Back in June last year we discussed how pharmacies are retail stores and thus in competition with other retail types. And that you need to determine your retail point of difference is, then find the right tools and platforms to promote it.

Here we’re going to look at what the different retail positions are so you can identify which one/s are right for you to use.

Why Shoppers Visit Pharmacy Is Different To Other Retail Types

Summarised in Figure 1 are the main different types of shopping trip by major retail channel. You can see that Distress (which is NOT price sensitive) and Script Fill are unique to pharmacy. Services is also unique to pharmacy, in the types of services that are offered.

Figure 1: Main Trip Types by Retail Channel. © ShopAbility 2011

SHOPPERS CHOOSE YOU BASED ON THE TYPE OF PHARMACY YOU ARE

Our article series on the different kinds of pharmacies (inner city, traditional community, suburban one stop, shopping centre generalist, discounter, medical centre) highlighted the differences in why shoppers choose you.

This is summarised in Figure 2. The key column to pay attention to is the What’s Most Important to Your Shopper, as this is the basis for your retail position.

Figure 2: Pharmacy Channel Segment Overview. © ShopAbility 2009

Each segment has its opportunities and challenges. And the challenge if you’re a retail banner is that you will have stores covering different segments, which means you need to allow flexibility for stores to do local area marketing that will play to their segment type.

MAIN RETAIL POSITIONS, AND SOME EXAMPLES

The key retail positions are Range, Service, Price/Value, and Experience.

Below is a map of these and a summary of the pharmacy segments. This enables you to see where each pharmacy segment should logically position itself. And for nearly all of them it is NOT price, because supermarkets can’t own that and you can’t compete in the long term … the exception is Discounters.

Note that there are different types of Range (breadth vs depth, specialist, innovation) and Service (speed, excellence, range of services offered). Depending on your pharmacy type you could position on Range – but in a couple of selected categories where you would go deep (eg Baby if you’re located  in a mortgage belt or near a hospital/maternity ward) rather than trying to own breadth of range across everything.

You can position across two (eg range and service) but from a communications point of view it’s stronger to select only one. It doesn’t mean you don’t do the others, but you need to pick one to be known for.

RANGE BREADTH EXAMPLE: BUNNINGS

Bunnings owns range breadth. People go to Bunnings just to browse. Shoppers expect that they will be able to get everything hardware and DIY related at Bunnings because of the strength of this positioning  While Bunnings now also offers a lowest price guarantee, they built their business on the strength of their range (and have started acting on Experience/Advice as well).

Another example of range breadth, and depth, positioning is  Dan Murphy’s, who are now Australia’s largest retailer for premium wines.  Dan Murphy’s has used range to position itself as a destination for wine in the Australian market. The strength of this positioning sees shoppers go out of their way to visit a Dan Murphy’s store, often travelling up to 20 minutes. While they also have a lowest price guarantee this has been replicated by 1^st Choice and therefore is not the primary point of difference for them.

Range innovation is exemplified by Ikea, who are renowned worldwide for their innovation and leadership within the home furnishings market. IKEA are known for their constantly redesigned, affordable range and unique store layouts and display.

SERVICE EXAMPLE: MCDONALDS SPEED OF SERVICE

It’s not called fast food for no reason – McDonald’s are in the business of fast service (although their internal mantra is QSCV – Quality, Service, Convenience, Value). In a recent campaign, McDonald’s promised drive thru service in under 3mins or your next Big Mac free … putting their money where their mouth is and reinforcing their speed of service position. This sort of positioning is an opportunity for shopping centre pharmacies where speed of script drop-off/script fill is of paramount importance

SERVICE EXCELLENCE – NORDSTROM DEPARTMENT STORES

A US-based luxury department store known around the world for their exceptional service levels Nordstrom was one of the few large department store retailers in the US to survive the GFC relatively unscathed as it’s not just about range and price there.

Led from the top the company has placed excellence in customer service at the heart of their strategy, with a 75-word ‘service mantra’ placing the needs of the shopper above the needs of Nordstrom, and  ‘The Nordstrom Way to Customer Service Excellence’ the handbook which contains the secret to their unsurpassed levels of customer service.

SERVICES OFFERING: WALGREENS, CVS, RITE AID (USA)

Walgreens is a US based drugstore chain which offers its customers a range of complimentary services which drive foot traffic, including optical, health checks, flu shots and passport photos as well as instore clinics … go to the doctor instore and get your script filled in the same place

Script fill services include automated script fill including mobile applications for this as well as an instore express script fill service

CVS and RiteAid (other US drugstore chains) have store-in-store GNC Livewell areas, staffed with GNC experts.

PRICE/VALUE OPERATOR: COSTCO

Costco uses its buying power to buy in bulk and sell to their members at significantly cheaper prices. They range everything from canned tomatoes to Gucci jeans and Tiffany diamond rings. They job lot (ie 60% of their stock is ‘short term only’ rather than core range, promoting a ‘treasure hunt’ mentality on bigger ticket items.

Shoppers must be a Costco member to shop in these stores … like Campbell’s Cash N Carry, on steroids. Minimal shop fit out so all savings go into providing lowest cost. Retail pricing model is cost price plus 15% … across the board.

Price/Value operators are generally no frills, with minimal if any service. Another example is Aldi, renowned for its bag-your-own groceries and minimalist shopping experience.

EXPERIENCE AND EXPERIENTIAL POSITION: APPLE STORES

Apple stores have some of the highest $ sales per square metre in the world, and it’s because they focus on the experience rather than trying to overtly sell you something. Aside from having fabulously design friendly hip products to promote, Apple retail stores deliver on their position of experience in two ways:

1. The level of experience of their employees is demonstrated in-store at their Genius Bar, their technically service department
2. The experience their shoppers have in-store trialing the latest Apple offers. Shoppers are encouraged to engage with the products and return with their Apple products to attend tutorials in-store.

Best Buy (consumer electronics chain, like Good Guys or JB Hifi) in the USA is another example, with their Geek Squad service centres. Dick Smith (DSE) are trying to own this position in Australia with their ‘techxperts’ positioning.

This positioning is relevant for retail channels with a lot of complex and little-understood categories (many pharmacy categories eg vitamins fall under this label).

So they’re the major retail positions by which you can differentiate yourself. Strive for uniqueness – a point of difference is only unique if your competitors can’t do what you do either as well as you do or in the same way.

Imitation is the sincerest form of flattery … but, in business, it can also take away your competitive advantage.

You should always aim to be unique, not replicable (nor replicate others).

Next time we’ll look at the best tools and vehicles to promote your point of difference, once you’ve determined what it is.

Until next time!

Community pharmacies differentiate themselves from discounters because they consider they are catering to their local community.

