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Hello Marketing Chroniclers. This is a special edition of the newsletter when I send out ad-hoc essays that go deeper into a specific topic relevant to our profession.

This week I’m diving into retail — the cornerstone of physical availability and the Place “P” of marketing tactics’ 4Ps.

Enjoy 🧠

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How Retailers Can Stack The Deck In Their Favour

When a young marketer joins an organization, a large portion of their idea of what marketing is about resides in advertising.

Cannes Lions does a fantastic job promoting this segment of our industry with its extravagant beachside parties, high production experiential activations, and sexy sounding French names of the stages in which all presentations take place.

It is indeed an amazing part of our industry — albeit only a small portion of what marketing can do for an organization.

When we think advertising, we’re talking about what the Ehrenberg-Bass Institute (EBI) has coined “mental availability”. Meaning, brands sending communications into the market to build mental structures about themselves in the heads of consumers.

But if all we did was build mental availability and ignored the distribution of our products and services, consumers would be quick to remember us in a buying situation but unable to actually purchase us.

Which is why “physical availability” — or, the ease with which a brand can be bought, in terms of its presence and accessibility in the marketplace — is so incredibly important to grow a business.

Over the years, EBI has observed how consumers shop and identified 9 empirical laws of shopping that govern retail. This was observed across a wide range of retailers, spanning supermarkets, pharmacies, convenience stores, hardware stores, and wine stores around the world.

Let’s dive in.

The Empirical Laws of Shopping

The empirical laws of shopping are concerned with:

• Purchase goals

• Mental and physical availability

• Time in store

• Trip size

• Selective purchasing

• Top-sellers

• Distinctive brand assets

• Promotions

• Shopping paths

Purchase Goals

Law #1: shoppers go to stores because the stores have something they want to buy.

Well, that sounds pretty obvious, doesn’t it? But the implications of it are substantial in the context of these laws.

In general, most shoppers enter a store with a product they want to buy in mind. Meaning, the leisurely activity of “shopping” is less so a treasure hunt and more so driven by a particular item the shopper is looking for — the store is a means to an end.

Yes, there are times when people shop without a goal in mind, but in the real world that’s largely the minority of shopping trips (meanwhile, online it appears that the split is a bit more even). This is also known as the exception to the rule in marketing science.

Why does this matter? As a retailer, inventory variety and management are of the utmost importance, because if shoppers can’t find what they’re looking for, the store will see a decline in repeat business.

Mental and Physical Availability

Law #2: mental and physical availability largely determine store choice.

Have you ever seen ads about a retailer? This is them trying to stay top of mind in the heads of shoppers, so they come to them instead of their competitors when looking for what they wish to buy.

Retailers will often stock very similar inventory as their competitors — particularly the top selling items which drive the bulk of their business — so store choice will come down to mental availability and ease of access to the location (ignore price for now, because discount retailers and convenience retailers are largely serving different needs).

Last week I shared an exceptional spot from Morrisons as they sought to build mental availability around their fresh counter. It’s a fantastic way to drive memorability because the spot was created through emotive messaging and in all likelihood was advertised widely.

Recently, the brand tracking company Tracksuit released a report with TikTok titled “The Awareness Advantage” where they uncovered the multiplicative effects of awareness on conversion.

In it we see that brands with awareness over 60% had a conversion rate 2.9x higher than lower awareness brands.

This is a major finding that corroborates with the laws of shopping because for the longest time marketers struggled to prove the value of brand-building efforts. But now we know that the stronger your brand is, the more efficient your sales performance will be. And this is how you overcome the fact that seldom will shoppers stop at a retailer they’ve never heard of.

What brings us to physical availability. If your brand has high awareness and shoppers think of you for their next shopping trip but they can’t find you — then they will simply go to your competitors instead.

Being easy to find, widely available, and having the right products always in stock are the cornerstones of a successful retailer.

Time In Store

Law #3: shoppers only spend a constrained amount of time in store.

Consumers are busy — they have dinner to make, kids to drive around, bills to pay — which is why time in-store is inelastic.

Meaning, while the amount of money a shopper can spend varies a great deal on any particular trip, time spent shopping does not. In other words, when a shopping trip is slower than expected, they will curtail their spending to avoid going “over time”.

The implications of this law are massive — if you can make it easy and fast for shoppers to find what they’re looking for, they will spend the remainder of their “planned” time in-store shopping around for other things (aka, basket building opportunity!).

All of this happens unconsciously for the shopper, but there is an empirical correlation between speed and spending amount.

Trip Size

Law #4: people make many short shopping trips and fewer longer shopping trips.

