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One Size Does Not Fit All –
Customizing Retail Chain Sales
Points
March |2011
One Size Does Not Fit All – Customizing Retail Chain Sales
Points
One of the factors that has helped make the retail chain concept so successful
globally is that customers are ensured a similar level of service, access to similar
products, and a standardized level of quality, regardless of which of the retail
chain sales points they visit. Customization provides an opportunity to make this
concept even more successful.
What we as consumers all love about chains like Starbucks or Carrefour is that we
know what we’re going to get from them, each and every time, in all location – be
it in London, Dubai or Buenos Aires, such retail chains offer a consistent level of
service and quality, factors which are very important to consumers. Aside from
national-based customization (such as offering Shrimp Burgers at McDonald’s in
Japan) on a product level, little varies between retail chain stores from city to city,
country to country.
This level of consistency has played an important role in helping such retail chains
dominate markets globally, expanding at an ever-increasing pace, killing off
independent coffee shops, bookstores, grocery stores, clothing stores, etc. In
almost every retail sector in most countries, a handful of brands make up a large
part of the market of their respective categories.
While this cookie-cutter approach works for the most part, it fails to take into
consideration local factors, variables that in this day and age of data-driven
decision making is disappointing. We believe there are significant opportunities
that retailers can capitalize on by customizing their retail sales points.
The concept of customization we recommend retailers pursue is not about
radically changing sales points, but rather, making small changes to each one that
can have a considerable impact on overall sales. The objective is to identify what
is different about each sales point (in terms of its locale, its customers / prospects,
even the weather) so as to capitalize on these facts. As a starting point, we believe
customization can be tackled around three areas:
1. Product Location / Position Customization
Sales-related data analyses on a point-by-point basis will yield important findings
that can help each store reposition the location of some of its products. This can
relate to where the products are placed (i.e. in display windows or at the store
entrance) or how they are placed near each other. Analysis of sales data will
show the importance of specific products to specific locations, findings that
should drive the re-positioning of the products based on their importance. This
analysis needs to be done down to a specific product & brand level, not just at a
product category level.
As such, as an example, the findings will dictate that one Best Buy electronics
store should place Apple iPads immediately at its entrance, while another should
place Dell netbooks at the entrance (as these are the top moving products for
those locations). Many different factors will drive variance in product sales (such
as local population demographics, income, weather conditions, etc.), the key is to
realize this and act upon it.
Products that are often purchased together at the same time in specific locations
can also be considered for re-location in the store. For example, capitalizing on
analysis of sales-data from a specific bookstore retail sales point that shows 38%
of consumers who purchase The Economist magazine also purchase Businessweek
in the same transaction, suggesting placing these two products right next to each
other to drive up that ratio.
The above stated ratio will not be the same in every sales point though; the
correlation can be non-existent, in fact. There could be a newsstand right out the
bookstore which carries Businessweek, for example, a variable which creates a
completely different dynamic for that store in terms of products purchased
together. As stated before, sales-related data should be analyzed on a location by
location basis to ensure the right decisions are made. The concept of placing
products near each other can extend into considering bundling the products
together, such that the consumer receives some added-benefit for purchasing
both products in the same transaction.
The findings of this analysis should also be used in driving cross-sales through
sales representatives in the stores. When a customer purchases a given product,
the representative (either on the floor or at the register) should make a
recommendation around the next best-selling product correlated with that
purchase – or even offer a benefit for the extra purchase. So, for example, when a
customer comes to the counter with a pair of Baby Nike Air Jordans, the
representative can offer a 20% discount on a matching pair of Nike Air baby socks.
The concepts discussed here around bundling and cross-selling should be tested,
of course, to ensure the optimal strategy is in place to maximize on the
opportunities available.
2. Advertising Customization
The method of advertising related to each store should be customized as well,
related to local factors that change response rates to the methods used. As there
are dozens of methods of advertising (TV, billboard, magazine, newspaper, radio,
web, blog, mobile, flyers, etc.), one size definitely does not fit all here. In a given
country, in different cities, some tactics will work, some won’t.
As such, for a chain with stores in different cities, analysis needs to be conducted
to determine the impact of advertising via different channels. Analysis of sales
relative to specific campaigns conducted in the past via specific channels will yield
the desired results – based on the findings, in one city, the focus may thus shift to
distributing flyers door to door, in another, relying solely on local channel TV ads.
As cultural differences have a significant impact on the responsiveness of
potential customers to pitches via different channels, customization is a must
here.
The effectiveness of using customized advertising strategies on a local basis
should be reviewed at least once a year, however. Over time, behaviors of
consumers will change, altering their responsiveness to different channels of
communication. Annually, local advertising strategies and each channel’s impact
on campaigns / sales should be reviewed, with findings used to possibly alter
tactics.
3. “Local Touch” Customization
The retail chain concept often prevents customization across the board on all
matters, preventing local touches to be made to specific stores, even when such
customizations can seem to be no-brainers. Little touches based on local
conditions can have a positive impact on customer satisfaction, and ultimately,
the bottom line.
Using the USA as an example, this can include providing complementary
umbrellas to customers in cities that have significant precipitation (in Seattle,
where it rains over 150 days a year, but not in Las Vegas, where it rains less than
30 days a year), or having clerks in grocery stores that will carry bags to cars in
cities that have a high elder population (in Honolulu, where around 20% of
citizens are over the age of 65, but not in Anchorage, where only 5% are).
Such customization can be made to an even greater degree when relevant, with
concepts like opening small day-care rooms and offering home delivery
considered (though such customizations can be difficult and costly to implement,
and likely not allowed by the global brand).
We recommend each retail point identify what types of local customizations can
and should be considered, with the suggestions reviewed and approved / denied
by regional management. The small touches (the WOW factor, essentially) can
truly have an impact that will be much greater than what it takes to make the
customizations.
It is our belief that the concept of local customization will begin to take off in the
coming years in retail chains, as companies begin to realize the wealth of data on
their hands that can be tapped into for making strategic changes on a local level.
We recommend retailers immediately begin examining their own data to identify
opportunities for bringing such customizations to life. To learn more about
designing retail sales point customization strategies, please contact
Forte Consultancy Group | Istanbul Office www.forteconsultancy.com
About Forte Consultancy Group
Forte Consultancy Group delivers fact-based solutions, balancing short and long term impact as well as benefits for stakeholders. Forte Consultancy Group provides a variety of service offerings for numerous sectors, approached in three general phases – intelligence, design and implementation. For more information, please contact
