Filling the void: A simple path to organic category growth post-COVID

How loyalty data helps retailers determine the "Critical Items" they need to have on-shelf to meet shoppers' expectations

A couple of weeks ago, I wrote a post about how measuring consumer trial and repeat is the new key to measuring brand loyalty and switching behavior. In that post, I explained that product unavailability has driven consumers to try a wide range of products that they would never have considered buying before.  In many cases, these consumers tried “New to Me” products and found that they are just as good or better than the ones they previously preferred (14% of triers repeated).

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Right Product / Right Place

With this kind of potential conversion rate, it’s clear that getting and keeping the right products on the shelves in the right stores is critical to organic category growth.  I call these products Critical Items and define them by measuring each item against two criteria in stores where they are currently selling:

  • Have a high level of purchase exclusivity among shoppers who buy the category*
  • Have a high rate of sales for every million dollars in total store sales where the item is currently being sold

*Indexed to Average Item Exclusivity in the category

The tricky part, however, lies in answering three questions:

  1. Which items are critical to carry?
  2. Which stores don’t have those Critical Items on shelf?
  3. What is the value of placing that Critical Item on the shelf in each of those stores?

The good news is, for CPGs who partner with retailers to gain access to loyalty data, answering these questions is pretty straight forward.

Fish Where the Right Fish Are

In the example shown below, data from a retailer’s loyalty data platform was used to conduct Exclusivity Analysis and $ Sales Per Million $ Selling analysis on all UPCs sold across the chain.  Based on the Critical Item criteria defined, Crown Royal Deluxe and Crown Royal Peach are the two most Critical Items to have in all stores. Crown Royal Apple on the other hand is less important to stock as it doesn’t demonstrate a high level of consumer exclusivity.

Activate or Evacuate

As with any analysis, activation against the insights is the only way to derive true value. By merging the insights above with individual store sales-data housed in most retailer loyalty data platforms, a detailed list of Critical Item shelf voids in each store is then produced.  Armed with these lists, CPG retail sales teams and brokers are then able to quickly and efficiently achieve 100% distribution on all Critical Items in the right stores (example below).

Lastly, what makes this opportunity particularly exciting is the fact that there are literally hundreds of retailer/manufacturer loyalty partnerships in existence today. If used to full benefit, these existing partnerships make activation of this type of analytic easy and scalable.  Further, for those suppliers that are not currently partnering with a particular retailer of interest, clear cut ROI can be unambiguously laid out in advance of investment, making the partnering decision an easy one to make.

Learn more in our whitepaper about how AI brings precision to grocery assortment optimization.

Discover more critical COVID-19 insights and recommendations on our COVID Insights Hub

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