News & Articles

Leveraging Retail Objectives To Drive Growth: Average Weight of Purchase (AWOP)

for Retail World Magazine May 09 by Norrelle Goldring and Lee McAllistair – ShopAbility

In the second of a series of 5 articles about achieving retail objectives, ShopAbility discuss the key retail objective of AWOP; its applications for shopper behaviour, and how to leverage it for category growth.

Our first article  introduced the concept of the key retail objectives being a 5-Way Multiple: Frequency, Traffic, Incidence, AWOP, and Spend (this article is re-published here at www.sh-opportunity.com.au if you missed it).

By orienting your strategies around these retail objectives you grow your relevance and relationships to Retailers and Shoppers, thereby driving category growth and profitability.

While the first article focussed on Frequency and Inter Purchase Interval, today’s article centres on Average Weight of Purchase as a lever to drive growth.

Future articles will cover:
3.      Basket penetration and incidence
4.      Traffic driving
5.      Trial management.

In our experience many suppliers are not yet aligning their business strategies and operations clearly enough with retail objectives. These articles focus on specific retail objectives and how to use them for win-win growth for both you and the retailer.

What is AWOP?

Average Weight of Purchase is one of the key retail drivers.

AWOP:     Average Weight of Purchase refers either to the number of items in the basket, or their weight in kilograms or litres. A common retail goal is to increase AWOP, which can also amount to an increase in Spend. A common way to achieve this retail objective are promotions such as ‘2 for the price of’ and ‘3 for the price of’ to drive multi-item buys. Alternatively, promotion of larger pack sizes can result in a higher weight in kilograms or litres.

A related retail objective is Basket Value (also called Transaction Value).

Basket value:    Also called Transaction Value, this is the total $ value of all items in the basket. Common ways to increase this are encouraging the purchase of more items (increase basket size) or increasing the value of selected items via uptrade to bigger packs or higher value products.  Achieving this retail objective also amounts to an increase in Spend.

The relationship between AWOP and Basket Value

Increasing AWOP will either have no impact on basket value or will increase it.

The relationship between AWOP and Basket Value can be described in the table below:

AWOP	Market	Mechanic/Example
↑ Increase	↑ Increase	2+ items for more than the price of 1 Pack/product uptrade for higher spend
↑ Increase	↔ No change	2 for the same price as 1

Fig 1: Relationship between AWOP and Basket Value © Shopportunity 2009

The only way in which basket value would decrease when AWOP increases is to offer multiple items or larger sizes for LESS THAN the price of a single item or smaller size. This is a highly unlikely scenario and you’d only pursue this as a loss leader strategy short term share grab.

How does AWOP relate to Frequency?

In our last article we discussed Frequency, which is the number of times your category and product is shopped over a defined period of time.

What increasing AWOP and Basket Value essentially does is achieve more dollars or more items this trip, by either encouraging more items in the basket, or higher value items.

What increasing Frequency does is achieve the same dollars more often with more trips. The same dollars more often = more $ overall, over time.

Whilst the objectives are separate, one can negatively impact the other – see Diagram below.

↑ Increase	↓ Decrease	Results/Behaviour
Frequency	AWOP	Shopper buys smaller items more often
AWOP	Frequency	Shopper pantry stocks. Sales ‘pulled forward’

Fig 2: Relationship between AWOP and Frequency © Shopportunity 2009

You need to find the balance between Frequency and AWOP as you can’t increase both at the same time.

How are AWOP and Basket Value built in to your KPIs and planning?

Do you know what the AWOP is for your category, subcategories and at brand level vs how your particular product performs against competitors? Do you know what the AWOP is in similar categories, and what shopper behaviour drives that?

Do you have plans to increase AWOP both strategically over time and tactically using specific promotions? Do you have clearly defined targets for both your brands and the retailer? Your relationships with retailers will strengthen to the degree that you have clearly defined retail objectives in your category, marketing and customer plans.

Why are AWOP and Basket Value important?

Because they have a direct relationship to dollars per shopper per trip. Increasing AWOP and Basket Value in a given category helps drive the top line for the whole store.

A key point with AWOP is that unless you marry your average weight increase with an increase in consumption for your category, you may merely bring sales forward, particularly in categories with non-expandable consumption. Great for short-term targets, but no real benefit in the longer term. How do you address this?

Understanding shopper behaviour and consumption occasions in your category is key. By increasing relevance through occasion-based marketing you can increase AWOP for the long term, not just the short term.

Let’s take skin care. Once upon a time, the skin care usage occasion generally involved three simple steps: ‘cleanse, tone, moisturise’. Now we have ‘cleanse, exfoliate, treatment, moisturise, protect ‘(from sun and ‘free radicals’). ‘Treatment’ as an occasion example can also include several products: masque, serum, pigmentation treatment, eye treatment, spot treatment; the list goes on. All of these specific purpose products serve to increase AWOP in the skin care category, by increasing the number of items in the basket. It is also likely that Basket Value is boosted through higher value items in the basket, such as the ‘treatment’ products. Another common way to increase AWOP in the skin, hair and personal care categories in general is via gift and multi-packs; buy the shampoo and conditioner pack for a value price compared to just the shampoo.

