The ‘shopper journey’ can be described as ‘how customers choose to shop and how retailers tailor the shopper experience’. In an effort to “elevate” the experience for the shopper, grocery retailers who pay close attention to the needs of the shopper can benefit from understanding how the shopper navigates the in-store experience. Recent findings show that although many shopper’s migrated to on-line grocery shopping in 2020, over 46 percent of shoppers still prefer to shop in-store rather than online. The State of the Consumer Behavior study shows 33 percent of respondents prefer shopping in-store because they like to physically touch and interact with products, while 26 percent enjoy the overall shopping experience that a physical location provides and 13 percent like the immediacy that in-store shopping provides—as opposed to waiting for delivery. Understanding the ‘shopper journey’ in-store is imperative for the grocery retailer.
As an example, take the experience of the ‘straightforward’ grocery shopper into account. This experience may only involve a short shopping list and less than an hour in-store. Can you guess, what’s most important to the ‘straightforward’ grocery shopper? You’re correct if you answered, “getting all of the items on their list quickly”. This customer wants to pop in and out of the store quickly and leave with the merchandise they intended to purchase. Although such shopping experiences seem not to need much improvement on behalf of retailers, the truth is that each customer’s shopping experience is unique, and a good experience can ultimately improve the retailer’s bottom line. As tempting as it might be to only cater to what seemingly brings in more revenue, let’s not forget that straightforward, day-to-day shopping keeps the industry thriving.
Here’s a quick question, “Does a shopper have a less favorable ‘experience’ when they venture in-store to shop for an item and the item is not on-shelf and available for purchase?” The honest answer is “Yes”.
Thirty-three percent of shoppers say availability of a product on-shelf makes for a positive in-store experience and 60 percent of shoppers stopped buying from a retailer all together when they experienced a bad in-store experience.
A recently conducted survey of NA food retailers indicates that retailers see an improvement of on-shelf availability with an implemented EAS solution. Grocery retailers throughout North America and Europe are recognizing a significant return on investment (ROI) in consideration of the investment in electronic article surveillance (EAS) systems.
Based on the survey, 90 percent of NA food retailers utilizing EAS systems recognized an ROI in the first twelve months, and 100 percent recognized an ROI by the eighteenth month. The ROI is driven largely by a shrink reduction on a select list of high-risk, high-volume products, with the shared objective of increasing profits, via greater on-shelf-availability (OSA) and increased sales across many stores.
All the grocery retailers we spoke to recognize a shrink reduction ranging from 10 percent to 40 percent on protected items, which improves OSA, thereby making the product available to customers for purchase. Results show an improved customer experience and a 1 to 3 percent increase in sales as reported by some of our customers.
The Case of the Missing Inventory
Merchandising execution in the store is critical to a retailer’s success. Merchandising success depends on selling the right product at the right price and keeping the product on the shelf available to the shopper for purchase at the right time. However, when product is on the shelf, it is also susceptible to external and internal theft. Over 348,000 shoplifters and dishonest employees were apprehended in 2019 by just 21 large retailers who recovered over $136 million from these thieves. Shrink causes operational havoc in the store, frustrating store associates, with disappearing inventory due to theft creating out of stocks and making shelf replenishment difficult. Missing inventory on high-volume products negatively impacts the shopping experience and contributes to lost sales and lower margins. As a result, maximizing product availability and the shopper experience is equally important for the retailer and the consumer goods manufacturer who owns the brand.
The Improved Shopper Experience
We recently spoke with the Galina Hoppe, retail arbitrage and availability leader from Procter and Gamble, who partners with retailers to improve on-hand availability with the objective to maximize the shopper experience in the store. She explained shopper behavior and the importance of keeping product on the shelf available for purchase. According to Galina’s research, “when ten shoppers are faced with an out of stock, two will delay purchase all together, four will reach for another product or brand, and four will be so determined to buy the product they will go to another store and purchase it. In this situation, you can see how all of us miss out: consumer, brand owner, and retailer.”
Unfortunately, this is a global problem as outlined by the National Retail Federation. The 2020 National Retail Security Survey revealed shrink was at an all-time high, accounting for 1.62 percent of a retailer’s bottom line, costing the industry $61.7 billion. This represents an increase of $11.1 billion from 2019. As grocery retailers historically have some of the lowest margins in the industry, reducing loss is even more important for their bottom line. Prior to the economic downturn caused by the coronavirus pandemic, total shrink consumed 3.1 percent (FMI) of a typical grocer’s revenue, much higher than any other retail sector.
Why is Visible Tagging Imperative?
Many Grocers utilizing EAS systems are recognizing significant returns to their bottom line and sustaining this return for subsequent years. Earlier this year at the Global Source Tagging Conference, one of the top discount retailers was quoted as stating that “Source tagging continues to make a positive impact to the vendors shrink rate and perpetual inventory accuracy, helping ensure product is on the shelf and available for sale when a customer is shopping the set.”
The visible deterrence solutions, applied in the store and at the point of manufacture (source tagging) help keep popular products in-store, or created opportunities for a line extension by adding new high-volume and high-risk products to the store. The result is continued positive impact from shrink reduction and increased sales.
Recent innovations with EAS systems and visible deterrence solutions provided by Checkpoint Systems are affording retailers the opportunity to solve this major problem while improving the ‘shopper experience’.
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Jason DeVinney is the Grocery Business Development Manager at Checkpoint Systems. Contact him at email@example.com.