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Layered Merchandising

Given three emerging features of retailing—the quick trip, big head, and communal pantry—retailers need to rethink how they merchandize their stores. The original idea of the store as a community warehouse needs to be rethought. The importance of quick-trip shoppers argues for a different store design, where the “fill-in” and “stock-up” areas should be considered as extensions of the “quick” convenience area, rather than having the convenience area an afterthought in a store designed for stocking up. Other than representing small selections of the categories specified in the second group (fill-in and stock-up) and the last group (stock-up) in Table 1.2, this convenience area should adhere to the same pricing and selection criteria: high-quality, higher-margin merchandise, delivered more conveniently than that in the long tail. Of course, it is easily possible that the “convenience store” area already is embodied in the promotional store, end-caps, and other promotional displays (see “Managing the Two Stores,” in Chapter 3, “In-Store Migration Patterns: Where Shoppers Go and What They Do”).

The essential element of this merchandising plan is to offer a common area for all shoppers that serves up the merchandise that all segments include in their baskets; then to provide a secondary area that encompasses the first two segments, a third area for the more extended trips that encompass the third segment, and finally, an “everything else” long tail area where a shopper can find almost anything but may need to spend some time looking. The “quick” area becomes the big head portion of the store, where shoppers can spend more dollars per minute (fewer seconds per dollar) than any other part of the store, while the other areas blend into the long tail.

The fundamental concept here is to address explicitly and distinctly the needs of each group of shoppers as they come through the door. Conceptually, this means that retailers should stand at the door of their stores, call out the first segment, and then ask themselves: How am I delivering right away to this group what I know they are going to buy, accepting their cash quickly, and speeding them on their way? The answer to this should be a clear and attractive path that covers all of those items quickly and with clarity—providing just the choices necessary to accomplish the shoppers’ purposes.

For each segment that comes through the door, it should seem as if the store was designed just for them. If retailers can stand at the door and know that they are achieving the Holy Grail for the quick-trip segment, they must proceed similarly with the second segment, and then the third. The key is for each segment to sense that the store was designed just for them. And how is this to be done? Through what we call layered merchandising.

Layered merchandising simply means that the principal needs of each segment are easily and logically found on as short a path as possible between the entry and the checkout. It creates stores within stores. For instance, say that a five-minute trip, by the nature and number of the items, is required for shoppers to acquire all the items they want or may buy. Remember the treasure hunt on which most retailers send customers in looking for the big head within the store, as shown in Figure 1.3. Treasure hunts might be fun for children’s birthday parties, but they are an irritation for a time-pressed shopper.

Figure 1.3

Figure 1.3 Spending speed: Shoppers spend faster the shorter the trip.

Yet retailers think that they are cleverly boosting sales and profits by holding the shopper in the store for ten minutes. They should think again. They force the shopper to spend his or her time walking around the store to find items to buy, instead of spending more time buying. Is this frustration worth it just to get the shopper to walk past a few more items? In reality, the shopper is being told, go somewhere else if you want to shop efficiently—here we intend to frustrate you and hinder you to maybe get a little more of your trade. This leads to fragmentation of the channel as needs are met elsewhere. To reverse this baleful trend requires true customer orientation, beginning with understanding the distinctive types of shoppers (segments) coming in the door, and serving each group efficiently through intelligent product placement.

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