To Win Share, Target High-Value Shoppers: IRi

To Win Share, Target High-Value Shoppers: IRi

March 12, 2014

The most productive shoppers can be elusive targets to retailers who don’t dig deep enough to truly understand the context of their shopping trips and baskets – and the messages that will resonate best with them. 

Without these insights, it is tougher for retailers to win market share, which is so critical today and hard to gain in an era of fewer trips to stores and typically smaller transactions.  Newly released IRi data show declines for Quick Trips (0.2%), Special Purpose Trips (0.5%), and Fill-In Trips (0.1%) vs. a nominal 0.4% rise in Pantry Stocking Trips in Q3 2012 vs. a year earlier.  The Chicago-based research firm also says average spend is declining.

These downtrends make it mandatory for stores to precisely identify their best spending prospects who feed the most people at home, or who earn high incomes and have lifestyles that lead them to buy higher-ticket, higher-margin merchandise.  

Retailers should know, for example, if a $50 basket is a shoppers’ stock-up for the week (because she eats out often) or one of three fill-in trips for a mom. They should also gauge the potential to grow a shoppers’ spend at the store by analyzing what’s in the basket and correlating that to household income.

The IRi White Paper, Targeting High-Value Shoppers in CPG & Retail, underscores the importance of the right customer mix:  the top 20% of customers account for 47% of channel sales in grocery, 59% in club, 60% in mass, and 70% in drug.  Stakes for wooing these shoppers have never been higher (Q4 2012 data) – yet the task is increasingly complex because they are more selective and better informed, and their shopping behavior changes “at an increasingly rapid rate…[They seek] more immersive, rich and relevant experiences from the retailers they patronize.”

Equipped with smartphones and tablets, more than half of consumers (57%) shop and research online before buying an item. Two-thirds (68%) prefer brands that can be bought in multiple channels. And, on average, they consult 10.4 sources before making a purchase, twice the number of sources of just two years ago, according to Forrester Consulting & Google Shopper Sciences data cited in the IRi report.

IRi defines the top 20% of customers as those who spend the most at Walmart, Kroger, Target, Safeway, Supervalu and Dollar General combined.  While it doesn’t appear to include online, drug chains, most supermarket operators or Costco, for example, it represents a significant portion of retail activity.

An IRi analysis shows how much more effectively Kroger attracts and retains these high-value shoppers than Supervalu does.  Between 2010 and 2012, Kroger drove more than one-fifth of its business from this group.  During the period, their contribution to company sales grew by 5.2% - to 22.6% from 21.4%.  By contrast, Supervalu experienced a 36.5% decline in top shoppers’ contribution to sales –to 6.3% in 2012 from 7.7% in 2010.

The right target marketing, based on predictive analytics and data mining, can help retailers capture shoppers’ “other spend” in a market.