Which they are, but to what degree? How well are they really applying knowledge of their local community to tailor their range and offer?

By catering to your local community, I’m not just talking about stocking product X for old Mrs Hodgkins who comes in once a month for it. What I mean is understanding the demographics and motivations of the people in a 3km radius (catchment area) of your store.

Let’s have a look at some opportunities this presents.

PROXIMITY

For whom are you the closest pharmacy? Who lives or visits the area you are located in and why? What’s in your immediate vicinity that provides a reason to visit you?

Below are some potential audience/shopper types, and reasons they might visit you. Based on some gross generalizations and stereotypes yes, but hopefully it gives you the idea. This is just a starter list, add your own examples!

• Mortgage belt: anywhere those display home villages and new housing estates are is likely ‘mortgage belt’ – first home buyers with young families. Areas like Narre Warren in Melbourne and much of the Hills District in Sydney. This is all about babies and toddlers
• Beach: suncare and skincare as well as accessories and accoutrements (beach towels). Could you bundle beach/sun oriented products together into a beach pack? (pre-sun, during sun, after sun, Stingose etc)?
• Aged care: incontinence. Footcare. Eye related things.
• Child care centres & primary schools: wound care, lice/nits, anti-itch products for chicken pox and other playground diseases
• Industrial estates: tradies. Bit of a stretch to assume they’re going to come to you for moisturiser, but woundcare for cuts and bruises potentially. Cleaning solutions to get the paint off themselves.
• University: condoms. Hangover cures, Berocca and painkillers. NoDoz for late night study jags. Pregnancy tests.
• Outdoor activity areas: as I found out when injured in Queenstown NZ, there’s an army of ‘ambulance chaser’ physiotherapists in ski areas, going to Whistler/Banff in Canada in the northern winter and Queenstown in the southern winter. This is because wherever there is skiing and particularly snowboarding, there are injuries. What a great analgesics opportunity!  Same applies for proximity to skate parks or national parks – pretty much anywhere outdoor activities are involved. (And in the case of national parks, great suncream sales opportunities too).  There’s a general store and liquor outlet in Chatswood (Sydney) that bills itself as the ‘last bottleshop before the M2’ … if you’re on the way to a national par or outdoor area this is a great outdoor signage opportunity for you … ‘last sunscreen before the Park’ etc.
• SINKs and DINKs: single income/double income no kids areas, these guys have more disposable income. Areas like Neutral Bay in Sydney, South Yarra in Melbourne. Function a bit like inner city pharmacies – dating related items (breath freshener, condoms etc) as well as aesthetic and beauty related items and weight loss products.
• Established affluent areas: otherwise known as areas with ‘ladies who lunch’ (Mosman in Sydney, Brighton in Melbourne etc) – all about looking good. Cosmetics land – special brands. Skincare. Weight loss.
• Pubs: Berocca and hangover cures, condoms.

And that’s just the products; there are obviously a slew of complementary services, checks and tests you could offer that fit each of the categories mentioned above eg baby rash consultations in mortgage belts.

It’s one thing for you to range it and specialise in it, and another thing for the shoppers in your area to KNOW that you specialise in it. You need to shout about your specialty, not just range it. And the way you become famous for something is by carrying it consistently across different marketing activities, both in store and out of store.  All your advertising, catalogues, permanent point of sale and fixtures … everything should specify (if not shout), and at the very least support, your selected specialist positioning.

CAPTIVITY

What and who else is around your location? What are the closest retail store types, services and offers to you (and how do they differ from yours?)

I’m not just talking pharmacy here, but other channels as well. Is there a mixed business, a bakery, a petrol station?

Obviously a few local GPs would be handy from whom you can receive script business!

The fewer the surrounding retail opportunities, the higher the degree of shopper ‘captivity’.

And the higher the degree of captivity, the less price sensitive shoppers are, because they have less choice. This means that if you’re the only pharmacy for several km you effectively have a captive local market who come to you for service and your areas of specialization as discussed above, rather than price.

It also opens up opportunities to stock non-core products, eg drinks, if there are no stores selling drinks etc within a 500m – 1km radius of you.

It’s a bit like those general stores in small towns that sell everything from fishing gear to band aids, because there’s nobody else for miles so the general store is the go-to destination for pretty much everything.

I’m not saying you need to rush out tomorrow and find a fishing gear suppliers, but go for a walk around your local area and see who’s really there and who’s not, and what this means for what you could be selling and what services you could be offering.

Last article we looked at Detached Bottleshops – what they are, who goes there and why. Here we’ll do something similar for Pub Attached and Grocery Attached, which in some ways are as different as night and day – particularly time of visit.

WHERE & WHAT YOU ARE

If you’re a Pub Attached ,it’s pretty self explanatory … you’re part of the pub building (or right next to it/underneath it), often on street corners on both minor and major arterial roads depending on the pub location. You’ve got a small store footprint and thus a limited range, predominantly smaller pack sizes such as single bottles and six packs, with fewer cases. Examples include the BottleO and Bottlemart pub attached sites.

If you’re Grocery Attached, you are immediately adjacent a supermarket (eg WW Liquor, some Liquorlands, IGA + Liquor) or may even be ‘dewalled’ where shoppers can walk directly from the bottleshop into the supermarket or vice versa. Because of their supermarket locations many stores will be located in shopping centres (and thus limited by shopping centre trading hours). Medium store footprint, you have a medium range of everything with a focus on mainstream and value brands and therefore lower price points.

WHO SHOPS WITH YOU AND WHY?

Because pub attached bottleshops are open later than everybody else (their key point of difference) a substantial amount of their trade is between 7 and 11pm, often the punters leaving the pub who are picking up something on their way home or to ‘kick on’ at a mate’s place, or other punters picking up something to take to dinner. Because your range is limited they’re in and out pretty quick, although this may be counterbalanced by those shopping in pairs where mutual preferences come into play (and/or if their decision making is slowed by what they’ve had to drink in the pub already). And they are more driven by convenience than value, so you can charge a price premium vs other channel segments like grocery attached or even detached bottleshops.

Grocery attached stores are pretty much the opposite on a number of counts. The majority of the grocery attached bottleshop traffic – more than 80% – comes from people shopping in the supermarket. So not only is the bottleshop trip more likely to be at the end of or part of a ‘stock up’ shop, there is a higher proportion of women  – around 60%, as on average three quarters of supermarket shoppers in non-SINK/DINK (single/double income no kids) areas are women. And they’re buying for the household, not just themselves – stocking up on replacement items, the partner’s regular case of beer etc. Because supermarket shopping trip peak times are 2-7pm, this is when most of the grocery attached liquor trade is likely to occur. As well as Saturday mornings, particularly for entertaining occasions backed onto the traditional ‘Saturday morning shop’.

