Active Retailing: Linking Shoppers with

Products Faster, for Greater Profits

Herb Sorensen, Ph.D.

The Holy Grail of Retailing

The Shopper Represents the Consumer at Retail

Brand Equity Pre-Disposition

Brand Equity Pre-Disposition

Transaction Seals Purchase

decision

Transaction Seals Purchase

decision

Shopper type

Type of occasion

State of mind

Channel choice

Pre-planning

Retailer choice

Retailer experience

Store layout

Store dynamics

Store atmosphere

Shopping style

Shopping basket

Shopping route

Shelf layout

Signage

Promotions

Pack standout

Consumption experience feeds back into brand

equity

Consumption experience feeds back into brand

equity

PRE-STORE

STORE

P.O.P.

Pack communication

In-store advertising

Consumer Experts

Consumer Experts

Shopper Experts

Shopper Experts

TNS Sorensen“The In-Store Research Company®”

Hidden in Plain Sight!

Count the number of times the ball is passed between the players in the WHITE shirts

Agenda

Active vs. Passive Retailing

Store Design: Seven Rules

Merchandise Layout to Target Shoppers

Category-Brand-Item: Measure/Manage Performance

Partnership: Retailers-Brand Manufacturers-TNS

The Problem . . .

Fewer sales opportunities

Increased channels

Rise of C-stores

Shoppers are more diverse and complex

The Solution . . .

. . . detailed knowledge of the shopper’s behavior in finding, selecting and bringing their products to the checkout.

TNS is now the driving force in a global retailing revolution.

Treasure Hunt?

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.

Store Design: 7 Rules

Tools: All Stores – All the Time – Anywhere

Paper & pencil

-Online internet

Tablet PC

Video Eye Tracking

People Counters

RFID PathTracker ®RFID PathTracker ®

Kiosk

RFID PathTracker®

Individual Shoppers

Millions of Shopping Trips; Second by Second

ZigZag Path Pattern

Racetrack Path Pattern

Racetrack with Excursion Path Pattern

Your greatest opportunity to sell is in the first third of the store.

Rule #1 - Concentration

Very Heavy

Heavy

Moderate

Light

Very Light

80/20 Shopper Density

What’s Wrong Here?

Shoppers will move around the store in a counter-clockwise (CCW) direction.

They will move from back to front.

They will buy on their left “when they have a shopping cart.”

Rule #2 – Shopper Asymmetry

Very Heavy

Heavy

Moderate

Light

Very Light

The Journey Through The Store

Clockwise is counter-intuitive

Right half of the store generally pulls better because of traffic flow

Counter-clockwise shoppers spend $2 more an average trip than clockwise shoppers

55 53

81

010

2030

405060

7080

90

leftentry

centerentry

rightentry

Average number of shoppers

Go with the Flow

Short-trip shoppers are very important:

More of them.

Spend money faster.

Stay nearer the front of store.

Rule #3 – Trip length is important

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

0 10 20 30 40 50 60 70 80 90 100 110 120 130

Trip Length in Minutes

Sh

are

of

Sh

op

pers Share of Trips by Length

Half the tripsare over in 8minutes or

less!!!

0%

3%

6%

9%

12%

15%

0 10 20 30 40 50 60 70 80 90 100 110 120 130 140 150

Items Purchased

Pe

rce

nt

of

Sa

les

Share of Trips by Items Purchased

Half of all shoppers buy 5 items or

less!!!

Spending Speed (typical)

R2

0

5

10

15

20

25

30

35

0 10 20 30 40 50 60 70 80Shopping Trip Length (minutes)

Sp

en

din

g S

peed

($/M

inu

te)

Short trippersspend moneyreally fast!!!

Trip Lengths

80/20: Implications

Faster Spending Speed = shorter trip focus

Short trippers are just stock-up shoppers on their other trips!

Short trippers: Twice as many 5-minute shoppers can be accommodated as 10-minute shoppers = fewer capital assets and greater profits.

Analogy: Turnover rate at peak times in restaurants

“The good is the enemy of the great!”

Rule #4 – Concentrated Merchandising

Develop a "C-Store Plus" merchandising strategy in the right front quadrant of the store.

