innovation that happens in this industry, probably one of the most dynamic industries that there is out there. And the opportunity to lead at a pretty large level relatively early on in your career.

(14:27):

So made the transition over 16 years ago, grew up through the merchandising and buying side of the organization, and then really found a home within the marketing organization. Again, I talked about I'm still a nerd at heart, and so I love the combination of the customer insight, the technology, the brand and their interest. And so being able to sit in this unique space of understanding and being able to grasp that technology piece, being trained from a merchandising standpoint on how to understand customer need, I found a nice niche in here. And I like to say at the end of the day, engineering is just structured problem solving. You break down a problem into its components, you solve the components, you solve the problem. And turns out that's applicable in a lot of different places.

Ilyse (15:08):

Those seem to be quite a few engineers turn marketers. And that does seem like to be the thorough line there as well. Engineers are more

Derek (15:15):

Creative people than they give us credit for.

Damian (15:18):

Yeah, absolutely. And so the sort of through line is data here then that helps shape strategy, of course, increasingly so in the world that we're in now.

Derek (15:27):

Yeah, I think being able to pull insights out of information, that's what I always preach my team, is that the best data set doesn't always win the best insight or the best story that you can tell from that data wins. And so I think marketing is a great place where you get to combine those two things. And at the end of the day, that's what we're doing. We're telling stories that are based on facts that are compelling to our customers.

Damian (15:48):

Just to go back to the space shuttle program, what was the toughest challenge you faced when you had that

Derek (15:52):

Job? So I joined the space shuttle program right after the Columbia accident, so if you remember that.

Ilyse (15:58):

Yeah.

Derek (15:59):

So our first year and a half was all about recertification, getting ready to fly again. And I dunno if I've ever put this story on tape before, but the first flight after Columbia, I worked in the room above the mission control center and we were the ones watching all the data and see what would happened. And the first flight afterwards, they saw something float away from the space shuttle. And so they said to everyone, they said, Hey, go scrub all your systems, see if we can figure out what that was. Did something break? Is this what's going on? So it's a mad scramble to go through the data, and I found seven little pieces of data that I could not explain everything else. I could explain these seven pieces of data. I could not explain

Ilyse (16:34):

Aliens.

Derek (16:34):

And so I sent this back to the mission control center, young engineer, proud, maybe I just saved the astronauts, and I received an email back, congratulations. You identified the seven times they flushed the toilet over the last two days. We got this one covered.

Ilyse (16:47):

That's hilarious.

Derek (16:48):

That's good. I like

Damian (16:49):

That. Oh my god. Wow.

Ilyse (16:52):

That's so wonderful.

Damian (16:53):

One question we like to ask is are there any sort of innovations in the ad tech space that are kind of on your radar, can still use an aeronautical metro on my

Derek (17:02):

Radar?

Damian (17:03):

Yeah.

Derek (17:03):

I mean, are there innovations? Absolutely. I mean, I think there's a tremendous amount of innovation. I think what we're focused on right now is what are our customers, and by that I mean the brands and agencies that we're working with, what are they looking for? And we're really focused on how do we take the friction out of that opportunity, that experience of working with Meyer. And so a lot of focus on the different self-serve platforms that are out there. How do we engage with that to drive a richer, more friction-free experience for our customers?

Damian (17:31):

I like my shopping to be friction free.

Derek (17:34):

Absolutely.

Damian (17:35):

Yeah. Well, Derek, thanks so much for joining us on the current podcast. Absolutely. Thank you. And that's it for this edition of the current podcast. We'll be back next week. So stay tuned.

Ilyse (17:52):

The current podcast theme is by love and caliber. The current team includes Kat Vesce and Sydney Cairns.

Derek (17:58):

And remember, the best data set doesn't always win the best insight or the best story that you can tell from that data wins. And so I think marketing is a great place where you get to combine those two things. And at the end of the day, that's what we're doing. We're telling stories that are based on facts that are compelling to our customers. I'm

Damian (18:15):

Damian, and I'm Ilyse. And we'll see you next time. And if you like what you hear, please subscribe and leave us a review. Also tune into our other podcast, the current report.