4. Retailer Profits (US supermarkets)
Supplier funds – slotting fees, promos, trade allowances
Float – interest on cash received, pending disbursements
Real Estate – buying, developing, managing property
Margin on sales to shoppers
Retail & Shopper
5. The BIG Problem . . .
Up to 80% of the
shoppers time in the
store is WASTED!!!*
. . . it is also a BIG Opportunity! ! !
*The 'Traveling Salesman' Goes Shopping: The Efficiency of
Purchasing Patterns in the Grocery Store
http://knowledge.wharton.upenn.edu/article.cfm?articleid=1608
Retail & Shopper
5
6. Twin Sales Barriers
Where is the . . . ?
. . . which one do I want?
Retail & Shopper
8. Sorensen’s First Principle of Retail Sales
The faster you close sales . . .
. . . the more you will sell!!!
Retail & Shopper
9. $40 Means
Means
$35 more
more
Sales!!!
Sales!!!
Annual Store Sales
$30
$25
(millions)
$20
$15
$10
Faster
Faster
$5 Selling!
Selling!
$0
90 80 70 60 50 40
Speed of Closing Sales
(seconds per dollar)
Retail & Shopper
10. The Holy Grail – Active Retailing
To know exactly what each
shopper wants, or may buy, as
they come through the front
door.
To deliver that to them right
away, accepting their cash
quickly and speeding them on
their way.
Retail & Shopper
13. The Faster You Buy, the More You Buy – Shopper
Efficiency
• H1: Decrease in Purchase Time results in an increase
in basket dollars and items
Shopper Efficiency Regression
Basket $s Purchase Count
Coeff t Coeff t
one second
A Intercept 3.00 0.64 1.641 2.25**
decrease in average
Avg Purchase Time ‐0.21 ‐2.65*** ‐0.074 ‐6.01***
Purchase Time increases
Trip Length by
Basket Size 0.02 2.77*** A0.003 second
one 3.32***
Trip Duration
$0.21! 0.02 2.87*** 0.007 5.35***
decrease in average
Purchase Time increases
Prob > F 0.00 Item0.00
Count by
R Sq 0.50 0.70
Adj R Sq 0.49
0.07
0.70
*p<0.10 **p<0.05 ***p<0.01
Retail & Shopper
14. Decreasing Purchase Time results in larger baskets
more effectively than does encouraging longer trips
Retail & Shopper
15. Faster Buying Results in More Purchases
Avg Total
Purchase Basket
Time Size
43.6 $12.7
7 6
36.6 $11.1
7 3
24.1 $35.0
4 1
19.5 $53.8
6
(Seconds)
Retail & Shopper
17. The Three Key Things to Know
1. How many items does the
shopper want to buy – or you
might be able to sell them?
2. Exactly what are those
items?
3. How best to sell those
items – locations and
techniques?
Retail & Shopper
18. Most Common Number of Items Purchased (Globally)
All classes of trade: big stores, little stores, hyper-markets, auto parts, drug stores
Basket Sizes
18%
Mode (most = 1)
16%
14%
Share of Shopping Trips
12%
10%
8%
Median (half = 5)
6%
4%
Mean ("average = 12")
2%
0%
0 10 20 30 40 50 60
Items Purchased – Supermarket scale
Retail & Shopper
21. Item Share (Count) for the Total Store
1.00%
Contribution of Single Items
The BIG Head
to Total Sales
0.75%
500 out of
32,000 items
contribute
25% of total
store sales
0.50%
0.25%
The L - O - N - G Tail
0.00%
0 500 1000 1500 2000 2500 3000
Rank of Single Items Retail & Shopper
22. Focus on the Few Products . . .
. . . that Sell the Best! (The BIG Head)
1,000 SKUs
3% Big Head
All Others
33%
# $
67%
97%
By Count By Dollars
Think About Those few Items,
Retail & Shopper
NOT Categories
23. Item Management . . .
“Well, we have never been a category company – that was decided
long before I came . . . We look at it item by item. That doesn’t
mean we don’t have a fair representation with a category. But
usually it’s only the top five or six items in that category, and we
look at them as items!” $1 million per day in their top store!
Charlie Burnett, COSTCO
“If an item doesn't pull its weight in our stores, it goes away to
gangway for something else.” Trader Joe’s
“What's not to like? They're very good retailers [Trader Joe’s], and
we admire them a lot.” Jim Sinegal, co-founder CEO, COSTCO
Retail & Shopper
24. 2. Focus on the Few Products . . .
. . . that Sell the Best! (The BIG Head)
300 items dominate total store sales.
30 items dominate total category sales
3 items dominate total brand sales
Typical household buys only 300 – 400 items
per year!
Half of those, 150 – 200, they buy regularly.
Sell them what they are buying.
Retail & Shopper
25. Item Management . . .
“So our traffic is up, our sales are up.
We’re in the 3% range right now over
last year”
. . . March 2010, Drug Store News
Charlie Burnett, COSTCO
Retail & Shopper
26. 3. Two Options for Accelerating
Sales of Items
Move the items to the shoppers –
mostly by secondary placement
Focus on, and close on the items
. . . wherever they are
Retail & Shopper
27. No technology!!!
No technology!!!
Call out the top sellers
Call out the top sellers
Retail & Shopper
28. Total grocery sales up 4%
Total grocery sales up 4%
for the 1st quarter 2009
for the 1st quarter 2009
over 4th quarter 2008!!!
over 4th quarter 2008!!!
Item Lift After “Top” Sign
Corona 16%
Angel Soft TP 67%
Store Brand Butter 324%
Ice Cream 116%
Retail & Shopper
34. “. . . an array of mobile
devices . . . continue their
inexorable march from
cellphone novelties to virtual
personal assistants.”
USA Today, March 31, 2010
The Convergence of Online, Mobile and Bricks-&-mortar (COMB)
Retail & Shopper
35. Personal Selling Fundamentals
Determine what people want
Narrow their choices to a manageable few
Make the process easy
– focus on selling the few
Upsell them on related items
Close as quickly as possible
Retail & Shopper
36. www.insidethemindof theshopper.com
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Retail & Shopper
herb.sorensen@tnsglobal.com