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Grocers have significant opportunities for sales growth in several center store product categories that can be realized by enhancing the in-store experience and eliminating purchase barriers that lead to “shopper leakage” to other channels, according to a study by VideoMining Corp., a provider of in-store intelligence for shopper marketing.
According to the “Center Store MegaStudy,” one of four customers walks through the center store on a typical shopping trip, but doesn’t buy anything. Retailers and their brand partners can convert these non-buyers with better signage, navigation cues, displays and shelf layout, the research found.
“Although Grocery retailers need new, creative ways that differentiate the shopping experience, our research shows that their biggest growth opportunity by far is increasing conversion by shoppers already in their store,” said Tom Sullivan, president of State College, Pa.-based VideoMining, “Understanding ‘shopper leakage,’ which is when shoppers stop, engage, and contemplate a purchase but walk away empty-handed, represents huge growth potential. In many categories, shopper leakage is greater than shopper conversion.”
The study quantified shopper behavior by using unobtrusive video cameras in the ceiling of grocery stores and software to track customer movements. The measurement technology automatically derives shopper behavior and segmentation from in-store video. The results show, for example, how shoppers react to certain product categories on displays and on the shelf.
The latest phase of the research was conducted in the fourth quarter of 2011 utilizing VideoMining’s syndicated Grocery Store Panel. The panel consists of carefully selected stores from ten banners from six leading supermarket chains, equipped with up to 150 cameras per store. In this initial phase of an ongoing shopper insights program, 2 million shopping trips were analyzed from a subset of the panel stores.
Per the study, this becomes even more important when one realizes how little time is spent in center store actually “shopping.” The study found that the length of the typical grocery shopping trip is just under 13 minutes. But nearly half the time is spent on non-shopping related activities like navigating the store and checking out. The center store’s share of the total trip time is less than 20 percent, or two minutes. Non-buyers spent nearly the same amount of time as buyers in each center store department. This “willingness to shop” implies opportunity for improving shopper conversion, according to Sullivan.
Data from the research details the performance of certain product categories compared to center store overall by measuring share of traffic, shopper engagement within the category — measured by the customer stopping — and sales relative to traffic and engagement.
Some departments are more efficient with shopper time than others. For example, categories such as alcoholic beverages, pet, coffee and tea, baby and frozen food are more efficient with shopper time – sales generated per minute of shopper time significantly over-indexes. Meanwhile, soup, beauty, personal care and snacks are potential candidates for improving the shopping experience.
Sullivan said the large sample size and objective methodology of the study combine to provide “insights into the shopping process” and ways to increase sales by pinpointing purchase barriers and the most likely ways to overcome those barriers.
“The ‘share of shopper’ data provide a formal basis for comparing key performance characteristics of each category and identifying opportunities,” he said. “For example, which categories to target for increasing exposure or which categories to target for improving engagement.”
He added that grocery’s center store tactic has typically been to compete on price, specifically low price. A fresh approach is needed to engage shoppers and prevent shopper leakage.
Converting a shopper who is engaged with a category into a “buyer” is critical in a large format supermarket, said Sullivan, because the shopper probably won’t revisit an area of the store on the same trip. A bigger lost opportunity is if a shopper spends some time in a category or section of the store and then leaves without buying.
“As a result, using metrics such as ‘shopper-to-buyer conversion’ and ‘share of shopper’ become important,” said Rajeev Sharma, founder and CEO of VideoMining. “These metrics allow the retailer to develop the key performance metrics for each category in the store. That is more meaningful than just sales numbers. It helps to pinpoint the ‘leakage’ in sales opportunities and identify barriers to purchase so steps can be taken to lower the purchase barrier. If measurement reveals that a large percentage of category or department shoppers are spending more time there – but are not buying anything – corrective action would be called for.”