The term "market basket "(or shopping basket) is perhaps one of the most important terms in retail.
Manufacturers and retailers strive to understand consumer buying habits including the average list of items found in customer’s shopping baskets during each visit. This allows retailers to customize product assortment, marketing strategies, in-store merchandising, promotions and pricing to better meet consumer needs.
This is far less intrusive than the tracking cookies websites use to monitor your activities; the personal information you freely provide to Facebook; or the smart phone application that automatically provides coupons when you enter your favorite retailer.
While we are all concerned about privacy concerns, we desire convenience and appreciate the local retailer that welcomes us by name when we enter the store.
Capturing the market basket
Every person on the planet consumes goods and services. The goal of the retailer is to capture as many sales as possible in a single shopping trip to their store.
For example, let's say that the average consumer spends $300 a month on toilet paper, eggs, milk, potatoes, apples, meat, snack bars and barbecue potato chips. The retailer then attempts to capture the majority of items (the highest percentage) on the consumer’s shopping list for each shopping trip.
Consumers shop at a variety of retailers, cherry-picking them for the best deals. This is due largely to advertised promotions, selection, pricing and service. Convenience is a huge factor for most shoppers.
Today’s consumers are savvier. They make lists and typically pre-plan their shopping trips based on published sales and deals.
In a market with eight different retailers, a consumer might shop at five stores each month to buy all of the items on their list. They might purchase 65% of their list at retailer A; 25% of their list at retailer B; and 10% at your store.
Your goal should be to increase the number of items each customer purchases at your store. An increase from 10 to 20 percent will double your sales. Now imagine multiplying that times a quarter of the customers that shop your store annually.
Here are 10 ways to increase market basket size.
1. Provide superior customer service.
Exceed customer expectations by highlighting the key reasons customers should shop your store exclusively and how they can get all the things on their shopping list.
2. Stock the right product assortment.
Sell top items in the market as well as niche items to attract new customers and appeal to existing customers.
3. Offer competitive everyday pricing.
Don’t start a pricing war with your competition—offer competitive prices every day.
4. Run a promotional strategy that drives excitement.}
Leverage promotions with strong national brands to drive their loyal customers to shop your store.
5. Build incremental displays that attract attention and increase product awareness.
6. Take a leadership role in trending categories.
7. Adopt solid business building strategies through true category management.
8. Build a lasting relationship with your customers.
Becoming social media savvy can help with this.
9. Adopt a loyalty program that encourages repeat business.
10. Get involved in your community.
What strategies do you use? Share in the comments.
Daniel Lohman is the owner of Category Management Solutions (CMS) which provides innovative strategic solutions for natural and organic CPG companies interested in gaining a significant competitive advantage.