From interruptions to engagements
Our core strategy was to get rid of most interruption points and to create / introduce engagement points. This would reduce out of stock level, improve space efficiencies, and enable cross category sales through meal solutions. With correct impementation, the category margin (due to mix management) would also improve.
Before situation:
A: Out of stock level at 13.5%
B: No conceptual & logical cross category set-up
C: 17 points of interruptions
After situation (What we did):
A: Introduced combo meals / menus in the food stalls at store entrance (Q1)
B: Created ‘Fruit to eat & Fruit to drink’ in fresh produce section (Q1)
C: Revamped the permanent category shelf as explained above (Q2)
D: Created ‘Home Meal Solutions’ with integrated freezer racks & menus (Q3)
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F: Refreshment Zone in snacks aisle (Q3)
G: Created ‘Home Meal Replacement’ solutions in meat section, with day-part menus (Q3)
H: Created an ‘Inner Beauty’ Water Cooler in beauty section. (Q4)
I: Improved planograms in Check out Coolers (Q4)
The Paradox of Choice
Some years back Barry Schwartz and Mark Lapper carried out the famous jam experiment in a supermarket in the US. They wanted to see the effect if the assortment of jam was reduced from 24 flavors to 6 flavors. Long story short, the purchase intent increased 10 fold and sales increased significantly. With fewer SKUs in the assortment, the planogram became more appealing with more clear lines. Shoppers though, funny enough, that the assortment had increased.
The conclusion was as follows: “With too many choices, people can feel stress, choice paralysis, and maybe most importantly regret. With 6 jams, people may feel that they’re saying no to 5 flavors when choosing a jam, but with 24 jams, people may feel that they’re saying no to 23 flavors! People hate bad more than they love good. The PI was 10 times higher with 6 jams (vs 24 jams).” Barry Schwartz of Swarthmore College details this behavior in his book The Paradox of Choice
In this case, the retailer had 1221 SKUs in the beverage category
Out of the 1221 SKUs, 678 were parasites and were reducing the overall category value. These 678 SKUs had just one to two facings each, an occupied 46 shelf meters.
Our ‘Assortment Optimizer’ tool (named 16 Matrix) calculated that the category would grow 47% if the planogram was changed to a more productive one, excluding all the parasites.
The remaining 548 SKUs represented 92% of total sales, and 146 SKUs represent 70% of total sales. These were the core SKUs to develop and focus on to grow the business further. This we did through optimized planograms, improved bone structure, converting POIs with POEs.
Results:
This was a holistic project, moving from only beverage, to also looking at other categories.
A: The food stalls lifted their sales with 60% (after introducing combo deals)
B: Products in ‘Fruit to Drink’ section grew 400% (racks in fruit section)
C: Category grew 139% in volume and 178% in value
D: Each of the ‘Frozen Meals’ (Home Meal Solutions) sold in average 41 meals per day (up from zero).
F: N/a
G: Sold up to 1000 solutions per week
H: N/a
I: Check out coolers grew 60%
Out of stock was reduced from 13.5% to 3.7% during the first six months.
Two key takeaways:
1. Shoppers are ‘sleep-walking’ 10% of the shopping time; hence simplicity is king to achieve success
2. Day part solutions / menus do work well
End note
Perhaps the most impressive store projects we’ve ever worked on, and it is for sure the way to enhance ‘retailtainment’. When suppliers and retailers start by looking at shopper needs, and not PL; both topline and bottom line will improve. This is possible, when we move away from just transactional selling,and introducing the remaining four selling techniques. A joint business plan is more rewarding then discussing terms of trade and margins.
There are 540 ways of creating a meal at point of purchase, and it all starts with the occasion, with focus on the center of the plate.
Our target for this account was to create ‘Home Meal Solutions’ and ‘Home Meal Replacements’, constructed around Conceptual-, Educational-, and Experiential selling.