ShopAbility outline some ways to take what you know about shoppers of your type of store and turn it into a customised offer, for Convenience World Magazine.
Aside from technology, there are a number of macro trends impacting both consumption and shopping that represent opportunities for retailers to leverage. Some of these include authenticity & heritage, provenance, health, indulgence, time shifting and time snacking, localization, and customization.
Following on from a number of comments in The Insider in the past few issues of Convenience World where store staff, store managers and some manufacturers highlighted the one-size-fits-all approach of some head offices versus what’s actually required for an individual store, here we’re going to discuss two of the trends – localization and customization – and how you can achieve this through segmented execution.
Back in the Sept 2010 issue of Convenience World we posited a potential way to segment the convenience channel (fuel: local, arterial, roadhouse; and non-fuel: minimart, transit). Segments need to be meaningfully differentiated – both of the channel and of various shopper types – based on not just how they operate differently, but what you would actually need to DO differently in order to talk to the various types of shoppers, based on your site’s channel segment and location.
Here we’re going to flesh this out a bit further by looking at what the components of ‘segmented execution’ are, how you arrive at it and how you can put it into practice.
For argument’s sake we will refer to the hypothesized channel segments from 2010 listed above, but you may choose to segment the channel differently (we would love to hear your thoughts on how best to break up the channel!)
SUGGESTED CHANNEL SEGMENTS AND DEFINITIONS
An overview of the channel segments we listed in 2010 is below so you can see how they might play out. The key principle is that aside from fuel/non fuel, your location – where you are – largely dictates who your shoppers are and why they visit.
If you are a:
Where they are (location)
Reasons they visit you
How shoppers behave
Who you compete with
|Local (fuel)||Suburban locations – minor arterial roads in specific suburbsClustered near other local shops
Tier 2/3 in size and footprint
|Not necessarily about fuelBread, milk and newspaper
Couple of things they’ve run out of
Party/entertaining trip (ice, gas bottles etc)
Other services eg trailers, rego slips … first port of call because you’re the closest to home
|Reasonably frequent, return visitsLikely to ‘know’ you, and you know them (familiar faces)||Route trade – mixed business corner stores||Essentials across most categories (not just snacks and drinks)Mechanic/auto shop
|Minimart (non-fuel)||Inner city and inner suburban neighbourhoodsAreas with medium to high density apartment housing
Small store footprints
|White collar professionalsTourists and backpackers||Bread, milk and newspaperSnack or treat
Things they’ve run out of
|Locals – fairly frequentTourists and backpackers – expect you to know the immediate area (ask for directions)||Route trade – mixed businessCommunity grocers like IGA||No fuel offerEssentials across core grocery categories including personal care
|Arterial (fuel)||Inbound or outbound on heavy traffic arterial roads
Often Tier 1 or Tier 2 sites due to traffic
|Cross section – relatively more Tradies & Truckies||High skew to fuelOn the way to work, school or home – snack/treat
Food to go – breakfast, dinner, some lunch
Visitors coming over
|Quick in and outDislike queueing||Other convenience stores closer to home||Beverage and snack basedSome automotive needs
Some pet food
Fewer essentials in non-food categories
|Transit (non-fuel)||At or adjacent train and bus stations, tram and ferry stops, airports
Smaller store footprints, sometimes kiosk like
|StudentsWorking professionals||Looking for something to readKill time
Beverages/snacks for journey
|Browse and hang around||NewsagentsCafes||Beverage and snack basedA few personal care items
|Roadhouse(fuel)||Major highways in regional areas away from state capital cities (but may be within 10km of – or located in- small country towns)||TravellersTruckies
‘Tree change’ commuters in areas within 200km of capital cities (eg Ballarat & Bendigo to Melb, Central Coast & Sthn Highlands to Sydney, Gold Coast to Brisbane)
|Fuel and food basedMeals (not just snacks)
Rest stop – bathrooms, break up the journey
|Sit down meal once fuel and bathroom needs metKids run around a bit – adults looking for something for kids to do||None really … the next roadhouse (distance/time dependent)
Cafes and convenience stores in small towns (if leaving the highway)
|Based around eat-in foodTravellers’ needs eg tissues, maps
Automotive needs (in case of breakdown etc)
Some entertainment needs – magazines, books, CDs
Seasonal eg swimwear and sunscreen in summer/beach, beanies and gloves in winter/ski
Fig 1: Convenience Store hypothetical segmentation. © ShopAbility 2010
WHAT COMPONENTS CONSTITUTE ‘SEGMENTED EXECUTION’?
The basic point of purchase (POP) drivers for a start which we term RSVP3 (+C). They are Range, Space & Layout, Visibility and Display, Pricing, Promotion, and Persuasion (store staff upsell, incremental sell etc). Plus Communications – how you message your materials both instore and prestore and the types of communications media you use to drive traffic and repeat purchase.
Range: if you’re a Local store and there isn’t an IGA within cooee, then you have an opportunity to ramp up your general merchandise (and potentially range more fresh and meal solutions) in order to become an IGA equivalent (depending on your floorspace). If you’re a Minimart located in the CBD and you get a lot of tourists then you should be selling maps, tourist guides, restaurant guides etc as well as traveller’s needs like mini shampoo sizes, insect repellent, band-aids.
Space: the range piece based on channel segment then has a natural flow on effect to what space you allocate to your various categories. Whilst beverages and tobacco are likely the biggest categories irrespective of site type, there will be other variances. Meal solutions would get more space in an Arterial and possibly Minimart sites. General merchandise would get more space in a Local.