IMPLICATIONS AND OPPORTUNITIES

For pub attached stores the key opportunities are about maximising spend from your existing traffic (price premiums, AWOP via 2fors and pick ‘n’ mix mechanics) and driving traffic through shouting about, and thus becoming known for, being open late. (Conversely, you could do ‘early bird’ offers for other dayparts to drive traffic earlier in the day). Because you’re part of a pub you’ll have a bunch of ‘locals’ to whom you can market via direct mail, letterbox drops in the local area etc. Provide reasons for them to visit you. Promote the bottleshop in the pub with combined onpremise/offpremise offers.

For grocery attached stores, the biggest challenge is getting more traffic in from the supermarket. Although more than 80% of these stores’ traffic comes from the supermarket, only around 10-15% of supermarket shoppers actually go into the adjacent liquor store. So the opportunity is in driving traffic from the supermarket via mechanics like cross category promotion (within RSA guidelines of course) with suitable categories in the supermarket, eg Entertaining categories like dips, cheese and crackers.  Another opportunity is to promote via the supermarket catalogue (where possible) as supermarket shoppers are already in the planning/list making/catalogue mindset – AWOP driven bulk offers will talk to the ‘stock up’ mindset, as well as promoting Entertaining occasion services and products such as ice, glassware etc. If they’re already in the supermarket buying entertaining occasion products, how can you make your liquor store the ‘one-stop entertaining shop’? Also, tie-ins to the supermarket’s loyalty scheme, if they have one.

So it’s clear from above that opportunities and executions differ for pub attached vs grocery attached liquor stores.

We’ll look at drivethrus, big box discounters and specialists over subsequent articles and discuss some of the implications.

They’re the words promotional marketing agencies see on most briefs for ‘target market’. “Main grocery buyer”.  Aka women 25-54.

OK, so the two major supermarkets average 75% female shoppers. But to assume that’s the same in all stores, and that they all shop the same way, means the majors are missing opportunities to tailor activities – more profitably – to specific shopper types and shopping trip types. Vanilla is not the only flavour of milkshake.

Over the past few years that we’ve been running shopper research we’ve noticed that household makeup (how many people in the household, ie how many mouths to feed) and lifestage (eg SINK/DINK, young families, older families, empty nesters) have a far greater impact on shopping behaviour than does age, income, or geography.

Let’s look at how this plays out.

WHO REALLY SHOPS IN SUPERMARKETS?

Actually, males represent 48% of grocery shoppers overall, it’s just that their overall frequency of shopping trip is lower than females. But this changes by household type. Supermarkets located in areas with a lot of SINK/DINK households (single/double income no kids – like the South Yarras, Neutral Bays, Fortitude Valleys, Holdfast Shores, Subiacos) will often have up to half of their regular shoppers being male. This is because the guys are either shopping for themselves and their partner (male or female) or shopping for the household (particularly share households of guys – and it’s not unusual to see two male housemates doing the shopping together of an evening).

There’s a reason that such a high proportion of the major phone networks’ mobile phone traffic between 4 and 7pm is ‘I’m standing in front of the X category, which is the one that we buy?’ phone calls. And it’s not the women making them.

Blokes shop a bit differently to women – they’re generally less concerned with getting the absolute right brand/product (unless they’ll get in trouble). Near enough is good enough. And they’re more open to impulse, and to pester power from the kids.

So what?

This is part of the argument for store clustering – changing your execution store by store depending on who the majority of shoppers are in it. If you know which stores have higher proportion of young blokes you’d dial up on easy and RTE meals, and offer impulse snack bundles for a start.

HOW DO THE LIFESTAGES DIFFER?

Herewith some gross generalisations (it does vary per category) but this should give you an idea.

SINKS/DINKS: tend to have more disposable income so as a rule they are less price conscious and more into quality and gourmet items and anything new/different/sexy. Obviously because they don’t have kids they’re not buying baby aisle to begin with. As a result they are more likely to have pets, particularly small dogs, that are treated anthropomorphically (like they are small humans). So stores in SINK/DINK areas are likely to overindex in pet treats and premium pet foods, as well as categories involved in entertaining (eg high end dips, premium salty snacks and crackers). They are least likely to buy on promotion or private label as they’re looking for quality cues (depending on the category, of course). They don’t buy on volume as they’re more likely to live in apartments with smaller pantries, fridges and cupboards – so big bulk packs won’t fit! This is single serve land – which of course comes at a price premium.

Young families: are all about baby, school, nutrition and some sports. Shoppers for young families will buy based on what they know the kids like and will actually eat. Because there are more mouths to feed, and often a mortgage, budgeting starts to come into play. They’re more likely to have a repertoire of brands that they switch between (so if you’ve always got one brand in a category on promotion all you are doing is merely switching a ‘given’ sale down to the lower priced brand on promotion. Time to review your promotional slotting and frequencies!)

Older families: tend to be more volume based (particularly if they have teenage boys).These guys are your classic 2L milk and 20pack toilet roll territory (note – SINKS/DINKS and Empty Nesters aren’t). Almost the opposite of SINKS/DINKS in behaviour, they’re after economies of scale because they’ve mostly got the storage space to hold it all (not that it lasts long with ravenous teenagers about). Whilst they’ll have certain brand preferences in certain categories, mostly it’s about feeding the masses as cheaply as possible so you tend to see a lot more private label in these households’ cupboards. Often catalogue monitors, they might switch stores if there are enough of the right bargains in one catalogue to justify it.

Empty Nesters: longstanding loyals to brands they know and that have stood the test of time, they’re looking for value for money but also service and acknowledgement … ‘they know me and what I like’. They will pantry stock on a bargain (but then, you’re just pulling the sale forward in a lot of categories). They are less open to trial, demonstrations and sampling (where SINKs/DINKs love this) and more likely to buy mainstream than premium brands.

So if you know what the majority of your store’s shoppers are, you can tailor not only your range but also your promotion and marketing mechanics to suit.

And even if you are in an area with a reasonably even split of household types, you can rotate your promotions and marketing programs around the various household types – you don’t have to assume that the same promotion is going to suit everybody.

It just gives you more strings to your bow, or weapons in your promotional arsenal.

Next time we’ll look at trip types and shopping missions, and how you can market to those.

Until then!

Who your shoppers are, why they visit you and how they behave provide clues as to what your offer should be and how you should be servicing them. However, the way the industry currently looks at itself (how it divides up or segments the convenience channel) doesn’t really look at shopper needs.
Traditional convenience channel segmentations include:

• Tier 1, 2 and 3 based on store footprint and sales
• Fuel vs non fuel vs dual
• Chains vs independents, based on whether you’re owned by a supermarket, or what banner/franchise/buying group you are or aren’t part of.

