Articles

Finders Keepers. Losers Weepers!

The inter-twining productivity potential of catchment area analysis and format development are a well understood discipline for big retailers, but often not so for smaller ones.

The basic principles are these.

Access is one of the relevancy attributes which shape customer behaviour. I shop more or less within a 15 minute radius of where I live, work or travel. In each catchment area there is a different scenario at play based on competition, customer profile and behaviour, geography and navigation and the retailer themselves.

Based on each “landscape” a unique opportunity or set of opportunities exist which are only fully exploited (in terms of maximisation of sales and profit) through a set of “plug and play” format options – that is, store configurations and product and service mix variations.

For example, some retailers have found that large super-regional shopping centres are now becoming so big that they are capable of carrying 2 or 3 stores (of varying formats) of the one brand in the same centre. And they deliver the returns which justify each individual store.

Other retailers have found that a geographic territory can be best conquered by combining a mix of big format (hub) and convenience or express (spoke) stores.

What is at play here are both defensive and offensive strategies. I need to cover my competitors and do damage to them by stealing share (defensive) while expanding my own opportunities (offensive). Creating a range of “building block” options for format (incorporating range, service and selling environment variations), then undertaking catchment area analysis to uncover insight is the first step. Testing clever multiple format combinations for coverage of specific catchments is a proven business practice to beat competitors and expand your growth.

The big boys do it as part of business as usual. It’s how they find the winning edge, while their competitors lose.

So what options have you got for small to large, wide to narrow and how could they be applied in combination to give you the most from your customer coverage?