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Food Retailing / Supermarkets

Keeping the Cart Full

How much are missed sales costing supermarkets? "Billions!" says VMSD European editor John Ryan

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Every time a disappointed shopper finds there’s no Kellogg’s Corn Flakes on the shelf and leaves the store, the retailer loses a sale. Every time a grocery shopper opts for the 12-items-or-less express lane instead of filling up her cart and waiting in a longer, slower line, sales are lost. Every time a shopper becomes confused and short-cuts her way out of the store, sales can be lost.

Retailers know all this, of course. What they may not have known is the extent of the problem. Now they’re finding out. A recent survey by the London-based retail consultancy Envision Retail says U.K. supermarkets lose $4.8 million every day because they fail to respond to those very signals shoppers give them. That’s nearly $2 billion a year in sales that should but don’t happen.

The U.S. has five times the population of the U.K., and that means U.S. food retailers risk missing out on $24 million a day, or almost $8.8 billion a year.

But even knowing the full extent of the problem may not be enough. Retailers must understand and face the issues. Thinking that store loyalty will save the day – that the shopper will always return, or will choose a substitute product or even that all shoppers will react in the same way – keeps the problem from being solved.

In fact, the Envision survey (which studied the buying habits of 3000 British shoppers over a nine-week period) identified that there are four specific customer types found in supermarkets, and they will react differently to out-of-stock situations and other challenges, depending on who they are or even on the time of day.

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First, says Envision, are the “focused fulfillers” – shoppers on a mission, guided by a list they drew up before climbing into the car. They’re unlikely to deviate from this list and the chances are low of their substituting one product or brand for another when an out-of-stock occurs. So if you disappoint them, you lose them.

Then there are “product groupies” – folks who know generally what they want and will consider a relatively small number of items within a range. They want cereal, for example, and if the Kellogg’s product isn’t available, they might switch to another from General Mills. But they might not willingly switch forever. At some point, you risk losing them, as well.

Next come the “category searchers,” who will stand back from an aisle to spend time considering all the options within a category. They’re the easiest to please but the most difficult to establish long-term relationships with. They have little loyalty to brands or to retailers.

And finally there are those referred to by Jason Kemp, Envision’s managing director, as “inspiration seekers.” These are shoppers who come in with little plan at all. They’ve dropped in to get something for the evening, but they’re not sure what. Instead, they trawl the aisles looking for ideas. They’re the ones who will respond to innovative presentation, eye-catching signage, pleasant cooking odors, inviting lighting and the occasional sampling station. And if you inspire them, they’ll return to you.

But identifying these four shopper types isn’t the end of the solution. Another problem is that out-of-stock situations increase as grocery retailers move into the latter part of the day – exactly the time of day, according to Envision’s research (from interviews and observations), that shoppers are less likely to substitute one product for another. This is a situation headed for calamity on a daily basis. And it’s becoming an especially big problem today as more and more food retailers go to a 24-hour schedule. That means an almost constant flow of shoppers, merchandise leaving the shelves around the clock and less down-time to replenish the shelves. It puts a greater burden on distribution systems, processes and staff training.

The Envision study brings out into the open a set of suspicions food retailers have had for some time. Now that there’s a dollar figure attached to it, however, those retailers are compelled to confront it. And knowing who your shoppers are, what motivates or repels them and even which problems arise at which times of the day is the first step toward finding a solution.

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Photography: John Ryan, London

 

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