All of these are numeric, structural or operational. Whilst they provide an overview of the industry, they are not helpful to you in micromarketing an individual stores because they miss the intricacies of looking at where you are located, why shoppers choose you, and who you compete with, among other indicators.

We’ve started to have a think about how this could be approached differently – to provide a shopper overlay to the numeric and structural approaches. Based on a number of shopper related indices and dynamics, we suggest there are at least 5 different channel segments. As a starting point, we’ve called these segments Locals, MiniMarts, Arterial, Transit, and Roadhouse. There may well be some others, but these will do as a start.  The key principle is that your location – where you are -  largely dictates who your shoppers are and why they visit.

At the bottom of this article is an outline of what these segments look like, and some opportunities for each. These are just initial thoughts, we’ll build on it over time. Note that the channel segments outlined here are currently hypothetical, yet to be quantified with research.

What does this mean for opportunities and growth?

Why use the below table or start to think about what your store type is? Understanding who your audience is and why they are there helps identify ways you can grow, and they will differ slightly by segment. Some initial ideas are:

• Local: Community based programs (like IGA does). Expand range of essential items (compete with supermarket for small baskets). Expand services offer – you’re a destination anyway!

• Minimart: Similar opportunities to Local stores – expand range of essential items and services offer where you’re the regular go-to place for local apartment dwellers. Maps, guidebooks and other travellers needs for tourist locations

• Arterial: Daypart marketing – breakfast, afternoon pick-me-up, dinner on the run/dinner essentials, based on whether you’re inbound (breakfast) or outbound (dinner). Improved food range, eg meats and sauces , for ‘dinner tonight’ shops in outbound. Facilitate less queuing (open more registers during peak periods) to drive loyalty through efficiency

• Transit: Cross category bundles – snack, drink; non-spill format beverages; books and CDs, not just magazines. Work/date night essentials – stockings, cough/cold, pain relief, condoms

• Roadhouse: Differentiate from other roadhouses – expanded food offer with a point of difference (not just fried stuff). Kids toys & games suitable for travel (including electronic).

Here’s the reference table of hypothetical channel segments:

Types of Convenience Stores © ShopAbility 2010

Fig 1: Convenience Store hypothetical segmentation. © ShopAbility 2010

So that’s a very general outline on some potential different convenience store types. We welcome your feedback on the types and where your store fits (or doesn’t) as we discuss the opportunities per convenience store type further in later articles.

Until then!

Who do you think you are (what your pharmacy is) vs how your shoppers see it?

Last article we talked a bit about various retail channels and store types, and why they are visited by shoppers. We’re going to break this down into more detail here specific to pharmacy types.

Subsequent articles will deal in more detail, per type of pharmacy, in the opportunities this presents.

Who are you?

Below is a summary table of pharmacy types that we have developed. It might not cover every individual pharmacy out there, but should cover the majority … if you’re a pharmacy that doesn’t fit into the below, let us know. Always happy to look at new channel segments!

The first row (marked with #1) is the most important indicators, then the second row are the next most important and so on.

Fig 1: Pharmacy Channel segments. © ShopAbility 2009

What is evident from the above is that at least who shops in your pharmacies, and how they shop (and thus what you sell) is going to differ depending on the type of pharmacy you are.

If you’re an Inner City pharmacy, for example, you’ll have a lot more corporate types in their 20s, 30s and 40s buying stuff for that night (stockings, condoms, breath freshener etc) in their lunch hour or to/from work. This means you need to staff up at peak transit periods, and range products that apply to their needs (no incontinence pads for this market!) “Service” in these types of pharmacies means ‘get me in and out as fast as possible’. These types of pharmacies are the law of large numbers – you might not see each individual very frequently, but you’ll sure see a lot of different people (traffic).

At the other end of the spectrum, if you’re a Community Pharmacy (generally located on a suburban strip) you’re more likely to have a number of regular older customers, often pensioners, who treat you and your store as a frequent social outing and are more likely to wander in throughout the day, looking for not only the script fill for their chronic ongoing ailments but also (aside from the aforementioned incontinence pads) products associated with aging such as specialist footcare like corns and bunions. “Service” here has to do with the personal nature of the relationship. Customers in these types of pharmacies rely heavily on you for advice.

What does it mean?

We’ve had a go at representing some of the implications of these differences below. We’ll be going into more detail in future articles, but you can use the above and below tables as topline ‘ready reckoners’ of sorts.

You can see that the Range, Service, Value equation we discussed last time is dialed up or down in importance to shoppers depending on the type of pharmacy you are.

Fig 2: Topline Implications of Pharmacy Type. © ShopAbility 2010

So that’s a very general outline on the different pharmacy types. As mentioned, we welcome your feedback on the types and where your pharmacy fits (or doesn’t) as we discuss the opportunities per pharmacy type further in later articles.

Until then!

By ShopAbility for Retail Pharmacy Magazine

In our first article in the Shopper Marketing series we identified the key levers you can pull in store to convert more sales. We outlined the 5 way retail multiple and the key Point Of Purchase  tenets of ‘RSVP3′: Range, Space, Visibility, Promotion, Price and Persuasion (ie staff persuasion).

This issue we’ll focus specifically on Range. How can you use Range as a draw card for shoppers, avoid wasted retail space and differentiate the store offer versus competitors?

In this instance, we’re referring to your front-of-store and OTC products. Range is basically the amount and types of products your store carries.

Ranging needs to be considered at three levels – Store, Category, and Product. This can be represented as follows:

Store Level

What you range says volumes about you

Range is a key traffic driver. What you range – both quality and quantity – says something to shoppers about who you are and why they should shop with you.

Range talks directly to your competitive strategy. Who are you trying to be and what are you trying to do? If you are ranging the same items as competitors, but more are more expensive, then shoppers would need to see a different in store environment and service to make up the difference.

If you’re ranging the same products as competitors but more cheaply then you’re aiming to drive traffic based on price (which doesn’t necessarily lead to profit).

If you are ranging some similar but a number of different categories and products to competitors, then shoppers will come to know that your store has a range of items that other pharmacies don’t, and your pharmacy may become a destination for those items.

What you range vs your competitors also says something about you – how are you different or the same?

Category Roles

Different categories play different roles. Typically, these roles are Destination, Preferred, Seasonal/Occasional, and Convenience. How you activate the other Point Of Purchase drivers (space, display, price, promotion, persuasion) can also have a role in how the categories are viewed by shoppers.

