Using Market Research to Drive Retail Results


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Hiri Presentation Fall 2011. This presentation presents the Premium Retail Framework for Retail sales growth and ties several of the lever for growth to market research capabilities and needs

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Using Market Research to Drive Retail Results

  1. 1. Growing in Retail Home Improvement in the “New Normal” Winston Ledet - COOOctober 20, 2011
  2. 2. My Background Premium Business Model Winston LedetPremium Retail Solutions, IncChief Operating Officer• Co-Founder of Retail’s Solutions Group focused on strategy, analytics and insight• Worked with over 50 current and prospective suppliers• Former Home Depot Merchandising Vice President - Merchandising Strategy and Innovation• Led corporate strategy at Home Depot for three years prior.• Strategic consulting background with McKinsey and Company
  3. 3. Defining the “New Normal” Pre Great Recession New Normal Temporary Stimulants Temporary Depressants • Buoyant housing prices • Falling / stagnant housing prices • 2 million housing starts • 500,000 housing starts • Ease refinance money • Underwater mortgages - deleverage • The decline of Sears • European Dept crisis • Diverse supply base consolidating Long Term Tailwinds Long Term Headwinds • Home as an investment • Home spending as consumption • Positive store growth • Store saturation • DIY as an enabler • Aging of the population • Aging of the housing stock • Leverage of the big boxes • Potential for significant inflation
  4. 4. Conditions Under the “New Normal” Limited opportunities in new construction – more manufacturers chasing retail Less organic growth in the US and Canada – square footage growth is tiny Greater leverage of the Big Box players Pressure on big ticket Purchases Growing DIFM / BIY
  5. 5. Thriving in the new normal Building a Consumer Brand. Expand Into Adjacent Areas Current Playing Field • Traffic • Conversion • Share Driving Bottom Line Profitability. What is the role for Research and Insights?
  6. 6. Growing in the Current Playing Field. Traffic Building a Consumer Brand. Expand Into Adjacent Areas Current Playing Field • Traffic • Conversion • Share Driving Bottom Line Profitability. Promotion• Special buys, wing stacks, clip strips Selling Beyond the Shelf• Leverage the spend of the • PRO desk and bid room retailer • Installed sales• Determining offers that • Web Expand Retail Footprint work • Increase store count at existing• Manufacturer directed retail marketing • New retail partners in core channels Education / Theater Improving Location within Store • New retail partners in new• POP, packaging, website, • Higher traffic area of the store channels smartcodes • Higher traffic area in the• Demos / Training in store department/category
  7. 7. Growing in the Current Playing Field. Traffic - ExampleLack of greets in thekitchen department To Do’s for Researchersleading to lower sales Understand what is lacking toPut in greeter / lead drive trafficgenerator Access to timely POS data andUtilizing POS data appropriate analysisPre / Post net of control Improvement loop PDCA
  8. 8. Growing in the Current Playing Field. Conversion Building a Consumer Brand. Merchandising & Assortment Pricing Expand Into Adjacent Areas• Understand your customer • Priced right Current Playing• Right product for the market/store • Line structure Field• Understand JLQ • Traffic • Everyday price = value • Conversion• Shoppability optimized • Differentiated pricing PRO vs • Share• Product quality, warranty & service DIY Driving Bottom Line Profitability.• POP, packaging, and display• Extend the aisle Field Execution & Logistics Off-Shelf and Cross Merch • Timely delivery • Off-shelf spots in relevant • Always in stock at the shelf categories and relevant seasons • Priced correctly • Constantly test and pitch new ideas • POP displayed, in good condition Product Differentiation Grow Shelf Space and SKUs • Competitive advantage • Target competitive SKUs • Solve customer needs with • Increase facings improved product or packaging
  9. 9. Growing in the Current Playing Field. Conversion - ExampleFinding knees in the demand curve To Do’s for Researchers Pricing tests for existing items Conjoint or similar approach for new products May dovetail into cost – don’t be scared Go on shops – play games • Recently we priced at this point (a 50% drop) • Sales rose over 500%