Visibility and display: should be linked to your shopper types, their trip types and the categories they are buying on destination vs impulse. But it’s not just about what you put on offlocation display or at the counter (all the usual suspects like energy shots, confectionery and gum etc). If you’re a Local you may choose to provide more instore visibility of various services you offer such as trailer hire, party ware hire in order to communicate that you are a destination for those services. You might even do this as a ‘Services Menu’ for instance.
Promotion: your site type and the types of shoppers would determine the types of promotional mechanics you employ based on the retail drivers (is your issue traffic, frequency, AWOP, spend, basket penetration of non-fuel categories?) and your major categories and trip types. If you’re an Arterial site a major opportunity is daypart marketing to drive higher traffic (penetration of passing traffic) – depending to an extent on whether you are inbound or outbound. Inbound sites are obvious for breakfast. Outbound sites are naturals for afternoon snacks (including homecoming/wind-down cheese and crackers) and evening meal solutions (on the drive home to save going to the supermarket). If you’re a Local or Minimart then what you’re probably after is frequency. So you need to look at promotions that will drive frequency such as ‘enter draw each time you purchase X’ (prize should be available for that store), ‘buy X number of Brand X (separate trips) during Month Y and receive a free Z’. The free thing could be a service, it doesn’t have to be a product.
Persuasion: it’s not just about suggesting they upsize their potato chips or getting them to buy an extra chocolate bar, though that’s a good start. If you’re a Local and you have shoppers coming to your auto mechanic for car registration renewals and checkups, you have an opportunity to sell them oil and other auto related products whilst they are there (car cleaning products, perhaps). If you’re a Minimart you might suggest a dessert or donut to go with their main meal purchase (even if it they came in just for several bowls of noodles).
The POP drivers are, however, just the rational or transactional component. Thought also needs to be given to the emotional component, since depending on the source used the % of shopping decisions made subconsciously and/or on emotion can be quoted as high as 95% (and rarely do you see a figure below 75%).
A useful framework for starting to think about emotional components might be Dr AK Pradeep’s 7 shopper experience dimensions. As listed in his book The Buying Brain, these are Information, Education, Interaction, Entertainment, Simplicity, Self Worth, and Community. Note that Simplicity (easy to shop, clean store etc) is only one of the 7 dimensions.
How might these play out depending on your channel segment?
Local stores are obviously going to have a higher part to play in Community than would an Arterial or Transit site, for instance. What community based programs can a local store get involved in, or create? Bunnings do a simple version of this with their community and charity run sausage sizzles on the weekends, for instance, where the sizzle at each store is run by community members local to each individual store. Local sites also have the opportunity to be the community notice board (if the closest IGA or newsagent isn’t already doing it), and this could be linked to local council news. This may help drive traffic. Minimarts also have this opportunity at a micro level if they are located in ‘apartment cities’.
Transit stores may have an opportunity to provide more Information, pertaining to the transit types (bus, tram, train, ferry etc) local to them and/or range transit related products and services from bus tickets to travel pillows.
Arterial sites, given their high throughput in peak periods, need to talk to Simplicity with hygiene factors like having enough registers open to allow fast transactions and to gain loyalty from efficiency.
Roadhouses, due to their higher dwell times whilst shoppers stop for a snooze or a meal, are naturals for Entertainment – both in product range (toys and games for kids, including electronic, music etc) but also entertainment related services – mini-theatres for watching hot TV series, for instance (rather than just dotting screens randomly around the site) as well as things related to electronic devices used whilst travelling – mobile phone and Ipad charging stations, for instance.
HOW DO YOU DETERMINE HOW AND WHAT TO CUSTOMISE?
Understanding who your shoppers are and why they are there helps identify ways you can grow, and they will differ slightly by segment. There are obviously reports you can buy or obtain from people like AACS, HIM convenience channel shopper data etc.
But you and your staff may already know more about your shoppers than you think. You could collect what you and your staff have observed, or you could spend a week physically observing shoppers and maybe asking some of them why they visited you today (trip type, which you wouldn’t get by simply observing them). You may also have scandata or your own POS terminal data you can analyse.
The main things to understand are what we call the 5Ws and 5Hs. These are Who (age, gender, lifestage ie kids/no kids, who buying for); What (products they buy); When (times of day, days of week); Where (do they go in the store?); Why (trip type, consumption occasions); How (shopping behaviour ie browse, planning, impulse); How much/many (spend, number of units per transaction); How Often (frequency – you’d need loyalty or Eftpos transaction data to track individual shopper frequency); How Long (are they spending in the store)?
And you can correlate any of the Ws against any of the Hs. For instance correlate How Much against What (biggest spend or volume items/transactions – likely tobacco for spend but may be some other things for volume) or against When (when are they spending the most and least?)
Once you’ve collected and analysed your 5Ws and 5Hs shopper data, you need to:
a) Look at your site type and location, and who your immediate local competition is for your major trip types. This will help with differentiation Then you need to …
b) Look at implications by RSVP3 (Range including services etc; Space; Promotion yada yada) and against the 7 shopper experience dimensions (Entertainment, Simplicity, Education etc). And last but not least …
c) Derive implications for how and where (both prestore and instore, and post-store to drive repeat purchase) you will communicate with your shoppers.
Yes it’s quite a bit of work, probably several weeks at least, but it’s better than doing the same ol’ same’ol and expecting a different result, or shooting in the dark. And you may well uncover some as-yet unthought-of opportunities.