Creating a closer connection
Up until recently, when retailers expanded their store network, it was vital that no matter where in the world customers shopped, they could expect the same kind of experience inherent to the brand.
But now, retailers are shifting towards localising their offers and ensuring that those consumers’ preferences are catered for, from product range and store layout to marketing campaigns.
Retailers are using this as a way to differentiate themselves and create a local connection with their local shopper.
Part of this shift is that retailers recognise that a store in one part of the country or city or state has its own shopper profile, so there’s a need to deliver against the tastes, preferences of different life stages, ethnicities and lifestyles.”
For example, in Bondi Junction where there is a higher Jewish population, the Coles store has aisles dedicated to kosher food. Meanwhile in the western suburbs, there is more halal food on offer to appeal to the Muslim community.
Other examples include the BWS in Marrickville Metro which regularly features craft beer to cater for its Gen Y customers. Harris Farm Grocers is also passionate about sharing the providence of its products with customers.
Retailers recognise that while shoppers say that wide range is important, convenience is equally important. There’s a subset of shoppers who are willing to travel the distance to a store they prefer, that might be because they offer a range that delivers their needs or they
prefer a store layout which makes it easier for the when they’re under pressure.
Another way to localise for retailers is to change store layouts based upon their customer bases. For example, in those areas where many young families live, retailers may choose to allocate more bays to baby products or leverage different planograms in categories like cereal or muesli bars.
Meanwhile, marketing campaigns reflecting the local demographic also aim to create customer connections, whether it’s by ethnicity, age, or life stage. However, implementing a more localised offer to customers can present its challenges. The greatest challenge often comes down to supply chain logistics. Incorporating local requirements adds an added layer of complexity in terms of distribution and the management of out of stocks.
How to do it
Looking to localise? It depends on the retail business itself and the types of data that are being leveraged, demographics of a stores catchment area, through to understanding shopping behaviours using IRI’s Shopper panel data through to our assortment optimisation analysis.
However, no-one knows and understands the customers in a local market as well as store managers and staff. That tight-knit relationship with the local community is something that smaller stores often enjoy in comparison to larger businesses, where it might be more difficult to create the same kind of connection.
Whichever way localisation is implemented, it is important that retailers keep an open mind and take a test and learn approach, by perhaps starting small before doing a full-scale deployment.
IRI is a market research company which provides clients with consumer, shopper and retail market intelligence and analysis focused on the consumer packaged goods industry.