AWOP can also increase brand loyalty by expanding the range of products with which the consumer has a relationship (such as the skin care example). By demonstrating value with the shopper and consumer, either through value-based bulk packs and pricing, or more products in the basket, you create total value perception.

AWOP applied to shopper behaviour

Similarly to our last article on frequency, AWOP in a given category also depend on the nature of the category, the number and type of occasions the product is used for, what kind of shopper they are, and from what household type.

Let’s look at milk. A family of four may default to a 2 or 4 litre carton of white milk in their stock up or top up shopping basket. But what about the occasions for different types of milk based on different family members? The adult female in the family may choose a 1 litre skim or lite option just for herself. If there is a mid to later life stage female in the family, she may opt for calcium enriched, also in a 1 litre. Children in the family may enjoy flavoured milks for occasions such as gut fill after school. These may be in 250ml packs, or even less. You may have a health-conscious member of the family that prefers to buy soy or long life organic milk from the ambient aisle.

By understanding all the occasions for milk in this particular family, you can increase AWOP substantially by promoting across the range to a single shopper, beyond just upselling to larger packs.

How would you activate against that in store? It depends on the channel. In grocery, you may think about secondary locations for different types of occasion. Flavoured milk, for example, can also be an impulse purchase as part of a top up shop, and may work on a gondola end or near the counter. Simply having your flavoured milk near the counter may increase the number of milk items in the basket from one (plain white milk) to two or three.

Last article we discussed how retail objectives need to be considered in relation to each other. You don’t want your increased AWOP to result in decreased frequency, for example. Again, this depends on the category and shopper / household type. Looking at milk again, by increasing the appeal of a range of milk options you are expanding the category, not just bringing sales forward and decreasing frequency.

The relationship between range and AWOP is critical in terms of increasing the number of items from the category in the basket. Therefore, new product development (NPD) can also be a key way to grow AWOP in your category. This can be especially effective if you are targeting a particular type of shopper and their profile. Back to skin care: the thirty or forty-something female shopper who cares about the way she looks, is concerned about aging, but is not likely to buy high-end products, may shop for skin care in grocery. Brands like Olay and L’Oreal play to this shopper brilliantly; producing a never-ending range of reasonably priced anti-aging skin care products that increase the number of skin care items in the basket, increasing AWOP, and increasing the $ value of items in the basket, thereby increasing overall Basket Value.

5 Ways to Increase AWOP

1. Increase the range of products and pack sizes shoppers can select, based on occasions
   • By increasing range, you avoid simply bringing sales forward through larger pack sizes for only one product
   • Offer a range of pack sizes for each product to increase consumption occasions (such as the 250ml flavoured milk for a treat or gut fill immediate consumption occasion versus the 2 litre white milk for planned stock up shop purchase)
2. Smart multi-buys across product portfolios
   • Instead of 2fors and 3fors of the one product, span your multi-buy promotions across a range of products so as to increase consumption rather than just bring sales forward. Example: shampoo, conditioner and treatment packs.
3. Trial pack promotions
   • Promote your newer or less popular products by combining them with your tried and true products in trial packs e.g. buy this doggie roll bulk pack and trial a free pack of doggie treat. This way you increase AWOP whilst growing the overall category and building brand loyalty.
4. Differ your AWOP pack strategy by household type
   • Have you considered all the types of shoppers that purchase your products and what kinds of households they come from? Don’t forget that people living in small spaces with limited storage can also drive AWOP buy purchasing multiple small, high-value items.
5. Introduce value and bulk lines
   • Introducing a value line in your category can increase AWOP through increasing kilograms or litres purchased.

Love your Weight

Let’s face it, the AWOP opportunity is one of the few times in life where you can enjoy increasing your weight, so do it with relish!

Think about your shoppers, consumers and retail partners. Think through the consumption and shopping occasions for your category, portfolio and products.

Identify the gaps; range, pack sizes, promotion strategy… what’s missing? How can shoppers be encouraged to by more litres or kilograms of your product, or more items from your portfolio? How will this contribute to overall category growth?

Measure where AWOP is now, in relation to your overall category and your company portfolio. Set a realistic target to increase it either through weight per item or number of items, or both. Develop a holistic plan across category, brand, customer and promotions.

Make sure you consider the 360 degree view, and how increasing your AWOP may affect other retail objectives such as frequency.

Then, enjoy your weigh-in … both you and the retailer will be The Biggest Winners rather than The Biggest Losers.

Next time, Basket Penetration and Incidence. In the meantime we welcome feedback from you. Email us at enquiries@sh-opportunity.com.au

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