I could very quickly list about a dozen metrics that category managers use with some regularity to evaluate category performance. Dollars per linear foot, percentage of total sales (distribution), days of supply, and inventory holding costs are just a few of those. As a matter of fact, the savvy category manager more often complains of having too much data and too many metrics than not enough.
But yet among the plethora of information there is an almost “mystical” absence of any information about how the placement of categories and departments effects performance.
Let me explain. Many of us have seen thermal maps that depict where shoppers go (and don’t go) when they shop the store. Simply put, there are aisles, alcoves, and even perimeter locations that are dying from under exposure. Shoppers just don’t go there.
The thermal map here depicts a supermarket all the various areas of the store that are well populated with shoppers (green-yellow-red) and those areas that are less frequently traversed, (blue-deep blue). Notice there’s more blue than any other color?
The reason for these “vast wastelands of retail” are two fold. One is rather intuitive. The products that are merchandised there have little or no appeal to the shopper. They are either redundant with other similar products that shopper has already purchased, or they are just very uncommonly purchased items, with very low household penetration numbers.
The second dynamic in play is less intuitive and almost completely off the retailer’s radar screen. It is that there are overt reasons why shoppers shop the way the do, where they tend to go, and how they tend to get there. These tendencies are so common and have been proved to be so universal they are principles in my mind. Without getting into detail the individual principles here, (I would recommend you read some of the great work my mentor and ex-boss, and fellow RetailWire contributor, Herb Sorensen has published on this topic), I will list several of the key principles for context.
1. Shoppers like to shop counter-clockwise (right to left). (Right handed stores are good Left handed stores, not so much)
2. Shoppers are much more productive spenders early in their trip and spending diminishes as they progress through the store. (There are diminishing returns on long trips)
3. Shoppers spend only about 25% of their time “shopping” and about 75% “going” from spot to spot in the store to shop. (Improving “shopping time” can be very fruitful for the retailer)
4. Shoppers migrate to open spaces, they don’t like aisles and cubbies, they also like open sight lines. (Store design and layout implications are abundant.)
5. When shoppers do visit aisles, they frequent the polar ends of the aisles much more so than the center of the aisle. (Be careful what you merchandise in the middle of the aisle, it may die of loneliness.)
Ok, I could go on and on with dozens of additional scientifically proved principals. But I think you get the drift that with the aforementioned dynamics in play, it does matter where in the heck you put things in the store. Here’s one example:
Looking at two nearly identical stores with similar square footage and layouts, the Household Cleaner Category in the left side diagram is place earlier in the shopper’s trip cycle when they are spending faster and in more volume and where 25% of all the shoppers are exposed to the category.
On the right side, we see the same category placement later in the shopper’s trip and in a aisle where only 12% of shoppers visit. The end result is 6% of the shoppers make a purchase in the category in when the category is in a superior location….3X over the sales it generates in an inferior location. This might be really important to know, if you find your Household Cleaner Category being commandeered by the big box stores.
I understand fully that not all categories can be placed in the stores “hot spots”. But the point is that categories will perform radically differently depending up where they are placed in the store. The good news is, there is a process that can rank and prioritize categories and match those categories to the where the shoppers are going in the store. The results can be unbelievably lucrative for not only the category, but the overall store in terms of basket size, profitability and even shopper satisfaction….it works, I’ve seen it!!