18 accelerating sales and profits herb sorensen tns

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Congreso AMAI 2010

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18 accelerating sales and profits herb sorensen tns

  1. 1. Accelerating Sales & Profits Retail & ShopperHerb Sorensen, Ph.D., Scientific Advisor, TNS Retail & Shopper 1
  2. 2. Small Levers, Big Impact3-6% Lift in 3-6 Months For the retailer . . . . . . a little longer for the brand. Retail & Shopper
  3. 3. Tiered Sales – “Customers” Supplier Retailer Shopper Consumer Retail & Shopper
  4. 4. Retailer Profits (US supermarkets) Supplier funds – slotting fees, promos, trade allowances Float – interest on cash received, pending disbursements Real Estate – buying, developing, managing property Margin on sales to shoppers Retail & Shopper
  5. 5. The BIG Problem . . . Up to 80% of the shoppers time in the store is WASTED!!!* . . . it is also a BIG Opportunity! ! ! *The Traveling Salesman Goes Shopping: The Efficiency of Purchasing Patterns in the Grocery Store http://knowledge.wharton.upenn.edu/article.cfm?articleid=1608 Retail & Shopper 5
  6. 6. Twin Sales Barriers Where is the . . . ? . . . which one do I want? Retail & Shopper
  7. 7. Very attractive . . . Retail & Shopper . . . but not very selling!!!
  8. 8. Sorensen’s First Principle of Retail Sales The faster you close sales . . . . . . the more you will sell!!! Retail & Shopper
  9. 9. $40 Means Means $35 more more Sales!!! Sales!!!Annual Store Sales $30 $25 (millions) $20 $15 $10 Faster Faster $5 Selling! Selling! $0 90 80 70 60 50 40 Speed of Closing Sales (seconds per dollar) Retail & Shopper
  10. 10. The Holy Grail – Active Retailing To know exactly what each shopper wants, or may buy, as they come through the front door. To deliver that to them right away, accepting their cash quickly and speeding them on their way. Retail & Shopper
  11. 11. “The Amazonification of Walmart” Retail & Shopper 11
  12. 12. Retail & Shopper
  13. 13. The Faster You Buy, the More You Buy – ShopperEfficiency• H1: Decrease in Purchase Time results in an increase in basket dollars and items Shopper Efficiency Regression Basket $s Purchase Count Coeff t Coeff t one second A Intercept 3.00 0.64 1.641 2.25** decrease in average Avg Purchase Time ‐0.21 ‐2.65*** ‐0.074 ‐6.01***Purchase Time increases Trip Length by Basket Size 0.02 2.77*** A0.003 second one 3.32*** Trip Duration $0.21! 0.02 2.87*** 0.007 5.35*** decrease in average Purchase Time increases Prob > F 0.00 Item0.00 Count by R Sq 0.50 0.70 Adj R Sq 0.49 0.07 0.70 *p<0.10    **p<0.05    ***p<0.01 Retail & Shopper
  14. 14. Decreasing Purchase Time results in larger basketsmore effectively than does encouraging longer trips Retail & Shopper
  15. 15. Faster Buying Results in More Purchases Avg TotalPurchase Basket Time Size 43.6 $12.7 7 6 36.6 $11.1 7 3 24.1 $35.0 4 1 19.5 $53.8 6(Seconds) Retail & Shopper
  16. 16. Planned Purchases Take as Long to Buy as ImpulsePurchases Retail & Shopper
  17. 17. The Three Key Things to Know 1. How many items does the shopper want to buy – or you might be able to sell them? 2. Exactly what are those items? 3. How best to sell those items – locations and techniques? Retail & Shopper
  18. 18. Most Common Number of Items Purchased (Globally)All classes of trade: big stores, little stores, hyper-markets, auto parts, drug stores Basket Sizes 18% Mode (most = 1) 16% 14% Share of Shopping Trips 12% 10% 8% Median (half = 5) 6% 4% Mean ("average = 12") 2% 0% 0 10 20 30 40 50 60 Items Purchased – Supermarket scale Retail & Shopper
