Store clustering is no longer about grouping retail stores based on store size, geography and/or dollar volume. The first step towards true Shopper marketing is building a new set of strategies for store clusters (groups of stores that have similar Shoppers, performance and traits). Then, for individual stores, assembling the right resources with the right ideas and competencies. In short, clusters need to be based on Shopper-focused attributes. By understanding the different demographics within local communities where their stores reside, stores can better meet the needs of a larger range of people. This Shopper-focused store cluster approach enables Retailers to quickly identify clusters of stores with similar demand patterns and focus on the most important target segments. Below are 3 steps to build and define Shopper-focused store clusters.

Your success depends on you and your team’s abilities to utilize rapidly-advancing changes in data, technology and the Shopper. STRATEGIC PRIORITY #1. Improve Your ROI on Data and Technology Purchases. Why is your organization operating like it’s 1999 when it comes to maximizing data and technology? Category Management has now been around for over 30 years. Data and technology continue to evolve and advance, pressuring organizations to invest heavily in new data sources, advanced technologies and market research to better understand their changing and increasingly sophisticated Shoppers.

Space Management has changed significantly over the past 20 years, but in many ways has stayed the same. What’s changed? Technology has improved significantly in space planning software. Data sources have become more plentiful, including store-level data, consumer data, and most recently, Shopper research data. There are also many things that have remained the same in space management for both Retailers and Manufacturers:

Space Management represents an area of opportunity for Retailers and Manufacturers to collaborate to Improve Shopper Satisfaction. Retailer and Manufacturer investments come together at the shelf — where Shoppers meet products face-to-face and most importantly, where purchase decisions are made. So who needs to Understand the shelf?

Gone are the days where decisions and recommendations to retail customers are made based purely on intuition and relationships. Sales and marketing teams need to take a fact-based approach to their business, starting with developing new skills in “retail understanding”, “proficiency in data”, and “category & business insights”. A fact-based presentations approach will help you uncover development opportunities as well as combat potential weaknesses through joint business planning (JBP). Some of the questions you need to be able to answer, include: Who are your Retailers and what are they trying to accomplish? What data sources are available to me and how do I analyze and interpret them? How do I create actionable recommendations for the Retailer using the tactics? Adding value to the Retailer through solutions and recommendations that tie in with their overall strategies and their biggest areas of opportunity will help move you from relationship-only selling to an added-value, more collaborative sales approach. The result? Win-win solutions for the Vendor and Retailer. But keep in mind, once sales teams answer these questions, their job is only half done. Their next step is to learn how to tell stories through compelling, fact-based presentations that connect with the opportunities and insights they have uncovered. Let’s review the most important elements of fact-based presentations.

Most retail and vendor organizations I have spoken to or interacted with in the past 6 months list at least one of the following objectives in their Corporate Strategic Plans: Collaboration. There is a big opportunity for Retailer and Vendor Collaboration, but organizations are not making any or enough progress. Shopper-Centricity. To win with Shoppers, Retailers and Vendors need to collaborate to be truly Shopper-centric. Limited collaboration is leading to misalignment of messages — meaning shoppers’ needs and wants are not being met. Big Data. Leveraging Big Data (by Retailers or Vendors) requires more precision and sophistication in its use and is similarly aided by strategic collaboration between Retailers and Vendors.

Progressive Grocer recently ran an article on “How Ineffective Promotions Are Dragging Down Top Consumer Packaged Goods Brands”.

Pricing is one of the tactics of the Marketing Mix. It is an important marketing tool in retailing, and has become much more analytically- and strategically-focused than in the past. Prices vary based on different promotions, and on differing Retailer strategies. A difference of 5 or 10% in price can influence sales and profit significantly. Pricing decisions directly affect category sales, inventory positions and category profitability.

I was recently working with a large client on strategic efficient assortment and asked them what tools they used to complete their assortment analysis. Their answer? 1) “homemade” tools; and 2) item rank reports (yes, ranked in descending order and cutting off the lowest selling items). Honestly, I was shocked—how has such an important tactic (the most important one!) become so unstrategic? This approach gives little or no thought to Retailer strategy or the Retailer’s Shopper and their needs (it’s what I was doing for assortment analysis almost 25 years ago!). I think for some, assortment (and shelving, for that matter) have become too automated, too tactical and too low level. There’s so much time spent on the tactical work associated with maintaining homemade tools, managing item-level databases and pulling the right data that there’s no time left to incorporate very much strategy, Shopper or thought for trends into the recommendations. The opportunity? 1) Reduce the tactical work across your organization through proper tools and processes; and 2) Ramp up your efficient assortment analysis with a strategic Shopper focus and get a new level of insights and recommendations!

Learn how to build strategic thinking into your analysis to understand more advanced Shopper solutions I’ve been writing and speaking about the components of category management which relate directly to the Category Management Association’s certification requirements, including: Steps of the category management process and the importance of Retailer strategy; Key data sources available and the different data insights to uncover; Drilling through data (including in a limited data environment) to discover strategic insights; and Assessing the health of your business.