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The Big Head and Long Tail

Once the behavioral groups are identified, it is important to match the groups to their distinctive purchases. For the segments identified in this study, the share of shoppers who purchase something from each of the listed categories is shown in Table 1.2. In other words, once shoppers “group themselves” by the behavioral measures, we can look at the resulting market segments to see what they bought, as clues to what we should offer to each group.

Table 1.2. Matching Groups to Distinctive Purchases

Market Segments – Purchases

Category

Quick

Fill-in

Stock-up

Where to Locate

Beverages – Non-alcoholic

30%

30%

33%

Common to All Segments

Breads/Pastries/Snack Cakes

13%

19%

35%

Salty Snacks

14%

18%

21%

Health and Beauty Aids

14%

11%

14%

General Merchandise

15%

13%

13%

Candy/Gum/Mints

18%

14%

11%

Tobacco

11%

8%

4%

Frozen Foods

4%

23%

47%

Fill-in and Stock-up

Dairy – Refrigerated

1%

20%

70%

Produce

6%

11%

68%

Breakfast Food

5%

9%

21%

Cookies and Crackers

7%

11%

17%

Alcoholic Beverages

8%

10%

15%

Meat, Poultry, Seafood – Fresh

0%

5%

47%

Stock-up Only

Baking/Cooking Supplies

2%

8%

28%

Paper and Plastic Products

2%

8%

25%

Dressings/Condiments/Pickles/Olives

2%

7%

25%

Canned Vegetables

1%

4%

16%

Stock-up Only

Soup

0%

4%

15%

Prepackaged Deli-Meats/Cheese

1%

4%

15%

Given most stores’ focus on stock-up shoppers, it is not surprising that they are poorly designed for the quick trip. Stock-up and fill-in shoppers are looking for the same products—just expanding the set. We want to focus on, at most, a few thousand items that are needed to satisfy perhaps 90 percent of shopper needs. Moreover, because we will deliver this merchandise to all shoppers very quickly—near the entrance of the store—we expect them to pay for the convenience. So pricing will not be promotional, but rather we will focus on premium brands, quality, and freshness.

This is not how most retailers think. Warehouses typically offer in the neighborhood of one million different items that retailers could offer for sale in their stores. The retailers have wisely selected a mere 30,000–50,000 items to offer in your stores. But the typical customer’s household buys only a total of 300 to 400 distinct items in an entire year. And they buy only about half of those on a regular basis. Those items purchased over and over, day in, day out, week in, week out, constitute a really short list. In fact, 80 items may contribute 20 percent of a store’s total sales, with milk and bananas typically vying for the top slot at supermarkets (see Figure 1.1). A thousand items contribute half the dollar sales. (The same phenomenon holds for other classes of trade.) As noted here, those few items generating the lion’s share of sales are referred to as “the big head,” while those thousands of other items—and they do generate significant sales—are referred to as “the long tail.”

Figure 1.1

Figure 1.1 Contribution of single items to total store sales

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