Entry-left before – bakery tables Entry-left after – “C-store” format

Rule #4 – Concentrated Merchandising

Rule #5 – Open space is attractive

Shoppers do not want to go down aisles.

Encourage them with space and visual enticement.

Racetrack with Excursions

Excursions into the aisle create heavier traffic at the ends.

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

Front Middle Back

Vis

its

Center-of-Store Aisles

BreadCookiesCrackers

CannedDried

MexEthPastaBeans

HealthBeautyPaper

BakingSpiceHouse

LaundryCleanAuto

IceCreamCoffeeCandy

FrozenFood

BabyPets

CerealJuices

SodaSaltySnacks

DressingsPickles

Aisle Blow Back

Rule #6 – The Checkout Magnet

It takes less and less time for shoppers to make a single selection as their trip progresses. Plan for more leisure at

the beginning at the trip.

y = -13.922x + 104.63

R2= 0.8665

0

20

40

60

80

100

120

0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0

Trip Progression

Bu

yT

ime™

(se

co

nd

s)

Quickening Pace of ShoppingOn the racetrack

In produce (beginning):

BuyTime™ = 28.2 seconds

In grocery (near end):

BuyTime™ = 8.5 seconds

Salad Dressings

“Future Store” Ideas

Lower every other gondola

Push the upper shelves back 6-8”

Profile

Floor

Pão de Açúcar

DiamondPyramid™ Fixture

Rule #1 – Concentration

Rule #2 – Asymmetric traffic

Rule #3 – Trip length is important

Rule #4 – C-Store strategy – right front

Rule #5 – Open space is attractive

Rule #6 – The checkout magnet

Rule #7 – Difficult access → penetration

Store Design Summary

MerchandisingLayout of the Store

Chaos . . . Sort . . . Segments

Trip Measures:

Length in minutes;

Displays visited(%)

Categories visited

Items purchased

Dollars spent

Walking speed

Day part; Day-of-week

Each Dimension:

Trip progression

Walking speed

Buy time

Share of purchases

Gondola or secondary purchase

Store Dimensions:

By category

By geographic area (left, right, front, back, center)

By behavioral domain (open bazaar, constrained aisle, service, end cap, all other)

Shopper Behavior in the Store(Segmentation Variables Summarized)

Clusters

PathTracker® Segments(Shoppers “sorting” themselves by behavior)

Chaos-2: The Products

Where to merchandise

selections of this category

What Each Segment Buys(Their “Market Baskets”)

Categories shared by all segments

Common area near the entrance

Distinctive categories by segment

Divergent distinctive/instinctive paths

The completed sale

Putting the Pieces Together – Shopper Segments and Products

Entry

CommonBeverages (CSD, water)Breads/PastriesSalty SnacksHealth/Beauty AidsGeneral MerchCandy/Gum/MintsTobacco

MediumFrozen FoodsDairy, RefrigeratedProduceBreakfast FoodCookies and CrackersAlcoholic Beverages

LongMeat, Poultry, SeafoodBaking/Cooking SuppliesPaper & Plastic ProductsDressings/Condi/PicklesCanned VegetablesSoupDeli-Meats/Cheese

. . . etc.

Everything else!!!

Checkout/Exit

Putting it All Together

MerchandisingCategory, Brand, SKU Performance

Exposures

Visits

Impressions

Sales

Purchases

Shops

1 2 3

Shopper Presence

Shopper VisionJust

ONEitem

Three In-Store Moments of Truth

Merchandising 1-2-3™

Conversion rates – the percentage of shoppers in the store who buy an item – need to be broken into 3 components.

0

20

40

60

80

100

Visitors Shoppers Buyers

Video

Walking

Video

Shopping

Video

Buying

Getting traffic to a section is only half of the battle. Good merchandising will yield high DoubleConversion™ – stopping the traffic and then converting the shoppers to buyers.

