Cannibalize Store Sales Strategically

When you introduce a new product line in your store, you hope to increase total sales. If profits from the new line do no more than equal profits from the existing lines, that hope hasn’t been fulfilled. Worse yet is if revenues from one segment eat up revenues from other segments.
     What are the best ways to turn cannibalization to your advantage?
     Researchers at University of Virginia tracked results when a specialty apparel retailer installed a store-within-a-store (SWAS) boutique which featured a new label. Here’s what they found, along with suggestions based on this and other research:

• Installation of the SWAS improved three metrics for the overall store—the percentage of shoppers converted into purchasers, the dollar amount of the average customer transaction in the store, and growth in sales. It appears that a SWAS is a good idea. 
• Sales from the boutique did cannibalize sales from other parts of the store. The implication for you is to prepare for adjustments in inventory management when introducing the SWAS. 
• When consumers feel there’s a natural fit between the SWAS item lines and the other item lines, this increases customer spending on both sets. One explanation is the added excitement from introducing the new product lines. There are other ways to add to your store the sort of excitement which will draw shopper interest. The SWAS is only one alternative. But it does appear the SWAS way has a lasting influence. If you choose this alternative for building profits, expect more in sales climbs of the existing lines than in sales climbs of the added lines. To refresh the excitement periodically, you might decide to use the SWAS space for different lines over time. When retailers have a part of the store set aside for seasonal items, they are using a variant of this technique. 
• If the consumer perceives a very high fit between the two sets of product lines, sales on the SWAS lines will drop while sales on the older lines will increase. The reason here seems to be that shoppers conclude they’re getting equivalent products with the two lines, and they prefer the older lines. Perhaps this is because the older lines are a time-tested alternative and/or the price of the older lines is lower. In your store, it would make the most sense to introduce a SWAS only if there is some distinction from the existing lines. 

For your profitability: Sell Well: What Really Moves Your Shoppers

Click below for more: 
Keep a Store-Within-A-Store Compatible 
Open Up Profits Using Stores-Within-A-Store