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Ken Greenberg
Senior Director
ACNielsen Homescan
Dollar stores, warehouse clubs, convenience stores, drug chains, home improvement outlets, pet stores, beauty supply chains, the Internet—and lest we forget, grocery stores—are only but a few of the ever-expanding shopping choices available to today's consumers. And new options become available almost daily. Understanding what shoppers are doing today is not enough to help retailers navigate the retail landscape and set a course for future growth. Retailers need to know the “why behind the buy” if they are to truly understand their strengths and weaknesses and take advantage of opportunities while minimizing risks. While researchers in the past have been able to “survey” consumers to get a feel for consumers' attitudes on various shopping issues, they have not been able to accurately quantify the impact of equity on behavior. That is, until now.
The Competitive Edge
Welcome to a new day. Understanding equity is just not enough. The ability to pin down the core reasons that drive consumer behavior gives marketers the competitive edge necessary to develop programs that work. And just as important, tracking what happens over time provides an accurate measurement of marketing program impact.
Developed jointly with ACNielsen International Research, and using the globally recognized Winning Brands equity model, ACNielsen Homescan provides a solution for retailers that can quantify the impact of attitudes on retailer equity, customer loyalty and actual sales. The product, called Shopper Trends, uses an online survey methodology that questions respondents about their favorite store, whether or not they would recommend this store to someone else, if they are willing to pay a price premium for the products in the store and their willingness to travel to get to this store. Store equity is measured by how shoppers react to the store. A store equity index is calculated from a multivariate analysis to determine the correlation between the retailer equity score for all retailers in the survey and each attribute such as store quality, freshness of produce, etc.
The index produces a score in a range from zero to ten;
the higher the index, the stronger the equity. A score of 10 would indicate that everyone in the market is a loyal
customer, pays a price premium at any cost and drives wherever the store is located. For comparative purposes,
in competitive markets, an index score of 3 is very strong.
Responses are linked to actual purchase behavior and through statistical analysis, the attributes that really drive equity versus statements that a household just “says” are important can be determined. In fact, all statements are grouped into four quadrants: “Mean it, say it”—households say it is important, and statistically it is important; “Not important”—households say it is not important and
statistically it is not; “Subliminal”—households say it is
not important and statistically it is; and “Say it, don't mean it”—households say it is important and statistically it is not [See chart 1].
The unique value of Shopper Trends is the ability to quantify the opportunity of occasional and non-shoppers and assess the risk associated with core shoppers who have a low stated retailer equity. For example, if a household spends significant dollars in a store, but has a low equity score, there is a risk of losing that customer. Based on their dollars, traditional analysis would have labeled this customer as a core shopper and would have seen an opportunity for growth with this customer—not a risk for loss. Since brand and category purchasing information is highly accurate, retailers can determine which categories and brands are better correlated with retailer equity and develop a plan to focus on them. In addition, retailers can determine if
any change in shopper composition is related to shopper attitudes or equity.
Equity Drivers
Consumer attitudes on various store attributes, such as the quality of products, efficiency/loyalty programs, store format and selection, pricing and “value for money” and store accessibility are just a few that drive equity [See chart 2].
For example, in Market X, four key attitudinal attributes were selected as the most important in driving equity:
- Easily and quickly find what I need
- Better selection of high quality brands and products
- Food and groceries are good value for the money
- Low prices on most items
Conversely, the least important attributes include:
- Long opening hours
- Ease of parking
- Frequent shopper program
- Store brands
- Quality prepared foods
Using Shopper Trends, differences among equity drivers emerge for a selection of stores in Market X. Retailer A is associated with low prices and good value, but it is not a place to quickly find what is needed, does not offer good service, nor does it have good selections of high-quality fresh foods [See chart 3-5].
To delve deeper, one needs to understand who is shopping at these stores, and then a clear picture of shopper composition becomes apparent. While Retailer A has a strong equity among larger households, Retailers C and D are stronger among smaller households and among higher income groups [See chart 6].
Convert Occasional Shoppers to Core Shoppers
Once you understand consumer attitudes and you've quantified their impact on equity and sales, you can determine which shopper attitudes need to be addressed to protect and expand the business. Start by focusing on the critical areas first. These areas have high importance to consumers but have a large gap in attribute scores among those who are core shoppers and those who are occasional shoppers. These attributes provide more leverage in converting occasional shoppers to core shoppers. Next, look at secondary focus areas, which have lower importance to consumers
but have a large gap in attribute scores between core and occasional shoppers. Finally, address maintenance areas
that show smaller gaps in image scores between core and occasional shoppers.
First and foremost, Retailer A needs to focus on store layout, product selection and quality. Critical areas of focus such as improving the selection of fresh fruits and vegetables, including high quality brands and products and incorporating attractive and interesting store deals and promotions are important. In addition, the secondary focus areas need to be addressed. Retailer A should provide its own brands as a good alternative to main brands, the staff should be groomed to provide good service, checkout counters must be efficient, and fresh meat, fish and poultry have to be high-quality. Maintenance areas include keeping store opening hours long, having a well-presented display of products and offering a modern, comfortable and
spacious store.
Compare Retailer A's image among core shoppers of other stores, and it is relatively easy to pinpoint which shoppers can be targeted for conversion. For Market X, core shoppers for Retailer B may be easier to convert than shoppers for Retailer C or D [See chart 7].
Retailer A has an opportunity to strengthen its market performance by converting its occasional users to core users. Those who shop occasionally have a weaker image of the store on several attributes as compared with the core users of the store. Retailer A should focus on the areas where it
is perceived to be weaker to strengthen its image.
Quantify Results
Over the long-term, retailers need to track year-to-year changes in key attitudes in order to continually determine vulnerability and to measure the effectiveness of marketing programs aimed to impact retailer equity. Through the use of longitudinal insights retailers can quantify the impact of attitudes on retailer equity and actual sales. And, importantly, retailers can also understand threats due to low equity among core shoppers. Shopper Trends has transformed
traditional retailer equity applications from “nice-to-know” to “must-have” insights for action.
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