IRI offers strategies, solutions for upselling
One more thing. At the end of the day, that’s really what it’s all about — convincing the consumer to put one more thing in their shopping cart. For retailers, it’s about optimizing price, merchandising and marketing in an effort to capture more than their fair share of the market in any particular category. IRI has recently enhanced its category management tools, including its Leakage Tree analytics, to help suppliers and retailers capture greater share of wallet.
Applying a leakage tree breakdown can help inform a category manager’s strategy for how to convert shoppers who are shopping a particular retailer, but not buying a particular product from that retailer. Part of the appeal to leakage tree analysis is its flexibility. It can provide a 30,000-ft. view on category performance, or it can be broken down to the SKU level for a brand analysis. Other variables that can be manipulated include the geography and the demographics. A leakage tree can help determine how a particular category is indexing across low-income purchasers in the Southeast, for example, or Hispanic shoppers in Texas.
IRI walked Drug Store News through a typical Leakage Tree category analysis.
“Leakage tree provides rich macro-level diagnostics for the retailer and the manufacturer,” said Amruta Gupta, IRI’s principal, consumer and shopper marketing, healthcare practice. “These metrics really provide a status on the health of a brand. And because you trend or do them on a regular basis, it provides an early flag if you need to go deeper.”
“It’s really fine-tuning a strategy in order to help our manufacturer/retail partners figure out how to bring potential new buyers in and convert them to their particular chain and/ or their particular product within that chain,” said Kristin Hornberger, principal and team leader, client insights healthcare at IRI.
First, a leakage tree analysis gives a category manager insight into a consumer’s interest in a particular category or product. In the example chart (see page 8), of the 68 million households who shop in Retailer X, only 40.6% buy a product from Category A anywhere.
Second, it defines shopper penetration — how many shoppers are actually buying that category in Retailer X? In the example chart, 16.8% of shoppers who shop Category A are buying that product in Retailer X. And the trend is moving in the wrong direction — Retailer X lost 1.2 percentage points in this category for the 52 weeks ended July 12.
The next two metrics are associated with leakage, Gupta said. “It’s like a share of wallet,” she said, where a retailer can determine not only how many dollars they are capturing in a category, but also can track which channels or competitors the dollars they are not capturing are “leaking” into.
For example, for the 83.2% of Retailer X shoppers who are not buying Category A from that retailer, most of them are turning to retail pharmacy or Walmart — Walmart Supercenter is capturing 22.9% of the dollar volume, CVS 13.7% and Walgreens 9.8%.
Of those 4.6 million households who have shopped Category A and made that purchase through Retailer X in the past, 60% of that customer’s annual spend went to a competing retailer — 12.4% of that spend was captured by Walmart Supercenter, 8.2% by CVS and 7% by Walgreens.
The opportunity is in preventing that leakage and convincing the shopper to take that “one more thing” to the check stand instead of buying it at a competitor. Moving the metric just one percentage point to the positive equates to a $4.5 million opportunity.
Click here to view the full Leakage Tree example.
Throwback Thursday: NACDS Total Store Expo edition
Here at Drug Store News, we’re gearing up for the 2015 National Association of Chain Drug Stores Total Store Expo, which will take place at the Colorado Convention Center in Denver from Aug. 21 to 25.
Take a look at an editor’s note from one of last year's show dailies and check out DSN's 10 tips on how to make the most of this year’s NACDS TSE.
10 things to do at NACDS TSE 2015
With the National Association of Chain Drug Stores’ big Total Store Expo, kicking off this weekend in Denver, Drug Store News has compiled a list of 10 things to do to help prepare for success at this year’s show.
1. Download the app.
With the NACDS Events app, users can receive up-to-date conference information and personalize their schedules, search for and bookmark participating companies, and access NACDS social media, TSE said. The app is compatible with iOS and Android devices.
2. Do your homework.
Visit the retailers you want to meet with and familiarize yourself with their business. “Preparation and performing in-depth due diligence prior to attending TSE is critical,” Rich Swanson, principal of The Swanson Group, said.
3. Attend the Meet the Retailer session.
If you haven’t done #2, be sure to catch up by attending these 20-minute power sessions where top retail executives brief closed-door audiences on how to engage with their chains.
4. Attend the Meet the Market session.
Industry vets told Drug Store News that companies should send two to four associates to this event, which showcases new, up-and-coming and small companies the day before the show floor opens. NACDS arranges thousands of appointments for the full day of “speed date” meetings — last year, more than 700 companies participated in Meet the Market.
5. Attend the educational programming sessions.
NACDS will provide educational programming through 10 Pharmacy Insight Sessions on issues spanning from pharmaceutical trends and forecasts, to medication adherence and the role of motivational interviewing. Eight of these sessions are accredited for pharmacist CE.
6. Attend the Business Program.
A good way to remain relevant with the retailers at NACDS TSE is to understand the critical issues that drive and impact their business. The Business Program is a good way to catch up.
This year, television journalist and author Tom Brokaw will offer Sunday’s keynote address. Brokaw’s most recent book, “A Lucky Life Interrupted,” details his experience battling cancer.
7. Hit the show floor…but save something for the evenings!
Dave Wendland, VP of Hamacher Resource Group, suggests dressing comfortably, listening closely and following up quickly with contacts. “Although TSE only lasts a few days, follow-up may go on for weeks/months,” he said. “Don’t forget the importance of keeping promises and commitments when you return from Denver.”
But be sure to pace yourself, because there are tons of networking opportunities outside of standard business hours, including the NACDS TSE welcome event, closing event and nightlife entertainment — this year’s big musical guest, the Goo Goo Dolls will rock NACDS’ Monday night Denver Extravaganza.
8. Do the Product Showcase.
Preparation is the name of game at TSE for retailers and suppliers alike, and retailers looking for hot new products and new merchandising ideas will be hitting the Product Showcase. Want to get a head start? Check out the Product Showcase online before you even hit the show floor.
9. Vision 2026.
Glimpse into the future of what retail pharmacies will look like in 10 years. Companies, such as Kantar Retail, IBM Watson and Menasha Packaging Company, will offer their perspectives on the changing diagnostic landscape, healthy living landscape, store environment, and economic/logistics engine.
10. Set goals for your time at TSE.
“Set your expectations/objectives in advance,” Matt Poli, head of marketing at the Emerson Group, told DSN. “Create a list of three, five, [or] 10 things you want to accomplish at Expo and stay focused.”