The Pharmacy channel is interesting in that a) pharmacies are health retail generalists, operating across a number of categories and b) several categories are Destination categories based on shopper/patient distress situations, such as Cough/Cold and Analgesics. Or your pharmacy may attract Destination perfume shoppers, for example, because your range of perfume is good and prices are competitive versus department stores.

Categories like Weight Management, Vitamins & Baby might be Preferred categories for pharmacy (over and above mass merchants or grocery) because of the staff knowledge and service element. Categories like Allergy/Hayfever are highly Seasonal. Convenience categories are ‘while I’m here’, impulse type purchases typically with a narrow range, such as confectionery.

An example of category roles and their impact on range and retail measures is provided below. Don’t forget, the Retail Drivers are where the rubber hits the road. As you can see, by understanding your category roles (and the impact of that on your range decisions), you can leverage your retail drivers to increase profit.

So you need to figure out which roles each of your categories play, and what that means for the kind of range in each you should carry.

Category coverage & weighting

To achieve basic level category ‘coverage’, ranging products across the top selling categories is the obvious place to start. Naturally you need basic offers across the top 10 OTC categories (according to Nielsen’s 2009 OTC report): vitamins & supplements; cosmetics; analgesics; cough & cold; skin care; gastro intestinal; allergies; wound care; baby; and weight management.

So the above gets you to a place where you’ve covered the basics and you’re all things to everybody.

From a coverage point of view, if you only range the above Top 10 categories, what is missing? Is there another category that you could range to gain competitive difference? Could you be known as the orthopaedic shoe specialists, for instance?

Weighting is about relative emphasis. If you range more skus and devote more space to a specific category, promote it, and provide staff training in it, you will eventually become known as a specialist in that category. Are there any particular categories in which you would upweight your range, in order to become a ‘specialist’? What could you be ‘famous’ for?

When thinking about this, it is useful to ‘profile’ what kind of shoppers you see most often in your store. How old are they? Male to female split? What are their most common needs? What ELSE is that kind of shopper likely to need that either you or your competitors are not currently providing? Look for gaps and opportunities… how can you increase your usefulness to your primary shopper?

Depth vs Breadth

Depth is having few categories, but lots of skus (stock keeping units = individual products/packs) within the few categories you stock. In bottleshops, an example is Vintage Cellars – lots of depth in wine (and a few boutique beers) but really only the basics for beer, spirits, mixers etc.

Breadth is having many categories but only a few products per category. The soon-to-open Costco warehouse club is an example of this – they carry many more categories than the average supermarket – only 40% of what Costco carries is food, 60% is ‘general merchandise’, including everything from BBQs to plasma TVs to Tiffany jewellery – but in each category they only carry 2 or 3 skus.

You need to decide whether you are going to go for Depth (ie be a specialist in a few things, and just cover the basics with everything else) or Breadth (try to be all things to everybody, in which case you’re competing with the Pricelines and Chemist Warehouses of the world … and you probably won’t be able to match them on price because you won’t have their economies of scale and trading term relationships with suppliers).

Category Level

Categories are broken down into subcategories or ‘segments’.  Depending on your depth/breadth ranging strategy, in theory you need to cover most segments within a category.

For skincare, the segments might look like Face, Hand, Foot, Body and Suncare.  For Vitamins & Supplements it might be vitamin type (Echinacea, Vitamin A, Multivitamins) or condition specific (arthritis, period pain etc).

For each category, you need to a) segment the category/divide it into product groups based on how SHOPPERS look at it, and then b) decide whether you’re going to range products in EVERY segment or just focus on specific segments (ie back to depth vs breadth).

You also need to think about whether there are any ‘unique skus’ that are effectively a one-product segment, servicing a particular market, and how you might treat those in your category segmentation.

Note that as per the Store Level, individual Category Segments may play different roles.  Eg Glucosamine is Destination within Vitamins & Supplements.

The theory of coverage and weighting applies at category and category segment level too -  are there any category segments in which you would upweight or downweight your range?

Product Level

At this level, you’re deciding which brands and individual items (skus) you’re going to carry. Eg for Analgesics Brand X, will you carry tablets, liquid capsules, powder capsules or all three? Will you carry only the all purpose painkiller, or also the period pain and injury specific varieties?

This comes back to your store level strategy (focus/specialty categories vs basic categories, and their roles) and the decisions you made at category level.

What you’re now deciding is how many different products of a specific brand you’re going to carry across segments and across the category.

You also need to decide the mix of branded products vs own-label/private label/generics you’re going to carry.

In order to do this, you need to understand the role of ‘beacon brands’ for a category (eg Nurofen is a Beacon Brand in analgesics), and how substitutable the products are. Beacon brands may or may not be substituted for other products by shoppers. If it is a Destination category (eg Analgesics) and a Beacon Brand (eg Nurofen) a shopper may abandon the purchase if you’re not carrying the beacon brand … or if you don’t have a persuasive argument as to why they should buy an alternative product.

Ways you can determine the core products to range include sales analysis and trends of your own product sales (volume and transactions per line item); space to sales; and hurdle rates (units sold per store per week … otherwise known as velocity); industry intelligence and reports as to what’s selling, and trend monitoring to see what’s new that’s selling that you’re not ranging. Note that seasonal products will have highly variable velocity rates.

At a more advanced level, smart operators also look at the cost of supply per brand and line item, the cost/benefit of a broad vs narrow range within a category, and build in space limitations.

In summary: explore your range of possibilities

With the foregoing in mind, have a think about:
1. Who is your typical shopper? What do they need?
2. What does your ranging point of difference and strategy need to be to appeal to that shopper more versus competitors?
3. What types of category and segment level additions or cutbacks would achieve this?
4. What changes do you need to make to your category mix and segment/product mix within categories?

We’ll be back in the next issue to talk you through how to then come up with the right range for the size of your available retail space … known as ‘efficient assortment’.

In the meantime, we welcome feedback on these articles – what you agree with, what you don’t – and what you’d like to hear about. Email us with feedback on enquiries@sh-opportunity.com.au

Norrelle Goldring from ShopAbility and colleagues discuss how to leverage the in-store environment and influence the shopper where it counts. Norrelle’s comments highlighted on page 4.

Download the article here

Macro consumer & economic trends impacting shopper behaviour and how to leverage them

We are living in interesting times for retail. On the one hand we have a growing pool of high income earners and the ubiquitisation of luxury brands, and on the other a set of economic factors that are beginning to curb retail spend.

In this article we will cover the major consumer and economic trends impacting retail, likely changes in shopper behaviour, and implications for marketers.

