December 16, 2013
Have you taken stock of how well your ads perform?
I came across interesting data about conventional grocery sales fliers, but I think there’s potential natural retail channel application.
A typical grocery shopper buys less than 1 percent of the items the store carries, according to Catalina. (Actually she buys about 0.007 of the merchandise that a store carries.) You know as well or better than I do the value of the space inside your store. If each shopper only bought such a small percentage of what is on the shelves, could you survive? The answer probably is “no.” Grocery stores can survive with people buying such a small portion of what is on their shelves because (a) they have so many people walking the aisles, (b) they have shoppers spending so much their family food budget with them and (c) they have shoppers coming to their stores once or twice a week. The shopper numbers work in their favor—and they have stores with much larger footprints than a natural products store.
I want to focus deeper on the data. (This study involved over 32 million shoppers and their spending of over $55 billion in grocery stores.) During Memorial Day weekend, 66 percent of them did not purchase a single item that was advertised. (They had more than 1,100 to choose from!) Holiday phenomenon? Hardly. The next week, nearly 75 percent of them did not purchase a single sale item.
Think about these numbers for a minute. More than 1,100 items on sale—hundreds of hours of negotiations, thousands of dollars in discounts and co-op advertising support, dozens and dozens of purchase orders and shipments, hundreds of hours of display building, and so on ... and 3 out of 4 shoppers did not buy a single item in that process? Why are they—or why are you—making such effort?
I’ve written recently about using your POS system as a strategic tool and often about the dangers of trying to compete on price. (The winner of a price war is the first one to the bottom of the pool. To stay ahead, you have to stay there!) Use your POS system to help you not only choose good items to put on sale, but also to monitor how they perform when they are on sale. When on sale, they should turn at a higher rate than when off sale. It sounds like that is not the case with many grocery items. Is that true in your natural foods store?
My suspicion is that even with its demonstrated lack of effectiveness, the grocery flier will continue unabated for years to come. I think so for two reasons. The first, which is a trap that I see natural stores slipping into, is that there are manufacturers willing to spend advertising money to support fliers. Just because there are co-op ad dollars behind a product does not mean that you should advertise it. I know that you have print bills to pay for and a budget to meet, but your growth comes from meeting customers’ needs, not from advertising products they aren’t buying. The second reason fliers will continue, which is where our industry can separate itself from the grocers, is that they do not have anything else to say. They are about selling products cheaper than their competition. We are about quality items, which are unique in their ingredients with compelling stories behind them. We are about customer service, natural health and wellness, and a great shopping experience. You can use your ad space to help communicate that message and sell your store to those in your community.
If your ads are producing well for you, great! Use your data to plan your sales items and analyze their performance. If they are not producing, consider these ideas:
Change the theme.
Address your shoppers’ needs and challenges.
Position your store as aisles full of solutions.
And then wow them with a great time when they are there, in person.
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