  19. 19. Quick Trippers Do More Spending . . . $8.00 . . . Than Shopping!Spending Speed ($/minute) $6.00 $4.00 $2.00 $0.00 0 10 20 30 40 50 60 Shopping Trip Length (minutes) Retail & Shopper
  20. 20. 1. Focus on the small basket Retail & Shopper
  21. 21. Item Share (Count) for the Total Store 1.00%Contribution of Single Items The BIG Head to Total Sales 0.75% 500 out of 32,000 items contribute 25% of total store sales 0.50% 0.25% The L - O - N - G Tail 0.00% 0 500 1000 1500 2000 2500 3000 Rank of Single Items Retail & Shopper
  22. 22. Focus on the Few Products . . . . . . that Sell the Best! (The BIG Head) 1,000 SKUs 3% Big Head All Others 33% # $ 67% 97% By Count By Dollars Think About Those few Items, Retail & Shopper NOT Categories
  23. 23. Item Management . . . “Well, we have never been a category company – that was decided long before I came . . . We look at it item by item. That doesn’t mean we don’t have a fair representation with a category. But usually it’s only the top five or six items in that category, and we look at them as items!” $1 million per day in their top store! Charlie Burnett, COSTCO “If an item doesnt pull its weight in our stores, it goes away to gangway for something else.” Trader Joe’s “Whats not to like? Theyre very good retailers [Trader Joe’s], and we admire them a lot.” Jim Sinegal, co-founder CEO, COSTCO Retail & Shopper
  24. 24. 2. Focus on the Few Products . . . . . . that Sell the Best! (The BIG Head)300 items dominate total store sales.30 items dominate total category sales3 items dominate total brand salesTypical household buys only 300 – 400 items per year!Half of those, 150 – 200, they buy regularly.Sell them what they are buying. Retail & Shopper
  25. 25. Item Management . . . “So our traffic is up, our sales are up. We’re in the 3% range right now over last year” . . . March 2010, Drug Store News Charlie Burnett, COSTCO Retail & Shopper
  26. 26. 3. Two Options for AcceleratingSales of Items Move the items to the shoppers – mostly by secondary placement Focus on, and close on the items . . . wherever they are Retail & Shopper
  27. 27. No technology!!! No technology!!!Call out the top sellersCall out the top sellers Retail & Shopper
  28. 28. Total grocery sales up 4% Total grocery sales up 4% for the 1st quarter 2009 for the 1st quarter 2009 over 4th quarter 2008!!! over 4th quarter 2008!!! Item Lift After “Top” Sign Corona 16% Angel Soft TP 67%Store Brand Butter 324% Ice Cream 116% Retail & Shopper
  29. 29. For the Brand . . . Retail & Shopper
  30. 30. For the Brand . . . Retail & Shopper
  31. 31. Mid-Caps: End-Caps in the Aisle23% lift plus halo effect!23% lift plus halo effect! Retail & Shopper
  32. 32. Break-Through ToolsGraphic distinction (don’t add to clutter)Top Seller - #1 (use social forces)New (novelty minimizes “clutter filter”)Price (communicates VALUE!)“Personal” Shopping Assistant Retail & Shopper
  33. 33. “Personal Shopping Assistant (“Internet” in the Store?) Retail & Shopper
  34. 34. “. . . an array of mobile devices . . . continue their inexorable march fromcellphone novelties to virtual personal assistants.” USA Today, March 31, 2010The Convergence of Online, Mobile and Bricks-&-mortar (COMB) Retail & Shopper
  35. 35. Personal Selling Fundamentals Determine what people want Narrow their choices to a manageable few Make the process easy – focus on selling the few Upsell them on related items Close as quickly as possible Retail & Shopper
  36. 36. www.insidethemindof theshopper.com Read the Views (and subscribe! ) Read my RetailWire blog! Receive notices on Twitter! Retail & Shopper herb.sorensen@tnsglobal.com

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