Ben Sprecher

FDBuyer: Clubbing The Clubs

July 13, 2010

FROM RETAILWIRE:
For supermarkets getting clubbed by club stores and losing share, experts advise grocers to focus on selection, convenience and quality. And -- perhaps most important -- be sure to stand for something. How should supermarkets position themselves to face competition from club stores?      [more...]

When our company works with a supermarket, one of the first things we look for is top shoppers with "category voids." As an example, think about bath tissue (well, don't think about it too hard).

Virtually all households in the US buy bath tissue, so if a frequent shopper at a supermarket hasn't bought bath tissue in 3-6 months, you can be sure that they are shopping club stores, dollar stores, Walmart, or other channels. And, while David Biernbaum's point about forward-buying is important, I think an even bigger issue is the *other* items in the shopper's cart when they go to Costco to buy the 48-pack of Charmin: cereal, steak, pasta, etc. The shopper isn't just punching a hole in their future bath tissue purchases at the grocery store, they are cutting out entire trips to the supermarket.

So what's a supermarket to do? Use loyalty data to fight back. First, find top shoppers who aren't shopping the entire store, and market directly to those individuals with special discounts for the aisles and items they don't buy. These discounts don't need to come out of the chain's pocket--they can be brand-funded, provided there's active collaboration with the brands to give them access to the shopper insights that are driving your decisions.

Second, use the insights gleaned about these shoppers to make fact-based merchandising and marketing decisions. Maybe you need to offer a few items that are "club sizes at club prices" in these key areas. Or, you can alert your best customers when the unique products that they like (and can't get at Sam's club) are about to go on special.

The point is, use your existing competitive advantages--the large number of items on the shelf, the deep shopper insights that loyalty data can deliver, and the willingness of brands to be partners in the process--to fend of the threat from clubs.