Hitting the Consumer Strike Zone
ATLANTA -- “We’re in an industry of seconds,” said Derek Gaskins during an education session on data-driven product positioning at The NACS Show. Every moment a customer is in your store counts toward how much sales they will generate. “We have to think of ourselves as a consignment shop,” he added, and products need to be generating money or get out of the way.
Gaskins, chief customer officer of Rutter’s Farm Stores in York, Pa., was joined by Pervez Pir, chief operating officer of Vintners Distributors in Fremont, Calif. and Casey McKenzie, senior partnering consultant of Impact 21 Group, Lexington, Ken., for the Saturday afternoon session focusing on strategies to optimize product assortments.
Setting up Gaskins and Pir, who dove into specific examples of how they’ve improved their sets, McKenzie urged attendees to seek out four different types of data: POS data provides the “what, when, where and how much,” syndicated scan data provides the “who,” consumer data adds the “why,” and supplier insights offers a deep dive into category management and shopper insights for a particular category.
McKenzie laid out best-practice protocol for both introducing new items and exit strategies for slow-movers. For introductions, be sure to understand the incremental sales potential and promised supplier support. Give a new item at least three to six months to prove itself, and track not only the item but also the total market basket. Track sales and be sure to communicate the new offer with customers—if they don’t know you have it, it won’t sell.
When delisting a product that isn’t moving, be sure to prearrange returns with the supplier (if applicable), consider transferring the product to other locations for sell-through, take a markdown—at least 50%--and remove after one week of markdowns.
“We are so slow to take markdowns in this industry,” said McKenzie, blaming it on emotional investment or lack of tracking.
Flipping the System
Taking to the podium, Pir provided a case study on how to be more nimble and attuned to customer needs.
Traditionally, when a product or category is lagging operations must wait to hear from marketing to make changes to the set. Customer feedback must travel from store staff to operations up to marketing, where it often sits on the long list of things to do before action is taken.
“If a store is down and there are 20 other fires that need to be put out, marketing is going to put out those fires, and then deal with your store,” said Pir.
He urged attendees to flip the system and empower operations to make changes for their specific store needs. He gave the example of a San Francisco store that had some unique needs in its lagging water cooler door. Operations was able to make changes to the planogram and it experienced an increase in dollar sales within a matter of days.
This flipping of the process is a “tough thing to swallow,” Pir admitted, and operations of course needs to be aware of any contractual issues, but in the end it allows the store to stay ahead of the competition, empowers operations and store managers to be leaders and not only prevents lost sales but generates additional sales.
To implement this process, Pir recommended discussing obstacles and wins with all departments, encouraging the use of data at the field level and explaining how to use it, planning for long-term gratification vs. short-term success, and reinforcement through weekly visits, case studies and resets.
If you’re not ready to empower operations to make set changes, in the very least “make sure you share data from the field with marketing,” and ensure it’s up to date.
Optimizing Hot Zones
Gaskins meanwhile shared strategies to create the best “hot zones,” where consumer need meets high-velocity products. Impulse categories should dominate hot zones, so focus those sets first on candy and sweet and salty snacks. Offering the consignment shop analogy, Gaskins urged retailers to be nimble with their hot zones, changing regularly instead of waiting for the annual or twice-yearly resets.
Build your hot zones by first analyzing consumer insights. Echoing McKenzie and Pir, Gaskins recommended turning to CPG partners “with reams of data specific to their categories.”
Once you have a sense of what products should be in the hot zones, turn your consideration towards placement in the store. Identify the optimal space needed for the transaction area and displays that allows for consumer comfort and good traffic flow, and identify what Gaskin calls the “strike zone” to keep core SKUs within reach of customers.
This “sweet spot,” the strike zone should be within 4 feet of checkout—essentially arm’s reach for the customer waiting in line to buy their goods. In fact, the checkout experience as a whole should be fine-tuned to the customer.
Intercept surveys have found that 68% of shopper satisfaction is driven by the checkout process. Fifty-two percent of that satisfaction comes from the physical environment itself: Do I have a place to set my goods, put down my purse? A relatively small 16% comes from the customer service itself. So pay close attention to the layout—checkout may be an optimal hot zone, but don’t clutter it with too much product or messaging.
All core SKUs need to be within this zone in order to have the best chance of success in getting the last minute impulse purchase, said Gaskins. Two-foot towers work best along with the required counter-top transaction and equipment display space.
Of course, the hottest zone starts at the pump, and 69% of fuel customers do not purchase anything inside the store. In the four-plus minutes a fuel customer is pumping gas, 56% look at the pump, 15% look toward the store, only 8% look at signage. Retailers must break that consumers’ tunnel vision, said Gaskins, and convert them to an in-store shopper.
To do so, use effective POP and advertising and try a different approach beyond price/value messaging with stories, humor, design, even a “cool” factor. And don’t forget SoMoLo: find out what customers are saying using social media, use mobile devices to drive awareness and conversation, and redefine loyalty using big data and analytics to segment, reward and entice desired consumer behaviors.