The headline trends we will discuss are:

• Changes in household makeup
• Market polarisation and trade up/trade down, growth of the discounters
• Affordable luxury and masstige
• Health, wellbeing and obesity
• Sustainability and organics – the rise of the ethical shopper
• Economic slowdown, rising fuel and food prices.

Trend #1: Changes in household makeup – the role of segmented marketing

The facts:

According to Australia Scan, Roy Morgan and other sources, single person households are now nearly a quarter of Australian households, and 1-2 person households are nearly half of all households. The white picket fence, 2 adults and 2.6 kids (well, 1.8 kid) family still exists, but it represents under half of households, and only in certain geographic areas.

Men are increasingly shopping for themselves, with up to half of all grocery shoppers now male. Whilst the traditional ‘MGB’ (main grocery buyer) might be Mum shopping for the family in the mortgage belt, in inner-city areas shoppers are more likely to be singles of both genders shopping for themselves, or share households shopping together.

Implications for shopping behaviour:

Different household makeups have different product and pack requirements. Bulk packs are bordering on meaningless for DINKs living in small apartments with little cupboard space. Increasing average weight of purchase (AWOP) for small households living in small spaces might look like getting them to buy more units of a small item, rather than uptrade to a larger pack size.  The reverse is true for larger households with kids in the mortgage belt.

What marketers need to think about:

• Consider your portfolio strategy. Do you have brand and product offers catering to all relevant household types? Review your pack strategy and pack sizes by lifestage and household type.
• Explore segmentation with retailers. Understand how your category is segmented by shopper type and what products should be ranged where.

Trend #2: Market Polarisation – Trading up where I care, and down where I don’t

Facts and Behaviours:

Private label is reaching 20% of grocery sales, and Aldi is gaining momentum with approx 5% share of total grocery.

Shoppers are increasingly trading down on products and categories they don’t care about, and trading up in the ones where they do.

Trading up can be seen across a number of categories that are gourmet or involve entertaining, including coffee, cheese, dips, chocolate, pet food, and beer.

Categories with the highest involvement and degree of personal risk are the ones most resistant to private label.  Health and beauty (haircare, skincare etc) and pet food have so far proved reasonably resistant to private label despite the retailers’ best efforts as shoppers ultimately place more importance on the product’s efficacy (is it good quality/effective for my hair, skin, pet …) via strong brand associations, than the price.

Trading down occurs in low involvement, low perceived risk categories where the product is a (potentially invisible) component of a larger whole (think baking ingredients such as flour) or products in the category are perceived to all do roughly the same job. Papers, foils and wraps is such a category.

In addition, shoppers are more likely to trade down when products are for their own usage, and trade up when the product is for use by others, entertaining, gifting or special occasions.  I.e they trade up when image, indulgence, and efficacy are important.

What marketers need to think about:

• Marketers need to understand where on the trade up/trade down scale their products fit, and which types of retail channels they are therefore best suited to.  What kind of category are you in? What channels are your product categories bought in? You don’t have to be everywhere, just in the right places with the right product.
• Understand the usage of your product. Is it primarily for use by self, alone or by and with others? Is it predominantly for everyday occasions or special events and entertaining? What are the implications of this on likely trade up or trade down scenarios?
• Determine your private label participation or defence strategy. Is your category a candidate for private label (if it’s not already present)? Will you provide both branded and private label products? If you stay with branded products only, how will you position yourselves against private label – where do you stand on the ‘good, better, best’ scale?  How will you shore up your positioning with above and below the line communications to ensure shoppers select your brand over private label or other brands?

Trend #3: Affordable luxury and masstige = importance of getting into the consideration set

Facts and Behaviours:

Once-exclusive brands are becoming not only aspirational but affordable due to broadening retail distribution networks, lower prices based on economies of scale, and the advent of shopping tourism.  And it’s compounded by the celebrity culture and endorsements, and the access to ‘sneak peaks’ inside celebrities’ lives.

Once considered bastions of visible achievement reserved for the select few, it’s now not unusual to see 23-year-old team assistants sporting an $800 Louis Vuitton handbag or a $500 pair of Manolos. There is an increasing expectation that luxury brands be available to the mainstream, hastened by the advent of outlet malls and more recently premium outlet malls (such as those in Las Vegas), which sell luxury brands at heavily reduced prices.

This is placing downward price, positioning and profit pressure on other brands in specific categories.

What marketers need to think about:

• Determine the role of your category. Are you in an expressive category, which shoppers and consumers believe says something about them?
• Where do you sit versus other brands in the category? Which are the aspirational brands? How will you reinforce your brand positioning?
• What does this mean for your price positioning? How will you balance the aspirationality of your brand with the expectation that it be available, in at least some channels, at a reduced price? How will you balance price promotions so brand equity is not eroded?

Trend #4: Health, wellbeing and obesity – making it easy to be healthy

Facts and behaviours:

Australia recently overtook the USA for the world’s top spot in the obesity stakes, driven not just by poor diets but also lack of exercise.  School canteens in most states now operate on a traffic light system, ranking food and beverages and limiting their sale according to their likely obesity contribution levels.

Our work hard-play hard culture has created spin off indulgent ‘take time out for me’ behaviours ranging from couch potato-dom to the growth of indulgent products such as imported chocolates to eating on the run.  Consumers are rewarding their hard work with consumable indulgences. L’Oreal’s ‘because I’m worth it’ tagline perfectly captures this mindset.

The counter trend is age denial – ‘looking after me so I look good for longer’. This is evidenced not only in the growth of day spas and massage services, but also the mainstreaming of chemical and cosmetic appearance enhancements via Botox and elective surgery.

The proverbial sweet spot is in products and categories that deliver both indulgence and functional benefit without compromising their proposition (who wants a diet chocolate?!)  Not ‘Product X is now minus the calories’, but rather ‘Product X now has added goodness stuff to make you look/feel younger, your liver perform 10% better’ etc. Functional waters are a good example of this trend. Breads are now being produced with added vitamins and minerals. And functional products command a price premium at the shelf, providing you with a measure of protection against excessive price promotion.

What marketers need to think about:

• ‘Naughty’ categories don’t have to be black-and-white, opt in/opt out propositions. Indulgent products can be made ‘permissible’ with smaller pack sizes and portion control packs, and labelling that clearly indicates their functional and daily intake benefits as well as contribution to intake limits.  Such initiatives should be supported with both instore and above the line communications to create airspace between yours and competitors’ products.
• Consider the positioning of your product and category. Is it an out-and-out indulgence category whose proposition is clear and shouldn’t be sullied, or could it can have ‘functionality’ added to it?

