Expert: Amazon-ify Your Stores

Conventional wisdom among retailers is that the longer you keep consumers in stores, the more money they will spend. That's why supermarkets can be such a frustrating place for shoppers looking to get in and out as soon as possible. Herb Sorensen, global scientific director of retail and shopper insights for TNS, says retailers should rethink that idea, though, since consumers more and more are regarding their time as precious. One way to make the shopping experience easier is to list the best-selling product for any given category and to have fewer products on shelves. Sorensen, who has been studying shopper marketing for 40 years, discussed those ideas and others with Brandweek. Below are some excerpts:Brandweek: You contend that if a store has a lot of product and a lot of aisles, that actually discourages purchases. Why is that?Herb Sorensen: There's only so much floor space and you allocate it either to shoppers or to merchandise and other stuff.BW: It sounds almost counter-intuitive though.HS: It's crowding. Too much choice is an issue, but it's also physically crowding the shopper. The more you crowd the shopper and the more choices you give them, both of those things go together. However, you're probably aware that there are major efforts under foot presently to reduce SKU counts by large numbers of manufacturers. And I think the move is largely misguided. I don't say it's wrong because the real problem is not the number of SKUs that you have, but the failure to delineate to the shopper what the offer is, which item they should buy. The problem is the sales of the big hit are being suppressed by the long tail and the refusal of retailers and brands to let the big hits stand up. For example, by saying "This is our No. 1 seller." Instead, they want the shopper to have to search for what they want in the hopes that they'll buy something else and quite frankly the shopper doesn't have time for these kinds of games and they're disgusted with it. But chopping off a long section of the long tail could help, but that's not the real problem. I tell people that I buy a few books a month at Amazon primarily because I figure anyone with 50 million books probably has what I want. Shoppers relate to the store in the same way. A massive offering is not a negative. It's a highly attractive force for the store and it's highly attractive for the category. The problem is you've attracted them there and then refused to tell them what to buy.BW: I could understand why other companies that aren't No. 1 would want to continue doing that, but what's in it for the retailer?HS: Well, retailers don't care. Let's cut to the chase here. No. 2, I don't care if you are a small brand and maybe have a small slice of the pie. Everybody has a big head and a long tail. If you have 20 items in your lineup almost certainly one or two of them are carrying the company. So we recommend that brands maybe put a gold star on their No. 1 seller and say "our top seller." In fact, I think a small brand has a chance to kick butt and take names here because if they put "our top seller" out there people are going to confuse it with the top seller of the store. We've seen this in stores already.BW: Which ones?HS: I saw this in an Aeon store in Japan a couple of weeks ago. BW: But if I'm looking for a cereal, do I care what's the top-selling cereal or which is the top-selling shredded wheat?HS: If I were the retailer I would carry it to the sub-category level like that. What's your top-selling flake cereal, etc? If you're a manufacturer and you want to sell it, you have to tell people what to buy and if you don't, just figure that they're going to be so frustrated that they just may buy the competitor because what the heck?BW: Supermarkets seem like they try to keep you in the dark as much as possible as to where things are located, but you say this is a wrongheaded approach.HS: Yup. It is absolutely certain that that works against [shoppers]. And you can look at supermarket trips over the years and they're trending down, down, down. [Retailers are] sawing away at their throats with misguided, anti-shopper efforts. I mean, they pride themselves on being shopper focused and they don't have a clue to what shoppers are doing there. Consequently, look at the c-store industry. Have the people in the store want to buy five or fewer items. And I have retailers telling me "our demographic is the stock-up shopper" and I tell them "Who do you think is buying one or two items in your store? Stock-up shoppers. They're just not on a stock-up trip." I may be a little extreme about this, but I tell people it's like supermarkets have put a big sign on their stores that say "If you want to buy one or two items, stay the heck out of here." And consequently, the entire convenience store industry grew up to serve these people.BW: True, but as a shopper, if I need just a few things, I'm still going to go to a supermarket because it's a lot cheaper.HS: Well, exactly. There's no reason a quick tripper shouldn't shop in a supermarket and they do. But the fact of the matter is supermarkets make it hell for them to shop there.BW: Doesn't it still work to their advantage? Even if you're frustrated, you're still likely to run across something else you need.HS: Yes that is true, but what you're balancing is "How much can I irritate this shopper?" It's just like going into a store and they're trying to upsell you. Let's say you're buying a suit and they're trying to upsell you this and that. Well, it's a fine line between helpfulness and downright irritation. On this very issue, there was a study done on Campbell Soup. Basically they found shoppers were having a hard time finding soup on the shelf and they alphabetized them. And sure enough, the speed with which people found their soup increased tremendously and people bought less soup. There is absolutely no question that there is some effectiveness to this. It's a question of largely retailers and brands have gone overboard. They relied upon this thought that "If we offer more options, people will buy more," but that's not true. If Amazon tried to sell me all 50 million of those books, I'd be out of there in a New York minute...I am promoting the Amazon-ification of the retail store. There is coming a merger of online and offline retailing for sure. But you don't have to have any technology in store to do a bang up job on this. Stew Leonard's is a store that's about 100,000 square feet. When Stew started he had 800 SKUs. He's now up to 2,000. Most of those SKUs are in a little warehouse area near the checkout because the basic design of the store has gotten more efficient. Here's the point: The average household only buys about 300 to 400 items in a year. Half of them they buy regularly, every week. If you offer 2,000 SKUs, another way to look at that is you're offering a shopper five options for everything they might buy.

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Expert: Amazon-ify Your Stores

Todd Wasserman

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