It's no coincidence that the biggest supermarket chains were actively refashioning their merchandising in the first half of this year. This flurry of activity is aimed at solidifying appeal to shoppers in the midst of extreme competition. Just as important, many chains are trying to transform their own images to capture a more diverse group of customers. Retailers are relying on both inspiration and solid data to build their strategies, as a look back at some recent SN stories indicates.
Which retailers are figuring most prominently in remaking merchandising? Wal-Mart Stores is in major makeover mode as it targets new customers. The giant merchant is experimenting with a supercenter in Plano, Texas, that embraces upscale offerings, including premium food and wines and a larger organic assortment, part of a major organic push at the chain. It is also testing a discount store in the Chicago area that targets urban, multicultural consumers with a wide assortment of foods, apparel, music and ethnic hair care. These moves are based at least partly on in-depth market research, and the new stores are already proving themselves in terms of performance. Wal-Mart will follow up with additional experimental stores, including those aimed at Hispanics, rural shoppers and baby boomers.
Another retailer changing its look is Dollar General, which is trying to abandon its old dollar-store image in hopes of adding higher-income consumers and more Hispanic shoppers. The new direction broadens the assortments and takes a more quantified approach to merchandising, looking to tools such as category management and planograms to insure maximum performance from each item.
A different kind of merchandising shift is taking place at Kroger. The retailer is more closely aligning its individual-store merchandising with the purchase behavior of those stores' shoppers. That involves segmenting stores by "upscale" or "mainstream," for example, as opposed to making geography the differentiator. This will enable the chain to be more consistent across its operating areas, and the chances of success will be enhanced by the company's reliance on spending data for direction.
Cynics would respond to all of these merchandising shifts by saying it's almost impossible for a large chain to successfully transform its image. But don't tell that to Safeway. That retailer contends it's already on the road to success as it continues to rapidly roll out its "lifestyle" format, which incorporates an enhanced shopping experience and unique proprietary products. The company said recently it has been posting 23% more sales growth at lifestyle stores than at conventional remodels with the same investment. It's hard to argue with that type of success.
Each of the retail chains mentioned here appears to have at least one smart strategy in common: closely tying merchandising shifts to goals for customer retention and growth. Further, we can assume that each chain has relied on unique insights and considerable analysis of performance metrics. That said, the ultimate judgment will come from a far more basic measure, the only one that really counts: the stores' sales reports. Stay tuned for the second half.