Trend #5: Sustainability and the rise of the ethical shopper

Facts and Behaviours:

According to studies by the Natural Marketing Institute (NMI) in the USA, LOHAS consumers (lifestyles of health and sustainability) now number approximately 30% of all consumers. LOHAS shoppers are those for whom sustainability, environment and ethics are of primary importance when making product and brand selections instore.  There is another substantially sized shopper group for whom sustainability and ethics are of at least secondary importance.  Taken together we have a sizeable portion of the population for whom sustainability is now a major means of instore decision making – ‘ethical shoppers’.

This is playing out in the retail environment in the growth of traditional fruit and vegetable shops, and butchers, at the expense of grocery. The perception is that the produce in non-grocery stores is fresher, less chemically altered, has fewer ‘food miles’ from farm gate to store, and is more likely to be organic.  Further evidence of the growth of perceived ‘fresh’ is in the shift to markets and organic stores such as Macro, Harris Farm, and various farmers’ markets.

Whilst LOHAS consumers have higher disposable incomes, downward economic pressure means that suppliers and retailers won’t be able to charge a price premium for sustainable/organic products for very long – there will soon be a consumer expectation that sustainable and organic products are priced the same as ‘regular’ ones.  Organics are quickly becoming the cost of entry for a sizeable proportion of shoppers.

What marketers need to think about:

• How to make products and packaging sustainable – both environmentally and economically.  Impacts of this and other organisational sustainability initiatives on product labelling.
• Communication of your sustainability propositions at shelf and above the line – and quickly, for first mover advantage.  We anticipate there is only a 6-12 month window where sustainability will be a point of difference, and that from late 2009 it will simply become a way of doing business.
• Over time, ensure labelling, sustainability practice and messaging and organics are communicated across every point of engagement as a lack of sustainability initiatives and messaging will become barrier rather than source of competitive advantage.
• Reconsider channels to market for fresh and food based products. Think about where ethical shoppers are shopping – it’s not just traditional grocery.

And the big one that’s beginning to bite now …

Trend #6: Economic slowdown – making every shopping trip count

The Facts:

Economic events outside the control of the everyday household such as interest rates, the highest inflation levels in 20 years, the housing bubble, rents, personal debt levels, stock market volatility, the cost of energy, petrol and food price climbs of 5% p.a. all combine to mean that shopping behaviours are modifying to meet the new economic climate.

Cost of food is increasing due to drought, climate change and dwindling supply, and it’s not temporary. Some categories, such as rice, have stock limits and allocations.

Recent findings from Nielsen in the US show that:

• More than 50% are eating at home more and eating out less.
• More are entertaining at home
• More are taking lunch with them
• 63% of American consumers are reducing their spending to compensate for rising gas prices
• More than 7 households in 10 (72%) are ready to reduce spending on household necessities if economic conditions worsen
• 78% combine shopping trips and errands
• 39% stay home more.

Changing what they buy:

Shoppers are becoming focused on buying what they have to have, as opposed to buying what they want to have. People won’t stop using toilet paper, but they will stop using other discretionary products and brands.
Responses from a recent Unilever US survey indicated some interesting behaviours and attitudes towards the future purchase patterns in certain categories during economic slowdown.

The top 5 categories shoppers would stop buying were largely discretionary and included air fresheners, cookies, beer and wine, frozen dinners, and soft drinks.

The top dozen categories shoppers would not abandon were those covering food, household cleaning and personal hygiene necessities. These categories included deodorant, batteries, canned veges, fresh meat and seafood, hair care, household cleaners, laundry detergent, margarine, pain relievers/cold medicines, soap and personal washes, pet food, and toilet paper/tissues.

Changing How They Buy:

There are three major consumers trends occurring that vary by income:

1. Those making under $40,000 a year are redefining what goes into their shopping baskets and where they shop. They’re finding ways to stretch the household dollar by going back to just the essentials, effectively trading down to different cuts and different qualities of product. Also promiscuity is growing as they hunting out bargains and low prices to stretch even further.
2. The mid-tier consumer in the $40- $100,000 income range is “selectively deselecting”. They’re choosing to buy cheaper products in low emotion categories but are willing to keep the little indulgences that make life that little bit easier.
3. Those earning $100,000 and above are changing their priorities about which products they buy as well as the brand and unit price. Do I really need to spend $50 on a bottle of wine for dinner or can I get away with a $25 bottle?

Price has become more important to a broader range of shoppers. Being a “smart shopper” is becoming a necessity for more and more American families. So, how are they reacting to this changing environment?
In an economic slowdown there are a number of predicted shopper behaviours:

• Trading down – searching for lower priced sub-brands and house brands to stretch the household budget even further
• Specials – buying products on special, or deferring purchases until the products come on special, cherry picking from catalogues as well as pantry stocking when products are on sale.
• Value mining – hunting around the whole store for other value based options in other categories. Buying pasta instead of rice, beef instead of chicken for example
• Attracted to outlets with a fuel docket offer
• Reduce overall spend on everything, some categories to a great degree others to a small degree
• Fewer small basket quick trips as people conserve fuel. Consolidated shopping trips – swing back to stock up missions to conserve fuel. Quick trips are 70% of all baskets and the fastest growing profile so the effect will be strong
• Move to the internet to make purchases (>$100k p.a. profile) with non-food and general merchandise lines making up most of the basket
• Cherry pick for specials across the retailers
• Pantry fill specials, particularly high SKU value non-food items such as laundry
• Just stop buying that specific brand
• Moving consumption behaviour back to the home, forsaking restaurant and take away meals for meals prepared and eaten at home

Changing Where They Buy:

Shopping trips are less secure in today’s environment. One consumer in four (24%) would shop for groceries in a less expensive store if food prices continue to rise.  Store repertoires are therefore widening, with increasing disloyalty and promiscuity.  If shoppers are increasingly looking for the best deal, how will retailers create store loyalty?

As the economy and retail spending tightens, trading down will also occur at a channel and store level, not just within/across categories or among brands.  Shoppers will shop locally to conserve fuel and ‘food miles’ (this ties back into the sustainability/fresh fruit and veg trend). Aldi will get a huge kick along as will Costco when they open. The dollar discount stores such as Reject, Crazy Clarke’s and Go Lo will do really well. The Victorian based NQR stores will thrive in this trading environment.  Some of the small privately held clearance shops and chains such as Cunninghams are trading very briskly.

The Petroleum & Convenience channel will struggle as the queues get longer and people want to get out of the store that is associated with extra $ spend. Impulse milk, bread and snack sales have already started to slow.

There is a definite trend to eat at home as well, which will assist Woolworths and Coles. The smaller local retailers could possibly get a double benefit, firstly from the eat at home trend but also to local/ short trips to save fuel – and add the healthy aspect of home cooking and they may just be on a winner!

