Want better execution? Learn from Convenience stores

Just a few weeks ago I was at my favorite beach resort in Thailand for a well-earned break. On my first afternoon I realized I’d left my travel adapter at home so I headed out to find a replacement. Anyone visiting Thailand will know that convenience stores are now a feature of almost every street in every built up area of the country. My beach resort was no exception, with two 7-Elevens and two Family Marts within close walking distance of my hotel. So when my first stop (7-Eleven) yielded no luck, I continued down the road the Family Mart. Having no joy in the second store I thought I’d try my luck in the third and sure enough, they had what I was looking for, albeit in a part of the store I hadn’t searched in before.

Having visited three similar stores in quick succession, I’d noticed that the layout of each category on sale was almost identical. So, I wondered, if I can find what I wanted in the third store, would it be in the same place in all the others. And sure enough it was, but what struck me was that the merchandising in each store within each category was identical. In each of the stores I visited, all owned by different franchisees, the 7-Eleven and Family Mart had been able to secure completely identical execution.

In our work with manufacturers we know that this level of consistency is hard to duplicate, so it strikes me that manufacturers could learn from what C-stores.

Here are three C-store principles that could be applied by manufacturers (and some large format retailers too!) if they want to improve execution:

Keep things simple – C-stores maintain a minimum range of products – this is not to say a limited range, but they simply seek to define the minimum range to meet the requirements of shoppers in the particular community they serve. Likewise C-stores keep point of sales materials and promotions to a bare minimum in order to ensure their impact.

Be specific – C-stores provide specific and clear instructions for their franchisees that leave nothing to chance. They specify exactly how and where products should be arranged on shelf. More importantly they provide store-specific instructions which define the shelf layout that fits the amount of space the store actually has and reflects the way it is configured. This makes it easy for operators to execute merchandising instructions.

Present in pictures – great C-store manuals are not text driven, they provide pictures of how the shelf should look, including where point of sale should be. This includes graphics which show how promotions should be executed and where they should be sited in store.

These principles sound pretty easy to duplicate and yet very few manufacturers produce in-store standards or guidelines that provide this level of clarity and accessibility for their sales teams. This is a mistake as it leads to missed opportunities to drive purchase behavior.

At engage we believe that nothing should be left to chance, standards should exist for each category in each retail channel and these should be adapted for different sizes of stores in each channel. These standards should be developed with a clear understanding of what is needed in-store to change shopper behavior and drive sales results.

So if you are seeking to improve in-store execution, seek to lean from those who do it well, your role model could well be your local convenience store.

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Using effective merchandising to drive sales

 

On a recent visit to a toy store with my oldest son, I experienced an interesting phenomena. He kept asking me to lift him up!

Why? All the cool stuff was displayed above his head. Now he stands about 1.2m tall so at his eye level all he could see were the cheaper cars and action figures. By contrast all the cool things – playsets, tracks and so on were placed directly in my line of sight.

Now before we debate the morality of encouraging ‘pester power’ let’s look at the dynamics of the behavior. As a father I am the shopper, the purchase decision maker. My son is the consumer – he will actually play with the toys. The consumer in this case wants the higher value playsets and is extremely adept at influencing the shopper’s decision. Were the more expensive products placed in his line of sight, the retailer would probably have an increased chance of making a higher value sale.

This is not earth shattering – we know for instance that confectionery placed at checkouts and high-value Barbie dolls sited in a young girl’s eye line lead to incremental purchase value. What’s most interesting to me however is how few consumer goods companies actively seek to grow sales by leveraging effective merchandising.

Many trade marketers blandly state that the best position on shelf is ‘at eye level’. But whose eye-level are we talking about? In a diverse human population heights very enormously. Further, research always shows that shoppers don’t stare at the horizon, they angle their gaze at about 15 degrees below the horizon. Recent research that we conducted using TNS’ eye tracking technology showed how the eye level of milk shoppers is actually a blind spot.

In the distant past (or as I like to think of it, the early nineties) Mars were able to calculate the sales impact of moving products into a hotshot (the center of a supermarket shelf between hip and shoulder level). Products in this zone delivered sales that were 40% greater than base sales in a neutral position.

Pepsi’s UK bottler Britivic inverted this logic to secure key positions in chillers by persuading retailers that Coke had to be in the prime eye-level position and that the number 2 brand, Pepsi should be immediately below.

We have found that even in static categories, significant growth can be gained from watching shoppers and implementing merchandising strategies that either encourage value creating behavior or disrupt shopping patterns that reduce basket value. For instance in one declining category we were able to increase total category sales by 10% through more effective merchandising.

Virtual store research like that offered by Bergent in Australia enables the potential gains from merchandising to be accurately quantified and applied.

We believe it’s time that less money and effort be spent in ineffective promotions (see Mike Anthony’s blog from last week) and greater focus be placed on learning about how merchandising can be improved.

To learn more about this, you could participate in our Batchelors in Shopper Marketing programs or contact us directly to learn how we can help develop strategies that activate purchase behavior