DDI - September 2010 - (Page 12)

12 | Shopper Insights The in-store Monopoly game hink of the store as a giant Monopoly board. Where is Park Place located in the store? Where is Marvin Gardens? And on the down side—where is Baltic Avenue? We have often spoken of the store as “real estate,” but how well do you know that real estate? Real estate has many idiosyncrasies. What drives the value of one location versus another? Sometimes it is obvious—prices will be higher for a plot of land in the heart of Manhattan or London, beachfront property on Malibu beach or a mountainside home in Aspen—and prices will be lower in an area that has been identiﬁed as a toxic waste dump. It should be no surprise that, on the Monopoly board, low-end real estate like St. Charles Place and Connecticut Avenue are located right beside the jail! The store’s real estate has some of the same obvious ups and downs. The best displays are usually close to the front entrance, and potentially some of the worst display locations are next to the loading dock at the back of the store. When looking at the real estate inside the store, you ﬁrst need to know where your Park Place is, and then, second, you need to understand what that real estate is worth. The challenge is to quantify the answer. There are a lot of industry veterans that can tell you which locations in the store are better than others. Unfortunately, the world of retail needs more than a gut feeling for the store. It needs speciﬁcs by location and by category, because each display location will have a different value for each category. The effectiveness of a given display relies on several factors, including its stopping power, the pricing and the purchase cycle. But, ﬁrst and foremost, is the level of trafﬁc that is attracted to the location. This is obvious, as a shopper can’t dwell or purchase unless they physically get to the location—just as in Monopoly, where you can’t collect rent unless a player lands on your square. A number of studies by Nielsen have shown that display spaces separated by less than 15 ft. can be dramatically different in effectiveness. At one mass merchandiser, 98 percent of shoppers travel the main aisle. On one side of the aisle, the displays attracted 49 percent of the shoppers, but the displays on the other side of the aisle only attracted 16 percent of the trafﬁc. What causes the shopper to turn right instead of turning left? T George Wishart Conversion Rate High Attract Customer Trafﬁc Low Assess Strategy Leverage Customers Trafﬁc High Increase Conversion Once you know the answer, you can also look at conversion and start developing strategies for improving the trafﬁc and the purchase rate for your real estate. You can plot this information onto a grid for easy analysis. The chart at left is a starting place to understand how each category impacts your total store. For instance, if you have high conversion, but your trafﬁc in a particular part of the store is weak (upper left hand quadrant of the chart), then you will want to attract customers to these categories and should explore trafﬁc building programs, and potentially secondary displays. Conversly, if you have high trafﬁc, but low conversion, you will want to increase conversion by exploring new incentives and price points. If you have speciﬁc locations that have both high trafﬁc and high conversion, then consider leveraging these successful categories for cross-selling other products and improve the real estate elsewhere in the store. Retailers can enhance their merchandising strategy with new quantitative knowledge of their real estate. What display space are you going to allocate to private label? What display space is most valuable to which vendors? Should you establish a ﬂoating merchandising pricing strategy by category, or should you encourage certain category vendors to use display space as a means of improving trafﬁc in the neighborhood? A retailer can also learn from comparing the results in one store with others in the chain. Find the store that has the highest real estate value for each store part and learn why. Spread that learning across the enterprise, and watch the store volumes grow. Manufacturers can use this new view of the real estate data as a way to quantify the beneﬁt of in-store marketing and display space. Is a certain location in the store worth the premium being charged by the retailer? Is the in-store display location strategy optimal? What is the residual value of this space? Of course, the next step is to ensure that your display is actually there (read: implemented effectively). Once you have answered all of these questions, wouldn’t it be great to get continuous improvement out of the real estate? Know your real estate. Know its value. Know how to leverage it. And you will win the game—even without landing on FREE PARKING. —A pioneer and consultant in the shopper marketing industry, George Wishart is the president and CEO of Edgewood Industries LLC. He shares his shopper marketing insights with DDI in this regularly appearing column. www.ddimagazine.com Conversion Rate Low | September 2010 http://www.ddimagazine.com

Table of Contents for the Digital Edition of DDI - September 2010

DDI - September 2010
Table of Contents
From the Editor
Newsworthy
Shopper Insights
Greentailing
Editor’s Choice
Portfolio Awards 2010
Retail Design Luminaries
Retail Design Influencers
Design Firms of the Year
Best Visual Merchandising Programs
Retailer of the Year
Best-Designed Stores of the Year
Retail Standouts
Calendar
Advertisers
Classifieds
Think Tank

DDI - September 2010