Double Conversion

11%13%

16%16%

4%9%

21%10%

7%7%

6%27%

4%3%

12%29%

21%3%

1%31%

2%35%

4%8%

6%0%

6%1%1%

42%0%

2%1%1%

0%0%1%0%0%

3%6%

7%10%8%

8%

14%9%

7%

6%7%

20%

7%

19%3%

24%17%

18%22%

11%

13%20%

24%26%

17%10%

35%29%

12%

10%4%

4%4%6%8%

9%16%10%

3%21%10%

22%

13%25%

8%21%14%16%

30%

31%37%

41%44%

56%64%

40%49%

67%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

H&B - Shampoo & ConditionersCanned Fruit

Dried PastaCanned Seafood

H&B - Body Soap & CleansersCanned Soup

Dairy - CheesePrepared Food - dry mixes

Household CleaningCanned Vegetables

Prepared Food, Canned - RTSDairy - Yogurt

Frozen Dinners & EntreesBeer

Breakfast CerealDairy - Milk

LaundryCoffee

Pizza/Snacks/Hors d'OeuvresPet Food

Peanut Butter, Jams, Jellies, SpreadsMeat - Fresh

Salad DressingsBaby Food

ProduceJuice, Drinks - DG

Grocery DeliPaper Products

Spices,SeasoningsService Deli

Non-carbonated BeveragesChips

Bottled WatersService Bakery

BreadH&B - Oral Care

Cookies & CrackersCarbonated Beverages

Candy-bags/bars

Gondola Both A/O Locations

Primary Secondary – endcaps, lobby, etc.

The Two Stores

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19

The Two StoresCookies/Crackers

Shoppers must visit the area (EffectiveDistribution™)

Visitors must pause or stop to shop (first conversion: visit-to-shop)

Shoppers must purchase (second conversion: shop-to-purchase)

DoubleConversion™

VitalQuadrant™ Analysis

Underdeveloped

Few stop to shop, few who stop … buy

Poor Merchandising

Niche

Few stop to shop, but those who do … buy

Effective Merchandising

High Interest

Shoppers stop to shop, but do not buy

Attractive Merchandising

Leaders

Shoppers who pass here stop to shop and buy

EffectiveMerchandising

Visits 1st

V>S Shops 2nd

S>P Purchaverages averages averages averages averages

Leader category . . . . . . . . . . . . . . . . . . . . . .39% 68% 26% 96% 25%Bread Dairy - Milk

Dairy - Cheese Produce

High Interest category . . . . . . . . . . . . . . . . . . . . . .59% 62% 37% 20% 7%Candy-bags/bars Cookies & Crackers Non-carbonated Beverages Spices,Seasonings

Chips Grocery Deli Service Bakery

Niche category . . . . . . . . . . . . . . . . . . . . . .27% 45% 12% 56% 7%Canned Seafood Laundry Salad Dressings

Household Cleaning Paper Products

Underdeveloped category . . . . . . . . . . . . . . . . . . . . . .28% 47% 13% 9% 1%Baby Food H&B - Body Soap & Cleansers H&B - Shampoo & Conditioners

Coffee H&B - Oral Care

Average category . . . . . . . . . . . . . . . . . . . . . .38% 54% 21% 38% 8%Beer Canned Soup Dried Pasta Pizza/Snacks/Hors d'Oeuvres

Bottled Waters Canned Vegetables Frozen Dinners & Entrees Prepared Food - dry mixes

Breakfast Cereal Carbonated Beverages Juice, Drinks - DG Prepared Food, Canned - RTS

Canned Fruit Dairy - Yogurt Peanut Butter, Jams, Jellies Service Deli

All Category, All Store . . . . . . . . . . . . . . . . . . . . . .39% 56% 22% 39% 9%

Performance across stores; primary and secondary locations

. . . Traditional research thinking may be inadequate in-store.

The Shopper

The Stimulus

The Relationship• One-on-one• Close distance• Long time (15+ sec)• Frontal view• Center of Field of View

The Challenge . . .

Surfing the Web

Uni-directional

Watching TV

Uni-directional

Shopping the Store

Omni-directional

The Shopper is Omnidirectional

Packages are media, too! And nearly ubiquitous.

In-Store Stimulus is Omnipresent… or Nearly!

Watching Them Make Their Decision at the P.O.P.

Watching Them Make Their Decision at the P.O.P.

Seeing What They See at the Point-of-Purchase

Seeing What They See at the Point-of-Purchase

TNS leads active retailing

Information is the foundation of active retailing

Unique tools

in-store shopper behavioral data and metrics

framework for understanding > actions > profits

Spans the brand-retailer bridge

Scalable: “every brand, every retailer” strategy

Shopper Insights Review

The Completed Picture

Thank you!