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, created by Florian Baur
Prize winning new approach to assortment optimisation
A pioneering methodology developed by emnos for optimising convenience store ranges has been recognised with an award.
Convenience store business is booming across Europe but suppliers and retailers have limited data on this growing distribution channel and can therefore struggle to define the right product ranges and marketing strategies. emnos responded to this challenge by creating a new assortment methodology which has already been implemented at a major French retail group. The development was recognised by LSA, the leading French retail magazine, with an award for exceptional projects using shopper behavioural data to increase revenue for retailers and suppliers.
A game changing technique
One key new development has made this a game changing approach to customer analysis in the convenience store sector – combining loyalty card and transaction data. Loyalty cards typically provide the rich data needed to understand behaviour KPIs but in convenience stores a much lower percentage of customers tend to use them – generally there is less loyalty to convenience outlets and people often visit these smaller stores without their cards.
Therefore, the new technique sources a more general performance overview from the transactional information. For example, transaction statistics identify how many units of a product are sold and the loyalty card data adds customer profiling detail. Amalgamating such a vast amount of data to distill a clear picture of shopping patterns is an extremely complex process and the development of an appropriate methodology underlines emnos’ unmatched experience in the field.
A retail group in France was the first to take advantage of the new approach with implementation across all its 1,500+ convenience stores. Underlining the typical situation, only 20% of this group’s shoppers used their loyalty cards in the local stores.
Due to significant differences in size, customer profile and category or brand preference, the stores were separated into urban and rural clusters. Another new feature was introduced at this point: looking at shopping patterns in not only the convenience stores but also the corresponding supermarkets within the urban and rural clusters. By analysing a customer’s behaviour in both types of store, it was possible to define larger needs units using information based on a much broader range of products.
The product categories investigated included: pet food, coffee, rice, soft drinks, beer and alcohol, snacks, frozen food, cereal, pasta, canned vegetables, catering/prepared foods, baby food and soap. Each was analysed separately and the needs units defined to identify shopper demands and what they require for their lifestyles. What do people actually need, how much they are prepared to spend and are they existing or prospective customers of particular categories or brands?
Insights extracted from millions of pieces of information, were used to define optimum product assortments and tailor them to rural and urban shoppers. An estimation was also given on the potential financial risk of listing or delisting products. Equipped with extensive recommendations, the retailer was able to quickly to start making strategic range changes and (at the time of writing) is continuing to roll out the modifications.
Impressive supplier participation
Not only were the insights derived from this project highly relevant for the retailer, but FMCG suppliers were also immediately attracted to the initiative. So far, 14 suppliers have already committed to participation and are working together with the retailer to create a better consumer experience in the stores.
The LSA awards programme
LSA magazine acknowledged the French project with an award for excellence in the field of leveraging shopper behaviour. This is one of seven new Category Management awards presented by the publication to retailers, suppliers and service providers for their work in fields such as: merchandising, omni-channel, loyalty, shopper experience, e-merchandising, promotion and trade marketing.