What might happen if a retailer increased SKUs in a particular category? Would sales go up, or would customers simply replace one item purchase with another?
A study from Management Science Associates sought to answer those questions, discovering some intriguing takeaways to help increase sales across the store.
In the study, developed using extensive wholesaler shipment and total-store POS data, beer was found to have the most potential to increase sales if more SKUs were added, followed by HBC, edible grocery, wine, cigarettes, packaged beverages, salty snacks and nonedible groceries.
“Store that had an incremental number of SKUs [in these categories] beyond the average really did significantly more business in those categories,” Don Burke, senior vice president of the Pittsburgh-based information management firm, tells Convenience Store Products. Stores with fewer SKUs had significantly less business.
The study also explored products that were consistently purchased with other items, making for a higher ring. Among those items: foodservice, bottled water, sports drinks, gasoline and iced tea. Categories with relatively weaker potential to increase the market basket spend: lottery, publications, gums/mints and smokeless tobacco.
Burke was especially intrigued by the amount of interplay found between beverages. “When someone bought a sports drink, they typically would buy bottled water. When someone bought an energy drink, they would actually also by a sports drink. And there was a lot of interaction between bottled water and almost every other beverage in the category,” he says.
From there, MSA looked at what categories could provide some pricing flexibility to help increase profits. Wine, OTP, beer, other dairy and candy all showed strong potential to drive up profits through increased prices without customer backlash.
For more insights from MSA’s c-store study, see the cover story of the February 2013 issue of Convenience Store Products: “What a Shopper Wants.”