  10. 10. Growing in the Current Playing Field. Conversion - Example Reason for Purchase Other Replacement 3% 10% Don’t remember Specific Room Purchase by Room 12% 38% Other Basement 18% Project or Attic 12% 2% Childs bedroom Kitchen Good deal New home 2% 46% 13% 13% Closet 6% Childs bath 6% Garage 9% Utility / Laundry 11%
  11. 11. Growing in the Current Playing Field. Conversion - Example To Do’s for Researchers Who buys, when do they buy Gender of Decision Consumer Purchase and why do they buy Maker Occasions In-store tests and tracking Unplanned Break away from conventional 36% thinking Planned 64%
  12. 12. Growing in the Current Playing Field. Conversion - Example Disregarding Price – Consumers prefer bottom loader more then 2 to1 To Do’s for Researchers Conduct concept tests and choice based mapping Push the development teams to try new things Top Bottom Use another category / Loading Loading industry as an analog 70% 30% A) Top Loader B) Bottom Loader
  13. 13. Expanding the Playing Field Building a Consumer Brand.Owning Categories Expand Into Adjacent AreasPower in providing an entirecategory. Current Playing FieldSimplify the life of a merchant • Traffic • Conversionand gain control of key levers • ShareWhat products in your bay or Driving Bottom Line Profitability. Customer/Project Adjacenciesrun can you produce or source? What other products do my customers buy that my brand and/or relationships give me an advantage in? Manufacturing Adjacencies e.g., power tool company What other products does the expanding into paint sprayers retailer sell that fit my manufacturing expertise? Often this is a good place to look e.g., Vinyl Molding to Vinyl for acquisitions Fencing
  14. 14. Expand the Playing Field - Example Attic To Do’s for Researchers Use consumer insights to get the customer view of the category Stretch your partners to think beyond the 4 walls Know more about your category than anyone Be patient – this is very counter-cultural to a manufacturer – but not too patient
  15. 15. Build a Consumer Brand. Building a Consumer Brand. Expand Into Adjacent Areas Why is it valuable? Current Playing • Build high switching costs for retailer Field • Build credibility with consumers • Traffic • Conversion • Develop strength and stability in sales • Share • Create stronger case for expanding into new Driving Bottom Line Profitability. categories Ways to Build a Consumer Brand • Proprietary technology • Consumer advertising • Commercial channel success
  16. 16. Building a Brand - Example WORX To Do’s for Researchers Know your brand’s real value and short comings - track it • Go around the retailer ongoing and respond • Talk to your customer Know who key influencers are directly Understand impact of channel marketing and messages If it can’t be done make the organization face realityThe #1 Brand in Cordless String Trimmers withNO retail distribution – now in Home Depot andLowes
  17. 17. Drive Bottom Line Profitability Building a Consumer Brand. Product Line Profitability • One-view of cost (avoid getting picked apart by retailer Expand Into Adjacent Areas behind the line programs) • Use new product introductions to eliminate / obsolete Current Playing Field low profitability products • Traffic • Drive operational and logistical efficiencies • Conversion • Share • Expense productivity Driving Bottom Line Profitability. Driving Cost Out • Distribution costs • Manufacturing costs • Packaging costs • Minimizing return costs Retailer Negotiations • Index commodity prices • Start early on price increases (expect it to take months) • Packaging costs
  18. 18. Understanding Cost - Example The Reality of Cost in the “New Normal” To Do’s for Researchers Understand the CTQs for your • Component costs are high and rising products • Retailers have significant leverage to deny, Experiment with ways to take delay and decrease price additions cost out without impacting the customer • Manufacturer who do not know how to intelligently cut costs will lose profitability or Competitive intelligence on lose business costWaiting for his costincrease to be approved
  19. 19. A Parting Thought – The Big Picture Traditional - If you are not growing square footage – you have started your decline Digital – If you are not growing customer interactions – you have started your decline How will your product be sold in the future