Mar 15 2012
By Jason Stemm
By some estimates, $175 million will be lost by employers in the next two days due to lower productivity resulting from the start of the NCAA tournament. Hopefully this blog post opened for you despite all the bandwidth being used by your coworkers streaming live hoops action.
In the Big Dance, smart perimeter play can propel a Cinderella team deep into the tournament. This is a lesson that should be adopted by grocery retailers looking to grow sales and build customer loyalty. “Shopping the Perimeter” has been a top recommendation from groups trying to guide shoppers to a healthier diet and recent research from Kantar Retail shows that this message is getting through. In their study, they found that 50% of shoppers claim to only shop “in select aisles to get what’s needed” rather than going up and down every aisle. This is a 6% increase from 2008. They credit the recession as being the driving factor, but I think there is more to it. This presents a challenge and an opportunity for retailers to maximize the size and value of the shopper’s basket.
Understanding consumer in-store traffic flow and where they spend most of their time can help guide merchandising strategies. While the center aisles still account for the majority of sales, it is the perimeter where customers are spending most of their time. Why? There are a few factors I see at play. In addition to the renewed interest in consuming more healthful, less processed food, the perimeter is simply more interesting. There is also more variance at play that can influence the time needed: customer service, meal planning, price, seasonality and quality. Here are some simple tips to capitalize on the time and attention that customers are spending on the perimeter, to increase their basket size and money spent on the interior.
Customer Service: A great opportunity for building loyalty. Give your employees a chance to have first-hand knowledge of new items to speak to customers about them. Also create an environment that encourages interaction. For instance, during the NCAA let employees where hats or shirts supporting their favorite college team in the tournament. Even if it is a customer’s arch rival it provides the opportunity for a little friendly ribbing.
Meal Planning: Providing meal solutions to customers is a great way to build incremental sales. Promoting fish for Lent? Give shoppers ideas to complete the plate and drive them to other departments such as produce, as well as in the center aisles for pastas, sauces and other items. You can even reach them before they hit the store with recipe ideas in your store circular and on digital assets. Consider your natural store flow and offer secondary locations for some items such as lemons to reduce the need for customers to back-track.
Price: Today’s economy has made consumers more price sensitive, but the perimeter is an area where they are willing to pay more for quality and other attributes. Store margins are also stronger on the perimeter. The center aisles have products competing with competitor retailers and store brands. On the perimeter, you can distinguish yourself from the store down the street with quality and service. You will still have the bargain shopper looking for the cheapest chicken available, but you will also have shoppers willing to pay more for attributes like hormone-free, organic and free-range.
Seasonality: Your first thought is probably produce, but the perimeter offers many other seasonal opportunities, many of which revolve around food. You know it is November when the island case of turkeys is out, and expect hams to be featured as Easter approaches. In the summer, the meat department is focused on grilling. Take it a step further with an integrated merchandising strategy on the perimeter to capture customer interest. It doesn’t just have to be candy for the next holiday. Capitalize on holidays where food and entertaining are a center piece such as Easter, graduation parties and Memorial Day in the coming months.
Quality: As mentioned earlier, the perimeter is a place to distinguish your store from competitors. One reason people are spending more time here is that the quality can vary from week to week. While you always know what to expect from a can of Campbell’s Tomato Soup, the avocado you enjoyed last week may be coming from a different farm or country this week. While apples and pears are sold by variety, many other fruits are comingled. Peaches may be separated by the color of flesh, but berries tend to have one identification, such as strawberries.
You have to fish where the fish are, which unless frozen, will be found on the perimeter. This is where your customers are spending the majority of their time and open to point of purchase influencers. The center aisles have become the battleground for price competition, both from private label and retail competitors. While they are still important to sales, it is the perimeter that is going to convert customers into fans, though if you want face paint and pompoms, I suggest you start streaming from cbssports.com.
Photo Credits: http://www.homemakers.com/