December 28, 2011 - by Herb Sorensen, Ph.D., Scientific Advisor, TNS Global Retail & Shopper Practice and Adjunct Senior Research Fellow, Ehrenberg-Bass Institute for Marketing Science, Univ. of S. Australia E-Mail: firstname.lastname@example.org.
This issue of the Views delves further into the relationship of shoppers to the store. Specifically, how a congruent cluster of stores actually performs in one major section of the store: the center-of-store aisles.
Atlas: The In-Store Behavior Map. The store segmentation we discussed in clustering large groups of stores (above,) was based on the patterns of total seconds distributed across the entire store. Now we take a deep-dive into the mechanics of how those seconds are converted to sales (or not,) in one section (the center-of-store,) for a group of stores - what we refer to as congruent stores. Congruent stores are similar across major design/internal geographic considerations. In this case, all the selected stores are right entry, similar sized, with no transverse aisles in the center-of-store area, etc. What these stores did have is a wide variety of specific category locations. That is, across the stores, peanut butter would be found in a variety of geographic locations.
For analysis purposes, each aisle was divided into six sections, front-to-back, and aisles themselves were grouped into six groups, from left-to-right. This effectively comminuted the four center-of-store Picasso sectors into three-by-three grids, giving 36 center-of-store locations, for study of their relative performances. The results are diagrammed below in terms of the double conversion performance of the 36 grid points. Again we are using the scientific approach of first distinguishing and naming/identifying parts of the total (36 distinct areas,) and then we will count behaviors within those areas, and finally compute the relationships among those areas. (See The Power of Atlas: Why In-Store Shopping Behavior Matters; also, "The Three Shopping Currencies," in the second edition of Shopper Marketing edited by Markus Stahlberg and Ville Maila, Kogan Page publisher, publication pending.)
To understand this performance diagram, consider how double conversion works. When shoppers move past merchandise, in order for sales to occur, the merchandise must induce the shoppers to stop, not just keep walking. This is stopping power, the first conversion. Then the merchandise must close the sale, by inducing the shopper to select and remove the merchandise. This is closing power, the second conversion. Of course, before either of these conversions can occur, the shopper must visit the immediate area of the merchandise. This constitutes reach for the merchandise. The fourth metric is time, that is, how long each of these other three take, in seconds.
For our purposes here, it is probably sufficient to note that leader and niche status are the most valuable, because both of them are good at completing the sale, although niche is not very good at engaging the traffic that goes by. On the other hand, high interest exhibits a lot of stopping power, but doesn't complete the sale. Those who have seen these classifications before have probably seen them related to categories, not locations. There is a reason that everything related to a sale is ordinarily associated with the products: the whole world, shoppers, retailers and their brand suppliers, think that shopping is about the people and products. IT'S NOT, at least in terms of shopping behavior.
Notice in this Center-of-Store Aisle study, that shopping behavior is associated with locations, not with the categories at those locations. In other words, it is the location that induces the behavior, not the products on the shelf. This is further supported by the fact that across more than a dozen stores, tracking hundreds of thousands of shopping trips across the full store - not just the center-of-store - fourteen different categories appear in at least one of the stores as a leader category. One of those, produce, was a leader in every single store. However, four of the categories were leaders in only a single store: candy, crackers, ethnic foods and pet foods. All four of these have significant presence in the center-of-store, and once you realize that only three of the thirty six center-of-store locations consistently produce leader results, it's not hard to understand how a lot more categories than perimeter categories can be leaders. Other than those already mentioned, canned vegetables, frozen dinners and salty snacks also showed up as leaders for the full store. This means there are locations (indicated in the diagram,) that are as valuable, if not more valuable, than many end-caps. Fascinating potential here for managing sales! (Note that all three of these leader areas are in the right half of the center of store, suggesting that the U-turn discussed in Tell 'em Where to Go; Tell 'em Which to Buy! may be driving this "leader" behavior.)
Display Domains. Now for explanatory caveats, and expansion beyond the geography domain. Note that in selecting a set of congruent stores for the center-of-store study, the selection of stores was deliberately constrained to assure some constancy of the types of displays. This is because of the recognition of the huge impact that varying display structures have on the shopping experience. A 2004 plan for modeling center-of-store aisles, identified the following behavioral domains, that is, display environments that virtually require shopper behavior distinct from that occurring in other environments.
- Race-track [perimeter] - exclusive of the following
- Center-of-Store Aisles - constrained straight path
- End-caps - 6ft radius
- Checkout - 6ft radius of entry to lanes
- Bazaar - produce/other non-forced paths with tables not blocking the view
- Service - requires assistance from staff
- Serpentine - constrained non-straight path
- Remainder - whatever is left
Each of these domains is significantly different from the others, on simple inspection, so that there is no reason to expect shopper behavior to be identical from domain to domain in any given store, or across stores.
Initial modeling of the center-of-store aisles was undertaken because of the large number of very similar aisles, in terms of width and length, that were available for modeling. The remainder of the store areas were judged similar enough from store to store, that variation in the non-center-of-store areas would have minimal impact on the center-of-store. Subsequent successful modeling of large numbers of end-caps across even more stores, confirmed that at least those two display domains could be successfully modeled. In fact, in both cases a mathematical model could successfully report category performance across display configurations, based on past performance in similar or related locations. This provides a means for management to conduct virtual experiments with "what if" placements to see monetary and behavioral results, without the cost or inconvenience of physically moving displays.
Given the huge impact on shopper behavior, driven by geographic location and the type of display for the merchandise, talking about item or category performance without specifying both of these domains, seems very inadequate for nearly any purpose. For example, saying it takes 16 seconds for shoppers to purchase a specific product or category is nearly meaningless without specifying both the display type, and its geographic location. It is not a trivial matter that within a store the shopper exists in a space/time continuum, that is warped across the store, and altered by the presence of the various display types.
Both retailers and their suppliers are woefully deficient in understanding the fundamental science of shopper behavior. Two examples: one of the top five global retailers, after being presented with the data on the relation of time efficiency to store sales commented: "Time doesn't matter, all that matters is the price, and whether the shopper enjoyed the trip." Another senior shopper researcher from one of the top five global brands, after hearing how the location being observed was impacting the behavior of shoppers said: "Oh, that's just background noise."
This level of superficiality in thinking about the shoppers' behaviors is not unusual. Major advances in retail performance are obviously there for the taking. But they will require understanding, driven by measurements. What is not measured, will NOT be managed. Another way to say that is that if you do not measure shopper behavior continuously, you will not manage it continuously. This is the doorway to the third great retail triumph: careful attention to the efficiency of what shoppers do, just as for the efficiency of what the retailer and/or supplier does. Any other so-called "shopper centric focus" is a step away from the real source of profits.
Here's to GREAT "Shopping!"
Your friend, Herb Sorensen