Jan 10, 2023
Multi-Unit Store Segmentation

Multi-unit retail operators tend to be offered challenges using their product assortment because of varying demographic and store configurations on their network of locations. Often, product assortment is standardized across all store types which leaves opportunities for niche marketing about the sidelines. Rather than the usual one-size-fits-all approach, multi-unit operators should segment their stores in order to optimize the product assortment.

Store segmentation doesn’t necessarily mean store-by-store plan-o-grams, but alternatively a grouping of store “types” that consume to consideration location, demographic and structural attributes of the complete network of stores. Grouping stores over these varieties of segments, allow a multi-unit operator to optimize the trade area, while still being capable to manage the process of SKU management.

Ideally, managing product assortment store-by-store would be optimal, yet it’s impractical because of the resources available. Store segmentation provides for virtually all stores to optimize the neighborhoods in which they serve, yet allow for the operator to effectively manage the logistics of segmentation.

Here are a few steps to think about when looking at store segmentation:

Know Thy Customer: Customers throughout your respective trade areas can vary greatly. The urban shopper – perhaps without a car – will shop your urban locations vastly differently than the usual rural customer. Not only will they shop differently, but also they’ll be expecting targeted product assortments that will make sense inside their neighborhoods. In urban markets, there can be products geared toward more singles and younger audiences where in rural markets the assortment could be focused more on families.

Assign Store Attributes: Next for the list is always to assign key store attributes per from the store segmentations. Size of store, location and store type may all dictate if the store features a full selection of SKU’s or maybe more of the limited offering. Larger stores with the appropriate demographic makeup may lend itself to more of your premier offering – in the quality and assortment – whereas smaller, transient locations may carry merely a limited product assortment.

Delineate Product Assortment: Not every store within the network should carry a similar product assortment. Larger, newer stores have greater permission to offer more premier products then tired, smaller stores. Perception might be reality and fitting a premier product into a reduced location will fall flat with the consumer. Store segmentation helps guide the two services and products that will be “permitted” by the customer to get carried in this particular store.

Divide And Conquer: Once the core product assortments are driven by store type, plan-o-grams and marketing are able to be put into place. Store segmentation allows for a strategic guideline not simply for operations but also for your merchandising and marketing tactics being employed. Knowing the customer demographic within the constraints in the physical attributes in the store will most likely dictate the general marketing and merchandising of the merchandise assortment.

Allocate Capital Investments: Once the shop segmentation process is complete, the corporation can then allocate capital investments accordingly. Premier locations may have the greatest upside and so have the lions-share in the organizations discretionary capital investments. On the flipside, basic stores may possibly receive stay-in-business capital to be able to keep them operating. Over time, these allocations can vary greatly as demographic shifts inside targeted trade areas take place.

Store segmenting is a critical tool for your multi-unit operator. It focuses the corporation using a strategic direction in addition to a realistic perspective that all stores are the same. Delineating your network of stores in this fashion permits a far more prudent allocation of both labor and capital investment.

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