One Size Does Not Fit All - Customizing Retail Chain Sales Points - March 2011


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One Size Does Not Fit All - Customizing Retail Chain Sales Points - March 2011

  1. 1. One Size Does Not Fit All –Customizing Retail Chain Sales Points March |2011
  2. 2. One Size Does Not Fit All – Customizing Retail Chain SalesPointsOne of the factors that has helped make the retail chain concept so successfulglobally is that customers are ensured a similar level of service, access to similarproducts, and a standardized level of quality, regardless of which of the retailchain sales points they visit. Customization provides an opportunity to make thisconcept even more successful.What we as consumers all love about chains like Starbucks or Carrefour is that weknow what we’re going to get from them, each and every time, in all location – beit in London, Dubai or Buenos Aires, such retail chains offer a consistent level ofservice and quality, factors which are very important to consumers. Aside fromnational-based customization (such as offering Shrimp Burgers at McDonald’s inJapan) 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 chainsdominate markets globally, expanding at an ever-increasing pace, killing offindependent coffee shops, bookstores, grocery stores, clothing stores, etc. Inalmost every retail sector in most countries, a handful of brands make up a largepart of the market of their respective categories.While this cookie-cutter approach works for the most part, it fails to take intoconsideration local factors, variables that in this day and age of data-drivendecision making is disappointing. We believe there are significant opportunitiesthat retailers can capitalize on by customizing their retail sales points.The concept of customization we recommend retailers pursue is not aboutradically changing sales points, but rather, making small changes to each one thatcan have a considerable impact on overall sales. The objective is to identify whatis 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 believecustomization can be tackled around three areas:1. Product Location / Position CustomizationSales-related data analyses on a point-by-point basis will yield important findingsthat can help each store reposition the location of some of its products. This canrelate to where the products are placed (i.e. in display windows or at the storeentrance) or how they are placed near each other. Analysis of sales data willshow the importance of specific products to specific locations, findings thatshould drive the re-positioning of the products based on their importance. Thisanalysis needs to be done down to a specific product & brand level, not just at aproduct category level.
  3. 3. As such, as an example, the findings will dictate that one Best Buy electronicsstore should place Apple iPads immediately at its entrance, while another shouldplace Dell netbooks at the entrance (as these are the top moving products forthose locations). Many different factors will drive variance in product sales (suchas local population demographics, income, weather conditions, etc.), the key is torealize this and act upon it.Products that are often purchased together at the same time in specific locationscan also be considered for re-location in the store. For example, capitalizing onanalysis of sales-data from a specific bookstore retail sales point that shows 38%of consumers who purchase The Economist magazine also purchase Businessweekin the same transaction, suggesting placing these two products right next to eachother to drive up that ratio.The above stated ratio will not be the same in every sales point though; thecorrelation can be non-existent, in fact. There could be a newsstand right out thebookstore which carries Businessweek, for example, a variable which creates acompletely different dynamic for that store in terms of products purchasedtogether. As stated before, sales-related data should be analyzed on a location bylocation basis to ensure the right decisions are made. The concept of placingproducts near each other can extend into considering bundling the productstogether, such that the consumer receives some added-benefit for purchasingboth products in the same transaction.The findings of this analysis should also be used in driving cross-sales throughsales representatives in the stores. When a customer purchases a given product,the representative (either on the floor or at the register) should make arecommendation around the next best-selling product correlated with thatpurchase – or even offer a benefit for the extra purchase. So, for example, when acustomer comes to the counter with a pair of Baby Nike Air Jordans, therepresentative 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 theopportunities available.2. Advertising CustomizationThe 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 thereare 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 givencountry, in different cities, some tactics will work, some won’t.As such, for a chain with stores in different cities, analysis needs to be conductedto determine the impact of advertising via different channels. Analysis of salesrelative to specific campaigns conducted in the past via specific channels will yieldthe desired results – based on the findings, in one city, the focus may thus shift to
  4. 4. distributing flyers door to door, in another, relying solely on local channel TV ads.As cultural differences have a significant impact on the responsiveness ofpotential customers to pitches via different channels, customization is a musthere.The effectiveness of using customized advertising strategies on a local basisshould be reviewed at least once a year, however. Over time, behaviors ofconsumers will change, altering their responsiveness to different channels ofcommunication. Annually, local advertising strategies and each channel’s impacton campaigns / sales should be reviewed, with findings used to possibly altertactics.3. “Local Touch” CustomizationThe retail chain concept often prevents customization across the board on allmatters, preventing local touches to be made to specific stores, even when suchcustomizations can seem to be no-brainers. Little touches based on localconditions can have a positive impact on customer satisfaction, and ultimately,the bottom line.Using the USA as an example, this can include providing complementaryumbrellas 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 than30 days a year), or having clerks in grocery stores that will carry bags to cars incities that have a high elder population (in Honolulu, where around 20% ofcitizens 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, withconcepts like opening small day-care rooms and offering home deliveryconsidered (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 canand should be considered, with the suggestions reviewed and approved / deniedby regional management. The small touches (the WOW factor, essentially) cantruly have an impact that will be much greater than what it takes to make thecustomizations.It is our belief that the concept of local customization will begin to take off in thecoming years in retail chains, as companies begin to realize the wealth of data ontheir hands that can be tapped into for making strategic changes on a local level.We recommend retailers immediately begin examining their own data to identifyopportunities for bringing such customizations to life. To learn more aboutdesigning retail sales point customization strategies, please
  5. 5. About Forte Consultancy GroupForte Consultancy Group delivers fact-based solutions, balancing short and long termimpact as well as benefits for stakeholders. Forte Consultancy Group provides a varietyof service offerings for numerous sectors, approached in three general phases –intelligence, design and implementation. For more information, please contact Forte Consultancy Group | Istanbul Office