What marketers need to think about:

• Review your channel strategy with regard to holistic vs promiscuous shoppers. The game is not just about grocery in the future. Could some of your products and brands be ranged in discount stores and warehouse clubs? How important is the Petroleum Convenience channel for your products? Which baskets do your eggs need to be in?
• Reconsider your category’s role. Is it a discretionary or necessity category?. If discretionary, how will you maintain relevance? If a necessity category – see the trade up/trade down questions around the role of brand vs private label.
• Consider the role of trade spend, and managing a positive return for the investment without eroding brand equity. If shoppers continue to trade down, two levers may well be applied: 1. Applying the spend across a wider range of products with a smaller price drop – again to leverage shopper in-store perceptions and to maximize the spread of products on special, or 2. Focussing the discount to create stunt price points. This has already been happening for some time, but the temptation to do it may prove irresistible.
• Ensure you have a rock solid new product launch sell story and rationale for retailers. In this environment, the role of Brand development for suppliers becomes crucial as range extensions, or repackaging and new product development will have higher and higher performance criteria to achieve as retailers want more from less. The usual balance will be disrupted possibly permanently as retailers become more critical about the returns they are getting (or not) from untested products.
• Consider how you can assist retailers to help their shoppers stretch their grocery dollars. Examples include Whole “The Real Deal ” catalogues, and a friends and family discount card program for repeat purchases to encourage store loyalty.

The concentrated and restrictive grocery marketing environment in Australia is expected to loosen over the next few years, giving marketers more choices in how they get their brands to market and promote them instore.

Coupled with new best practice thinking and tracking tools around trip management and segmentation, and the growth of shopper insights, we are on the threshold of a new, smarter, but more complex grocery retailing era in Australia. One size will no longer fit all, so it’s not a question of which horse you back, but rather which selection of horses you run on which tracks.  Here are some of the headlines coming out of the USA underscoring this trend.

Economic slowdown and the accelerated decline of the middle market
Upscale vs value retailing, and the polarisation of retail
Grocery retailing in the USA is segmented, with basic and budget grocery retailers such as Smart & Final and Vons at one end, as well as fresh grocery offers within WalMart and Target supercentres, and then upscale grocers and fresh markets such as Whole Foods and Bristol Farms at the other. (See diagram). Differentiated offers along the spectrum are often operated by the same retailer, such as Safeway, who have Pavilions at the upscale end, Ralphs in the middle, and Vons toward the value end.
In Australia, grocery is currently almost exclusively middle market, but there are signs of change. Woolworths is currently trialling a more upscale small footprint grocery store called Thomas Dux, but as yet there are no widely available upscale grocery chains with holistic meal and fresh offers.  However, some top end providores such as Jones the Grocer are increasing their distribution into shopping centres. And Aldi, and the soon-to-arrive Costco, spell the arrival of budget buy-in-bulk grocers and warehouse clubs.

Trade up vs Trade Down
The economic slowdown and rising fuel prices in the USA is resulting in a polarisation of shopper behaviour, which we can expect to see mirrored here over time, albeit not quite as distinctly. Shoppers are consolidating their shopping trips to save on petrol and to get better bang for the buck in the shopping basket. This is resulting in a shift back to stock-up and one stop shopping for the basics, particularly in supercentres, with specialty and upscale retail reserved for ‘destination’ trips.
Shoppers are trading down on products and categories they don’t care about, and trading up in the ones where they do.
Marketers need to understand where on the trade up/trade down scale their products fit, and which types of retail channels they are therefore best suited to.  You don’t have to be everywhere, just in the right places with the right product!

Differentiation, differentiation, differentiation
Different retailers, different strategies
Coles, Woolworths, IGA and Metcash all range a combination of well known brands and private label. Aldi is almost exclusively private label.
Costco is a different model again. A paid membership warehouse club, they only range 4000 skus (compared to an average Coles or Woolworths store with 30,000), 60% of which are general merchandise items (40% is traditional grocery and fresh). Two-thirds of products are job-lots on limited-release sale periods to create a feeling of ‘treasure hunt’ with shoppers … ‘I’d better get it today because it might not be here tomorrow’. Products range from high value items and luxury brands such as Tiffany jewellery and backyard swing sets, through to bulk 30-pack toilet paper.
We anticipate Costco will steal shopper share of wallet not only from the large grocery retailers, but also from department stores and mass merchandisers.
What all this means is that marketers will need different go to market strategies for each individual retail customer. This may mean a private label product for one customer and a branded one for another, or both within one retailer, and probably special packs and products specific to individual retailers.

Different trips, same shopper
It’s all about trip management – optimising the type of mission, or ‘trip’ the shopper is on. In the USA grocery retailers are beginning to execute against specific times of the day, for example with a huge range of ready-to-eat lunchbox style meals, and choose-your-own pick-and-mix salad and hot food bars, for immediate consumption at lunchtime.
Work has also commenced on mapping shopper traffic flows by trip type. These maps are then matched against basket data (analysis of the primary and most valuable items in an individual shopping basket) to create trip ‘clusters’ eg Dairy Demand, Mostly Meat, Constant Cravings, Fresh Fixation.  Retailers are then co-locating products from different categories together according to the trip cluster.

Different shoppers, different store offer – Segmentation
Two major schools of thought are emerging here. The first is that there are overarching shopper archetypes per category. Ie, that each category only has 4 different kinds of shoppers, who might be things like Proactive Planners, Experimenters, Basics Only, or Comfort Seekers.  These would change from category to category. This archetype thinking is similar to the work that Nielsen have been doing around shopper ‘modes’, or ways of thinking and behaving, in specific categories.
The second school of thought, and the slightly more mature one in terms of successful implementation in market (see the success of Food Lion’s segmentation strategy resulting in their Grocery Retailer of the Year award in 2007) is segmentation at a store level, based on who shoppers are and how they behave.

This type of segmentation can be cut in a number of ways, ranging from attitudinal, product affinity, behaviour/lifestyle, and demographic/socio economic, through to spend/value and promotional requirements. Ultimately the kind of segmentation employed should be based on your goal, and turned into meaningful clusters based on the way retailers would actually execute.
The point is that it is done from the market (consumers and shoppers) inward to the store, and THEN matched against store shopper and loyalty data, rather than using store data first and then pointing it outward and hoping it fits the shoppers.
Segmentation is a fast-evolving area of thought. The main message is that one size does not fit all, and that product ranging and go to market strategies including space, promotion, pricing and instore media, will change from store to store.

So the takeouts for marketers in this changing marketplace are that they need to review the retail channels they are in, what products they are there with, and how their go to market strategies should differ at a trip, shopper, store and retail customer level.

How many horses do you need, what should the jockeys’ colours be, and where will they all run?