How does store clustering help small-format brands think big
How does store clustering help small-format brands think big
Today, on almost every corner you can find small stores of the popular convenience store (C-store) format, also known as convenience stores or convenience stores. The limited area of such outlets requires an extremely rational approach to the selection of assortment and thoughtful placement of goods on the shelves. The importance of store clustering in the convenience retail business will be discussed in this article.
A small format is a big impact
The popularity of convenience stores is growing rapidly. Territorial proximity to the buyer, saving the client's time, the availability of basic products and goods for daily use, and comfortable conditions for shopping make this format more and more popular and convenient for the consumer.
But even if outlets are near each other, whether it's a block away, a kilometer away, or on opposite fringes of the same neighborhood, each outlet can serve its unique group of shoppers.
To give their customers exactly what they need, C-store operators need to understand the customers who visit each of the shops and must do store clustering of the retail chain.
In the process of understanding the true demand, one of the leading roles is played by clustering, which helps to choose the right assortment in a category. The ability to implement clustering practices is an important indicator of success. By identifying the demand for a particular category of store and product preferences, you can best meet the needs of your customer. Such a visitor is highly likely to return for purchases again and become loyal to the network.
Gain a high degree of understanding of customer demand through real-time data collection and analysis. In addition, sales insights gained from store clustering can be used to better communicate with suppliers, leading to space allocation and prioritizing the right assortment.
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Clustering gives a deeper understanding of customer needs
You can look at the population living near the outlet (for example, middle-income families with two children) and tailor your product range to that demographic. However, clustering allows for better tailoring of the assortment to the specific customer entering the door, rather than to the hypothetical needs of those who live nearby.
Think about how quickly the customer base of a convenience store can change. Let's say there is construction work going on nearby that will last for six to nine months. The construction crew will enter the store in the morning for coffee or energy drinks, and later buy ready meals for lunch. Some may even make a third visit, heading home in the evening to buy another soft drink or a small grocery basket. As soon as you begin to understand the needs and product preferences of this group, the construction work is completed, and it leaves both the geographical area and your daily customer base.
That is why it is important not only to do store clustering but also to review it from time to time. Many factors influence demand within a category and for individual products, and clustering allows retailers to understand this with a greater degree of certainty.
Clustering and understanding customer needs to lead to better negotiations with suppliers
Clustering certainly helps the retailer make the right decisions based on the needs of the customers. The practice of clustering also contributes to the adoption of informed strategic decisions in assortment management.
Convenience retailers developing a franchise network can use this form of collaboration to get information from their franchisees to make better decisions.
To remain competitive, franchisees must be well-trained and have a two-way dialogue with both stores and manufacturers.
Providing information about sales and consumer preferences allows you to optimize the range because the buyer is at the center of decision-making.
You also need to be careful about what new products you introduce into the assortment and how this process takes place. It usually takes 8-12 weeks for a brand-new SKU to be on the shelf in the network to understand the behavior. After this period, exclude products that perform poorly or do not lead to repeat purchases.
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Efficient inventory distribution is a decisive factor in small stores
The range of goods is growing, but the format of the outlet remains the same. Limited spaces require an extremely flexible and intelligent approach to determining the most efficient use of space. Especially when most convenience store operators have less than 90 seconds to influence a customer who enters the store.
Here's what a retailer should focus on:
- providing the ability to analyze the effectiveness of the use of retail space in the store, draw up planograms and regularly audit the actual display by category;
- understanding the sales generated by commodities such as hot dogs or coffee as more convenience stores offer fast food concepts;
- additional and impulse sales are very important, so decisions on the placement of goods near the checkout should be made based on sales data from the checkout area;
- understanding the availability of stocks of products in the balance and tracking sales in real-time;
- controlling the availability of products in key categories during peak hours, and understanding where sales can be lost due to out-of-stock.
C4R solutions help analyze the efficiency of the use of retail space, track stock availability, determine how products perform, do store clustering in the chain, and identify opportunities for optimizing retail business processes.
To learn more about how clustering helps to select a targeted assortment for a retail chain, as well as IT solutions for category management, write to [email protected] or fill out the feedback form. Our experts will be happy to answer your questions.
Based on materials from symphonyretailai.com
