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    Expert Column: Field-testing New Concepts Can Save Retailers Millions

    CVS/P&G 'guy aisle' great example of 'test and learn' method's success

    By David Buckingham, Aimia
    In partnership with P&G, CVS saw success with a "guy aisle" in its stores.

    Retailers typically follow two approaches when finding ways to drive progress and business growth: They repeat historical programs and hope for improved results, or they introduce new ideas and innovations through hypotheses, research, focus groups, leadership mandates -- and even gut feelings.

    Either way, most retailers don't integrate much, if any, investigative rigor into their activity in this space –- something that leaves them seriously exposed to downside risk. Indeed, on countless occasions we've seen retailers roll out new products, pricing or merchandising plans indiscriminately, with many finding out the hard way that mistakes can be costly.

    Don't Fall Into Temptation

    Grocers and retailers can lose a lot of money if they launch a program that subsequently fails -- and failure is a common occurrence. An estimated 70 percent to 90 percent of all new items and ideas flop each year, with "overestimating demand" named as the single greatest contributing factor.

    Human nature is at the heart of many of these failed programs. A lot of time, money, sweat and tears can be invested in perfecting new products, pricing or merchandising plans, and people's reputations can be put on the line. With pressure mounting both on individuals and whole businesses, a tipping point is often reached where it's tempting to jump the gun and launch a new program across a company's entire network in one go.

    As we've seen all too often, taking the big gamble doesn't always pay off. A large, high-profile failure can significantly impact a business' immediate bottom line, but it can also cripple its ongoing appetite for innovation and -- ultimately -- its future development and growth.

    Dipping a Toe in the Water

    The simple solution to much of this is for retailers to field-test and refine new concepts in a targeted set of in-store trials before rolling them out across their entire networks. Implementing this kind of "test and learn" mindset across a business introduces an element of discipline and due diligence, which effectively negates the downside risk associated with mass rollouts. Simply put, it allows companies to stop speculating whether new concepts will work by adding "science" to the "art" of innovation.

    Field-testing new products, pricing or merchandising plans provides hard evidence to validate concepts, without significantly lengthening the rollout process. Retailers can jump into test phases quickly, and results can be measured simply with point-of-sale data, or alternatively combined with in-depth customer data and analyzed further.

    Either way, "test and learn" is a cost-effective way to ensure that only the best ideas get through to market, providing a number of valuable insights and strategic lessons that can save a retailer an enormous amount of money down the line.

    By David Buckingham, Aimia
    • About David Buckingham David Buckingham is president of U.S. Region Intelligent Shopper Solutions (ISS) at Montreal-based Aimia, helping retailers and CPG companies on their journey to customer-centricity.

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