An overview of retail trials and trial management by Peter Huskins of ShopAbility, for Retail World Magazine.
So what are Trials, who does them, when and why….and how do I go about even starting to run a Trial?
Common questions with an equally evasive answer, as the points to consider are complex at best and downright confusing at worst.
What is a Trial?
So, let’s start off with a broad definition of what a Trial actually is:
“the implementation of a business initiative, measured through a controlled assessment that as closely as possible reflects the regular trading environment of the category”
Trials are run by Retailer and Supplier alike to test a business hypothesis – usually an initiative or business case that has been developed targeting total category growth.
For a retailer it may be:
- A new store format such as a small store or an alternative offer(eg Thomas Dux)
- An environmentally friendly format stuffed with new technologies and applications all designed to leave a negative operating footprint (continual focus of all retailers)
- Alternative category layout, adjacencies or flows within a store
- Secondary location alternatives
- POS or Shopper engagement strategies (eg the new Coles tickets)
- New fixture designs
The new Coles formats that been trialled in various guises in various State locations are a really good example of the above.
For a Supplier it may be:
- A Category based solution (eg the Cantarella coffee unit)
- A themed seasonal secondary location (eg Xmas cards and wrap, or boxed chocolates)
- A new fixture or stand targeting a particular Shopper trip (eg a refrigerated front end drinks unit targeting immediate consumption or an impulse confectionary gum unit)
- A particular layout reflecting usage occasions or a possible add-on sales opportunities
- A fresh location in the store, a new aisle location for the category for example
- Pack sizes, shapes and formats for particular channels or usage occasions
- NPD initiatives
So, why implement Trials in the first place?
1. Shopper and Consumer information is essential to be able to truly work with the retailers to manage and develop Category growth strategies, regardless of Channel. Leading companies are then using this information as a basis for strategic planning, and then undertake controlled Trials to prove their strategic hypotheses.
2. With the changes occurring throughout the retail trade, it is essential that we establish and properly Trial the corporate position on many aspects of our offer to the Shopper and the Consumer
3. Trials are used to not only prove a hypothesis but also to show your retailer partners your commitment to driving total Category growth. Often the Trial enhances your role as the thought leader in the category.
4. Enrols the Retailer not only in the process, but also the reason why the trial is undertaken in the first place – to test a category growth strategy in that retailer, in that channel.
5. Enrols responsibility and commitment across the internal silos of both the retailer and the Supplier
6. Proven knowledge of specific in-store activity and the corresponding responses is becoming vital as we move to store specific marketing in Space, Visibility, Range, Price, POS and Promotion. Well run trials of targeted programs provide this knowledge.
7. Shoppers are becoming more promiscuous based on Trip type, and traditional methods of “one size fits all….well nearly” is not appropriate. Continual fine tuning and differentiation is essential.
8. Trip type Shopper marketing is an evolving science and as the Baby Bomer, Gen X, Gen Y and soon to be Gen Z profiles further evolve, Trial management will be instrumental in fine tuning the differences
9. We need to have justifiable results that our sales and field people can use to “sell the story of our category” to all our retail partners across other Channels or within the existing Channel.
10. Differentiates Tactical from Strategic initiatives
The common denominator for both Retailer and Supplier trials are that they are testing a hypothesis – the concept is only a theory until actually proven in the context of the real trading environment where Shoppers determine the success or failure of the initiative.
The real key for a Supplier is Retailer engagement. Retailers must be involved in every step of developing the initiative, from as far back as commissioning the Shopper research questions and content to the design of the final unit or fixture. Joint ownership of the initiative and the final outcome is the only way to secure internal commitment from both participants.
There are a number of issues where the Retailer can have a critical input into the success of a trial. These are not strategic issues, but a set of important tactical considerations that can influence the timing and success of a trial.
Examples could include:
- Customer range changes post a range review
- Availability of in-store secondary display slots
- Meeting seasonal requirement eg Xmas
- Availability of warehouse slots
- Customer systems capability and compatibility
- Retail Operations consultation and acceptance
Retailers may also have minimum hurdle rates that must be met:
- Specific target % Gross Margin
- Net category profit (accounting for cannibalisation)
- Minimum number of units or cases sold per week per store
- Minimum or maximum SOH
- Specific OP or product sizes and weights
Implementing a Trial
When agreement is secured for a Trial a critical path schedule must be jointly developed. This will help ensure that commitments are met and will go a long way to remove barriers to implementing the Trial
Establishing carefully audited trials and widely publishing results is a critical success factor.
Evaluation of the trials must be carefully made to measure against the pre-set KPI’s or an agreed set of measurable goals before commencing. Often this will be factors other than just sales. Consider exit interviews – interviews with store & merchandising staff, also transaction size, profitability, associated category sales etc.
Agreement must be reached on how the results will be measured and then results must be presented vs goals/ KPI’s that have been agreed. Sources of the agreed data are also agreed and responsibilities assigned to gather and group the data, and interpret the findings, including interim recommendations.
Each partner must fully understand what they are setting out to test and pass that understanding on to those implementing the trials. Launch booklets from all of the information gathered through the development of the Trial parameters and any other discussions that may have occurred will form the basis of the selling presentation made by Field teams to the trial stores. These launch booklets are given to each trial store to ensure consistency of implementation between Field and Stores.
Conduct the trial over a minimum of 6 weeks, ideally 8-12 weeks. Maintain a running register of the trial stores vs the benchmark stores during the trial period. If the trial is obviously failing then serious consideration must be given to abandoning the trial and revisiting the key tenants of the trial
Ensure that the trial conditions are rigidly adhered to at store level during the period of the trial – any changes must be reported (these may abort the trial at worst or effect the measurement at best). Running a Trial in a store where there is an imminent refurbishment, or a major competitor opening will skew the results terminally. These impacts need to be considered and changes accommodated to ensure both the Trial and control stores are clear of any internal or external influences that will taint the agreed measurement criteria
Once the trial is complete, a fully documented report must be submitted to the retail partner, together with clear recommendations for the next steps. The format and reporting style is based on the previously agreed KPI’s and parameters and the final presentation is made to the key Retailer and Supplier sponsors and stake holders to ensure that the key decision makers are aware of the results and are in a clear position to make a decision to further roll out the Trial concept.
The Trial has then moved from category concept to category realisation, and becomes a fundamental basis of how the Category is marketed.
The evolvement of Shopper marketing hinges on the creation, trial and implementation of new Category initiatives , and progressive Retailers and Suppliers alike are continually developing new concepts to address different and ever changing Shopper purchase behaviours.
It is clearly felt for example, that the current global economic meltdown has indelibly changed the way Shoppers are wired to make purchase decisions. Out with premium product assortments and eating out to be replaced with house brands, weekly specials/ multi buys and eating at home.
So how are you developing your inititiatives and getting them to market?
Are you maximising your opportunities?
Are you managing the critically important aspects of Trial management to the best possible outcome?
