How to open a new store and engage your target audience?
In retail, any store is, first and foremost, a sales area that should generate profit. For a store to become a source of income, all its components must work on attracting customers, increasing their loyalty, and raising the average sale value, and turnover. Attracting customers will not be successful if the products on the shelf do not meet the visitors’ expectations. That means when opening a store, it’s crucial to know as much as possible about your future customers. How can you get all the necessary information about the target audience and the behavior of target customers? The founders of the company Num8erz – Andrey Shevchuk, CEO, and Denis Romash, director of research – discuss the possibilities of modern tools for analyzing consumer behavior and what they offer to retail.
Num8erz develops IT tools for researching sales data and consumer behavior, as well as provides retailers and manufacturers with analytical services that help make the right management decisions, identify trends in consumer behavior, improve the assortment, and optimize promotions.
Deciding on the format and size of the store
A discount store format is appropriate in a residential area. However, such a retail point will be empty on the outskirts of the city because essential goods can be bought near home, and no one will go far by car.
Next, it is simply necessary to conduct an assessment of the competitive environment. It’s important to understand what is already being sold in the region and how much these products meet the needs of the visitors to stores in the area. This is where advanced data analysis tools should be used!
Num8erz analytical tools allow you to see how stores of certain formats and sizes behave in a specific location and what potential traffic could be, as well as what would be an optimal assortment for them.
The Num8erz.CustomersInsights tool shows the retailer where and what is being sold by other retailers in terms of formats, customer segments, and what they have in their basket, with what frequency products of which category are included in the receipt. Data can be viewed globally at the country level, or on the scale of a specific city, or in a specific city area. Based on this data, you can compile
Vision of what the new store should look like
More accurately predict sales at the future retail location.
With Num8erz.CustomersInsights, it’s easy to see the average check in a specific location, as well as extract data on the number of large and small checks and how frequently these checks appear.
That is, proper analysis provides an understanding of the minimally possible size needed to open a store to ensure the maximum level of sales per square meter and not maintain excess space.
And what about future visitors? Num8erz.CustomersInsights helps analyze the target audience of the network and customer behavior. Next, we will discuss what insights the tool allows to extract from the data.
Learnings about potential customers of a new store
What and how your target audience buys
Retail chains usually know the portrait of their buyer. And Num8erz.CustomersInsights contains a large volume of information about the behavior of customers of different retailers present in the region. By making a selection in the context of the proposed store format or cluster, one can observe the behavior of the audience with selected characteristics in their usual environment.
For example, there is a category of people who go to the store twice a week. They have price sensitivity, say, average or below average, there is some frequency of purchases. Such customers show a preference for certain product categories, up to a consistent percentage ratio of some product groups in the basket. For such a group of customers, the size of the average check will be characteristic, and the basket of purchases will have a predictable set of categories for a certain period. That is, you can select a group of customers with a set of characteristics inherent to the target audience of interest and see what they buy in other retail chains.
Using analytical tools, it is possible to see what the regular customers of your retail chain and the frequent visitors of other retailers in the area buy. Make a conclusion about what customers found at competitors and, if possible, meet this need by selecting appropriate goods for your store.
Analytical tools allow you to view the basket content of a selected group of customers, the depth of penetration, the frequency of purchases in these categories, the share of sales in monetary terms, and the basket’s breakdown in percentage terms of all subcategories to the total sales figure, moreover, for the selected period.
As a result, the retailer gains an understanding that there are a number of customers with similar characteristics of a frequent visitor in their network in the given area.
Volume of potential customers in the area
It is quite easy to count it thanks to the Num8erz.CustomersInsights platform. Such analytics allows determining the number of identified loyalty program users in the region. Then, using the service, we make a selection of users among them who match the portrait of your retail chain’s target client. Considering the loyalty program’s coverage is on average at 50%, it is safe to double the obtained value. Ultimately, we have the number of potential visitors of the future store.
How not to lose them? Here, it’s necessary to figure out which goods they go for in other retail chains, identify the unit of need, and find products that will meet the customer’s expectations. The Num8erz.CustomersInsights service helps here too, not just with theories that need verification but with facts based on sales data analysis, and we will talk about this in the next publication.