Retailers and suppliers often fail to capitalise on what is called the ‘moment of truth’ – that crucial point at which a shopper sees a product on the shelf and decides to buy it.
When shoppers can’t locate or buy their favourite brands or a product they saw advertised on promotion because they’re not available then they are forced to make an alternative choice. The real impact of even a single shopper being let down at that critical moment, by the retailer and supplier, is something that is not regularly measured. Yet readily available information sources can be applied to quantify its impact to the bottom line.
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Just last week when I was in my local supermarket with my list of weekly shopping, one of our weekly staples, a four-pack of tinned tomatoes, was not on the shelf. There was just a gap where the tins should have been. There were private-label alternatives on other shelves but I wanted the brand I always get, so I checked with a member of staff to see if there were any in stock. The good news was that there was stock. To my surprise, and bad news for the next shopper, the shop assistant only brought one pack for me instead of enough to fill the gap on the shelf.
It made me wonder what the reaction of the next shopper would be. Perhaps they would ask a shop assistant too, or else select the private-label alternative, or maybe they would try to buy the brand elsewhere.
Each choice has a different level of impact for the shopper, retailer and supplier. First, sales assistants searching the store room isn’t an efficient way to deliver a perfect shopping experience (plus the shopper won’t always be happy to wait).
Second, making a trip to another retailer is inconvenient for the shopper, less negative for the brand, who will simply register the sale from another retailer but negative for the retailer who lost the sale.
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By GlobalDataAnd third, if the shopper is forced to buy a private-label option due to lack of choice, the retailer will benefit from a better margin but the brand loses a sale and possibly a previously brand-loyal customer too. Of course, brand loyalty is not lost in a day but these sorts of experiences do chip away at hard-won brand and supermarket loyalty.
Only one in 25 shopping trips are thought to end in complete success, which suggests that the choices I’ve described above are being made in supermarkets many thousands of times every hour of every day. The interesting thing is that in all choices the overall effect for the shopper-retailer-supplier relationship is negative, which is clearly bad for the industry.
A possible solution could be hidden in the sales transaction information recorded by retailers. Going back to my specific example, if you were to look at the sales transactions for the brand I wanted to buy at my local supermarket. I might see something like this:
| Sat | Sun | Mon | Tue | Wed | Thu | Fri | Sat | |
|---|---|---|---|---|---|---|---|---|
| Recorded sales | 34 | 13 | 11 | 12 | 1 | 1 | 10 | 40 |
My purchase was on Wednesday; and the sales data suggests that demand was low on Wednesday and Thursday that week. Closer consideration suggests this is unlikely given the rest of the week’s sales which, excluding Saturday, seem to average about 11 units a day. If we could add store inventory we would get an even clearer picture:
| Sat | Sun | Mon | Tues | Weds | Thurs | Fri | Sat | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Stock | Sales | Stock | Sales | Stock | Sales | Stock | Sales | Stock | Sales | Stock | Sales | Stock | Sales | Stock | Sales |
| 60 | 34 | 26 | 13 | 13 | 11 | 80 | 12 | 68 | 1 | 67 | 1 | 66 | 10 | 56 | 40 |
The addition of inventory information shows there was plenty of stock when I made my visit. The reason for the empty shelf was poor shelf replenishment. Some simple mathematics tells me around 20 sales of the brand were lost that week.
With more data and computing power this simple exercise could be scaled up to automatically spot these kinds of patterns across products and stores. An understanding of how frequently these failed ‘moments of truth’ occur and with which brands and stores, would give retailers and suppliers the ability to fix endemic problem areas and deliver a better, and more profitable, shopper experience.
Of course, it’s not so easy to do this on an industrial scale. My example is for one product in one store in a single week. Even with enough computing power and disk space to store all sales transactions for all products for a rolling year, I would still encounter many challenges with data compatibility, security and confidentiality.
Nonetheless, it’s clear there is a great opportunity for the industry to deliver on that promise of a perfect in-store experience. All of the individual technology elements are available to enable it. It remains for pioneers in the industry to take those elements and demonstrate the benefits to the rest.
Mike Ray is product manager for IRI’s Technology Services Group.
