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

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Use Staff Name Tags for Accountability

About 25% of back-to-school shoppers are already purchasing supplies. Another 45% will start any day now. That’s according to National Retail Federation surveys. The percentage of online purchasing has grown: A family with K-12 students will spend $688 on average, while those shopping online will spend an average of $874.
     What might the bricks-and-mortar retail store do to win the BTS shopping dollar? Two words: Name tags.
     But I’m getting ahead of myself. Allow me to move back a few years to when my granddaughter Molly was anxious to start kindergarten. So anxious that she dictated to her mom what she called her “Learning at School” list.
     Rule 9, “Do your hardest work,” was nicely augmented by Rule 12, “Don’t scribble scrabble on people’s work.” Sometimes a four-year-old’s silliness came through. Rule 14, the eminently sensible “Don’t pull people’s hair,” morphed into Rules 17 and 18, “Don’t bounce balls on people’s heads” and “Don’t pull people’s noses.”
     As a retailing consultant, I was glad to see Rule 1 was “Say hi to your teacher.” A friendly, outgoing approach will take you far, whether it’s with teachers, customers, or coworkers. According to research at University of British Columbia and INSEAD-Singapore, going beyond “Hi” to reveal information about yourself to others also helps. Maybe not Rule 15, “If someone says, ‘How old are you?,’ you have to say how old you are,” but Rule 11, “If someone says, ‘What’s your name?,’ you have to answer.” In fact, I think customers should not even have to ask. I suggest you require your staff members to wear name tags.
     An employee with a name tag is more likely than one without to form the sort of relationship with a shopper that leads to store loyalty. One reason for this is that the shopper feels they’re dealing with a real person who has, indeed, revealed information about themself. But research identifies another aspect as well: The employee who is aware they’re wearing a name tag tends to be more conscientious in their behavior with shoppers.
     There are two important points for you making use of this finding in your store. First, the employee needs to be aware that their name is on display. Regularly comment to your staff about their name tags. Second, the conscientiousness is useful only if the employee knows what constitutes excellent customer service. Coach them well so they do know.

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Filter Information to Create Your Future

In a Marketing Daily posting, marketing strategist Johanna Skilling wrote that when she wants to know about local weather, she doesn’t look out her window. Instead she consults her iPad. Her point is that, with the abundance of information available online, it’s quicker to answer questions that way.
     When I apply this thinking to retailing, I draw a somewhat different conclusion than does Ms. Skilling: Online information retrieval can slow us down. The abundance of online information requires us to filter it rather than become immobilized by it. You’ve a limited amount of time, money, and energy. If you spend all your time gathering information, if you listen to anyone who has an idea for your retailing success, every bit of time, money, and especially energy will be sucked out of you. An overabundance of information is an energy vampire.
     An excellent information filter for retailers to use is the degree to which the information helps us create our futures. I’m more interested in what the weather will be later than what it is now. That information helps me prepare.
     When it comes to the weather and otherwise, don’t just predict your future. Create your future. Don’t trap yourself by waiting for the marketplace or the broader economy to force you into reacting. Instead, do your best job of predicting what the government, regulatory agencies, your retailing competition, and your shoppers are likely to do. Then consult your predictions to grab the initiative.
     To put this grand sounding philosophy into workable form, keep in mind the inevitability of resistance. Retailing requires human interactions, and a universal component of human interactions is resistance. For every retailer seller, there are buyers and regulators. Buyers fight back against feelings they’re relinquishing free will. Regulators want to feel important. They want their knowledge and influence to be acknowledged. When it isn’t, they push back against you even harder.
     Your ability as a retailer to change the weather is limited. With other marketplace forces, however, your potential influence is greater. Learn from the past.
     Don’t dwell on the past, though. That would discourage you, and successful retailers are optimistic. Creating your future does generate optimism. It’s a particular kind of optimism. It's not a belief that everything will turn out fine, no matter what. Instead it's a conviction that you are capable of using the strengths of your business to achieve high profitability.

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

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Pay Close Attention to Each Customer’s Needs

CARQUEST drove past Pep Boys in the latest Market Force Information survey of 4,600 auto parts store shoppers. CARQUEST earned a composite score of 4.55 against the Pep Boys score of 4.20.
     Okay, that’s not a monumental difference. In fact, in the survey, most of the respondents expressed satisfaction with their shopping experience. However, almost 80% of the respondents said they were likely to drive past a competitor’s store to shop at their preferred auto parts retailer, so the difference between 4.20 and 4.55 corresponds to big dollars.
     At the foundation of the difference in ratings was the extent to which the frontline store staff—the ones serving customers face-to-face—accurately and promptly identified each customer’s needs and desires. It is what researchers at University of Mannheim and University of Bochum call Customer Need Knowledge (CNK).
     Based on their statistical analyses of information gathered from customers, employees, and store managers, the researchers found that when the CNK of employees in a store is higher, customers tend to be more satisfied and to say they’ve gotten better value from their purchases. An employee with high CNK pays close attention to each customer they’re with and is concerned with the problems of that customer.
     The research findings also suggest two ways to increase the CNK of your store’s employees:

• Manage employee turnover. Retailing has higher employee turnover than most other types of business. Some turnover in any organization is good. By bringing in new ideas, turnover heads off inbreeding and stagnation. Turnover can disrupt CNK, though. In the research findings, one of the top two facilitators of CNK was the customer having dealt with the employee over a period of time. Longer-term employees get more opportunity to learn what a store’s target markets are like and will like. 
• Recognize and correct for the ways in which your target markets are different from your sales staff. The research found that CNK is less when there’s a large age discrepancy between the salesperson and that salesperson’s typical customers. This argues for hiring employees who are similar in age and other characteristics to your typical customers. You’ll want to be sure those employees also can learn retailing skills and that you obey antidiscrimination employment law. Working at it from the other direction, use the characteristics of your talented employees to help you attract customers like them. This expands the scope of your typical customers. 

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Quench a Thirst for Health in Food Deserts

As a Time blog post reported, mobile stores carrying fresh produce are pulling into food deserts—low-income communities which have had limitations on access to a large grocery store. The objective is to sell good health. The initiatives reported in that Time post plus academic research findings provide lessons for a range of retailers about how to profit by creating and then quenching a thirst for health in food deserts:

• In communities where retailers of all sorts feature health benefits in their advertising and marketing, consumers are more likely to seek out healthy foods. 
• In some ways, shoppers in low-income communities have expectations similar to those in higher-income communities. Research findings from RTI International in North Carolina and George Washington University say that low-income shoppers want cleanliness and convenience. The Time post quotes potential customers in low-income areas saying they hesitate entering stores where there are people drinking alcohol outside, where they’d have to walk deep into the store to reach the healthy offerings, or where those offerings aren’t displayed attractively. Minimize these obstacles. 
• In other ways, shoppers in low-income communities differ from shoppers in higher-income neighborhoods. Researchers at University of North Carolina-Chapel Hill, Oregon Health and Science University, University of Massachusetts, and University of Alabama-Birmingham looked at whether having lots of Quick Service Restaurants (QSRs) in a neighborhood was related to the consumption of less healthy foods. They found that for the men in low-income neighborhoods, a higher density of QSRs was related to less healthy eating. There was no relationship with low-income women or with consumers of either gender in middle- and high-income neighborhoods. The findings argue for marketing to women as the agents of change and the men as the targets of change in food deserts. 
• What about measures such as a fat tax? That’s the name researchers at University of Alberta and University of Wisconsin-Madison used for a surcharge on the purchase of foods that are less healthy than available alternatives. It turns out that, overall, consumers do respond to a fat tax. The additional cost makes them significantly less likely to buy an unhealthy product. However, they also become less likely to buy any product in that category. Their irritation about the fat tax leads to them boycotting a purchase. They may be healthier for it, but you’re losing a sale. There are better alternatives for both the shopper and you. Consumers prefer rewards to punishments. 

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

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Feel Where Shopper Emotions Come From

The shopper’s emotional state affects how you can best make a sale. The specifics are determined by where the shopping emotions come from. Consumer psychologists talk about integral, incidental, and task-related emotions.

• Integral emotion comes directly from the item being considered for purchase. It might be the delicious pleasure arising from the experience of tasting the sample of ice cream or the piercing grief when deciding on funeral arrangements for a loved one who has died. Thinking about past experiences with the product or service—such as might be set off by an advertisement—can generate integral emotion. Of the three types of shopper emotion, integral emotion is the one least within the control of the retailer. Be sensitive to it, acknowledge it unless this would embarrass the shopper, and then work with it. 
• Incidental emotion consists of the complex set of feelings the shopper brings to the situation. The husband might be relieved at finally being able to buy a new TV, and the wife might be irritated because her mate cajoled her into coming to the store to shop for that same TV. Incidental emotion is open to change once the shopper has arrived in your store. But there are limits. Some people are, by nature, happy or sad or angry or tolerant. The amount of emotion the retailer expresses also makes a difference. Consumers feel greater enjoyment of the shopping experience and more positive feelings toward the retailer when there’s a close match of the salesperson’s level of emotional expression with the consumer’s degree of emotional receptivity. Research findings from Universidad Pùblica de Navarra in Pamplona, Spain indicate that a good technique is to monitor the extent to which your shopper uses emotion words themselves. 
• Task-related emotion arises from the process of choosing among alternatives in the store. The expert might feel pride from the process, but task-related emotion is much more often a negative feeling like frustration. When the frustration is strong, the consumer goes for shortcuts. This might be choosing the last item you showed them just to keep it easy. That’s not a good option for you or the shopper, since it increases the chances of post-purchase regret. The other common consumer response to task-related frustration is to delay the choice. That means losing the sale, at least for now. Therefore, dissolve negative task-related emotions by guiding the shopper through the selection process. 

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

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