The most common shopping trips are to buy a single item (15% of all trips) — even at supermarkets.

This law complements the previous one (time in store) because if shoppers only have a set amount of time they are willing to spend in a store but cannot find what they’re looking for, basket sizes will decline.

So, as a retailer you must make it excessively easy for shoppes to find what they’re looking for in order to facilitate these quick, single-item shopping trips.

Selective Purchasing

Law #5: a typical household buys only 300 to 400 stock-keeping units (SKUs) from a supermarket in an entire year.

For context, the average supermarket will stock anywhere from 30,000 to 50,000 items. Meaning, in a sea of options, individual shoppers will only buy around 1% of what’s available in-store throughout the entire year.

This shouldn’t come as a surprise since brands typically see the Pareto Rule in their own portfolios — a tiny number of SKUs driving the majority of their sales. But as brands get bigger and more mature, offering variety at a lower fixed-cost per unit becomes a viable option due to economies of scale and they’re able to capture a larger share of the market by serving the “long tail”.

Top-Sellers

Law #6: while a typical supermarket sells over 30,000 items, the top-selling 1,000 items will make up about half of the supermarket’s sales.

Very closely tied to the previous law, we see further implications of product variety here. While most retailers will be able to sell almost everything they stock, a very select few items sell at a significant higher velocity (aka, USW — units sold per week).

Product’s USWs are imperative for effective inventory management because as a retailer you need to re-order products ahead of time to restock forecasted sales. So, this law further drives focus on which products should receive more of your attention, as they will also serve as the gateway to basket building.

Distinctive Brand Assets

Law #7: shoppers read very little in store — instead they react to colours and symbols.

Reading requires a lot of cognitive effort. When paired with a high-stimulus environment such as retail stores, our brains seek shortcuts to make decisions.

And this is where leveraging distinctive brands assets becomes so important not only for manufacturers and vendors, but for retailers themselves in order to facilitate the in-store experience.

This is where proper planogram planning, store layouts and display signage can do a lot of heavy-lifting.

Sophisticated consumer packaged goods companies know this quite well and design their packaging with this empirical law in mind (i.e.: when launching an innovation, they place the product in the perimeter of the stores on displays, by the cashier for impulse purchasing, and in the middle shelf for ease of discovery in the aisle, all the while ensuring that a bold “NEW” callout is printed on the package in such a way that’s not covered by the shelving unit).

Promotions

Law #8: shoppers have been trained to buy specials.

Promotions are seldom seen by shoppers who don’t already have the brand in their repertoire. But even those who have it, ensuring that specials are properly flagged is imperative to maximize “time to find” so that the retailer creates the spare time in the shopper’s trip to increase the basket size.

And to those who have never heard of the products on promotion, proper signage can also facilitate discovery — but this is significantly less efficient than for brands that already have high awareness in the market (as per Tracksuit’s report mentioned above).

Shopping Paths

Law #9: shoppers follow pathways of open space, and that the checkout is a magnet they speed up towards.

Have you ever noticed how most supermarkets follow the same floor plan? Produce on one end, dairy and meat at the back, bakery on the other end, and packaged goods in the middle (aisles).

This is because the shopper follows very predictable paths in stores. They shop around the edges, where open space is more ample, and cut in and out of the aisles to pick up things in their shopping lists.

This means that the perimeter and open spaces of any store are prime real estate for vendors. If they want to get discovered and drive incremental impulse buying, showing up on the path most travelled is the way to go.

Changing shoppers’ paths is very difficult, which is why end caps and till displays are some of the most expensive arrangements that vendors pay retailers for.

Swim Downstream

As we can see, retail is a tough nut to crack. But by observing how shoppers shop across a variety of situations, we now know these 9 empirical laws of shopping.

The advice then is simple: don’t waste your time trying to fight these laws — swim downstream and you’ll achieve your objectives much more efficiently.

And finally, these laws show that physical availability is tightly intertwined with mental availability. The shopper journey starts in the minds of consumers, so don’t forget to build your retailer brand awareness in the market even before the shopper walks through your doors.

More of PPA:

• 🤝 Follow me on LinkedIn

• 🗣 For speaking engagements, you can reach me at [email protected]

• 💌 In case you missed it: Odds Are, You’re Wrong — Information vs formation, metrics that matter, how to advertise a bidet, and escapism

PPA 

Pedro Porto Alegre is a seasoned marketing strategist with in-depth experience building brand and communications strategies for top-tier B2C and B2B organizations across Canada. His repertoire extends from crafting and executing integrated multi-media brand marketing campaigns to the commercialization of performance-driven innovations for multimillion-dollar and nascent brands alike.