DDi - March 2011 - (Page 16)

16 | Shopper Insights Size matters here has been a lot of change in retailing over the last 50 years. With the advent of the hypermarket, the grocery industry has built bigger and bigger stores. This provided consumers with a multitude of choices, but it has also invited all sorts of competition to get into the food business with different formats. We all saw Tesco, internationally known for its hypermarket megastores, launch in the United States with its smaller-sized Fresh & Easy store format. We have also seen a boom in convenience stores. And recently, Walgreens has expanded its offering to include an extensive selection of fresh foods and staple food items. Why the migration to the smaller store size? As the stores grew bigger and bigger, the trend forced retailers to focus harder on understanding the shopper. As Stephen Quinn of Walmart has said to me: “[Shopper marketing] will not just shape and define consumer reach in-store, it will give us insights into what works and what doesn’t…We can reshape our stores.” And that is exactly what Walmart is doing—looking at various smaller formats to better fit the changing needs of the shopper. As a retailer concerned about store size, what do you do? The first step is to think about why the consumer is shopping. Studying what the experts call “trip missions” enables retailers (and manufacturers) to understand why shoppers stopped at a particular store. Understanding trip missions helps retailers decide what assortment of products to offer and how to lay out the store, and even what to promote. The Nielsen Co. tracks and records the shopping purchases for more than 10 million individual shopping trips, identifying four core trip missions (see chart below). What you will quickly see is most shopping trips or trip missions are not for the big stock up of groceries. The majority (68 percent) of customers’ shopping trips are small, immediate, need-driven trips. Knowing that most trips to the store are for one or two items illustrates why so many retailers are offering smaller-format stores. T George Wishart 1) Small Trips 2) Medium 3) Large • Less than or equal to a $36 basket • Low value, “grab and go” or “immediate” need-driven baskets • Averaging $14 per trip • More than $36, but less than or equal to a $72 basket • Slightly higher value baskets, “fill-in” need driven • Averaging $51 per trip • More than $72, but less than or equal to a $141 basket • High value “routine” shopping trips • Averaging $98 per trip 4) X-Large • More than a $141 basket • Large “stock-up” trips • Averaging $238 per trip Source: The Nielsen Co., Trip Mission Study, Homescan shoppers walk out of the store with only a few items.” The average grocery store is so big that “about 80 percent of shoppers’ time is spent simply in moving from place to place in the store, not looking at and purchasing items, which means that most of the shoppers’ precious time and attention in-store is spent not shopping,” Sorensen writes. With 68 percent of trips being limited-item trips, it is not surprising that Walmart has launched Neighborhood Markets averaging 42,000 sq. ft., and is now experimenting with the even smaller Marketside format. Additionally, Supervalu Inc., the supermarket giant that owns Jewel-Osco, recently announced that it is opening five Save-A-Lot discount grocery stores on the south side of Chicago, as well as closing a Jewel store. Save-A-Lot promises customers between 40 percent and 50 percent savings compared with traditional supermarkets. They do it by offering fewer items—about 1,400 compared with about 35,000 in a supermarket—and relying on private-label products. Smaller stores also keep overhead low. A 2011 study conducted by the National Grocers Association indicated that “right-sizing is key, because 90 percent of adults confirm that size is a main factor in their store choice. Just fewer than one in six (16 percent) say they wouldn’t entertain a move, because they like their current store enough to keep shopping there.” The Nielsen trip mission data reinforces that consumers will vote with their feet, and I expect we will see a sustained focus on smaller-format stores for the foreseeable future. The big store format also has other drawbacks. Sorensen points out that “the longer someone shops, the less they spend. So the old myth of keeping the shopper in the store longer does not hold true. Quick trippers spend at a fiendish rate. What retailers should be focused on is helping the consumer be more productive while shopping.” Having the right store size is critical to ensuring that the shopping experience for each shopping trip is a good one, and that the shopper returns again and again. —A pioneer and consultant in the shopper marketing industry, George Wishart is the president and CEO of Edgewood Industries LLC. He shares his shopper marketing insights with DDI in this regularly appearing column. www.ddionline.com Most trips are more “grab and go” than “stock up.” Herb Sorensen, author of the 2009 book “Inside the Mind of the Shopper,” says “most supermarkets are designed for shoppers who are stocking up their pantries, but most | March 2011 http://www.ddionline.com

Table of Contents for the Digital Edition of DDi - March 2011

DDi - March 2011
Contents
From the Editor
Newsworthy
Shopper Insights
Greentailing
Editor's Choice
Design Snapshot: Kusmi
Design Snapshot: Avril
Channel Focus: Toy Store
Longo’s
Brown Thomas
11 Retail Trends for 2011
Bloomingdale’s
The Exchange
Lola
White Castle
Design Leaders 2011
GlobalShop
Show Coverage
Right Light
In-Store Technology
Product Spotlight
Classifieds
Calendar
Advertisers
Shopping With Paco

DDi - March 2011