Tag Archives: Morrisons

News-Supermarket aisle and trolley

When I was at college I shared a flat with a Psychologist who was barking mad but now probably very rich and working for Wal-Mart. Helping retailers understand how shoppers react when faced with choices is a very profitable business.

Shoppers must be encouraged to walk past every stall before leaving the premises.

The layout of a Market Hall should follow the same principles used in a department store – Shoppers must be encouraged to walk past every stall before leaving the premises. That principle dictates ‘who goes where’ in a Market Hall because some types of use block the view of units behind them. At worst this creates a ‘deadmans’ alley’ which customers never visit and Mr Selfridge knew back in 1909. He positioned jewellery and beauty displays at the front of his store and products which need a ‘high-rise’ display at the back. The same principle is still valid today but often results in a spectacular argument when a front stall becomes vacant. The manager who opts to keep it empty rather than permit a Berlin Wall of shoe boxes is doing the right thing but doesn’t make many friends.

Life is a lot simpler for Supermarket managers. They don’t have to fight-off psychopathic shoe traders and are more concerned at packing in as many product lines as possible. They try to align the racking so you can see the Meat and Bakery on the back wall but aside from that they move things around to suit themselves, often on a weekly basis. In the USA psychologists were quick to latch onto this and offer their theories about purchasing behaviour to help supermarkets maximise sales. One of the alleged classic successes was to place canned beer next to nappies, (Why? – see later). Behavioural psychologists invented a whole new industry for themselves, advising what should be put where.

UK supermarkets have adopted many of the same principles so it was interesting to see the consumer organisation, Which? blow the whistle on how they use Sigmund Freud’s theories. It equipped researchers with funky, Google-type ‘smart specs.’ which recorded their eye movements and sent them off shopping at Tesco, Asda, Morrisons and Sainsbury’s. And the black magic worked – the researchers came back with more than they set out to buy whilst their eye movements recorded why.

Shoppers who make ‘healthy’ purchases then go on to reward themselves by buying additional junk food.

Putting aside all the really clever ideas – EFT and loyalty cards which predict shopping patterns etc – researchers found the first technique was to slow people down. Slow shoppers buy more, so after driving into the carpark at 60 mph they need to be slowed down at the store entrance. A deceleration zone is used, with an automatic door, calming music and seasonal goods to put them in a calmer mood. The entrance area obviously needs to cater for ‘convenience’ visits (a lunchtime sandwich, soft drink and pack of fags) but ideally should relax visitors into an extended ‘dwell time’. I always thought they put fruit and veg. next to the entrance – not the exit – because it’s bright and cheerful, but not so. Cunning psychologists have worked out that shoppers who make ‘healthy’ purchases then go on to reward themselves by buying additional junk food – despite squashing their tomatoes as they walk around.

Some stores even reduce the size of their floor tiles in the wide, luxury aisles to give Shoppers the impression they’re moving faster than they actually are.

Encouraging shoppers to circulate by placing staple purchases such as meat and bread on the back wall is straightforward enough, as is scattering other staples like dairy and preserves to ensure all the aisles are visited. The psychologists have taken this a step further though and recommend arrow aisles to display ‘essential’ purchases. Narrow aisles discourage dawdling i.e. encourage quicker turnover on essentials, whilst wider aisles encourage pausing and are used to display luxury goods. In the USA (where else?) some stores even reduce the size of their floor tiles in the wide, luxury aisles to give Shoppers the impression they’re moving faster than they actually are. This makes them feel a lot less guilty about purchasing luxury items.

Product brands pay a fee for eye-level positioning and even more for the ‘golden zone’.

‘Eye-height is buy-height’ is a common saying in retailing, so product brands pay a fee for eye-level positioning and even more for the ‘golden zone’ next to the checkouts where mothers reward kids with sweets and themselves with copies of the ‘People’s Friend’. Apparently shoppers choose between similar brands by scanning them from left to right so higher-margin products are often placed on the left whilst value lines are relegated to the right or bottom shelf.

Cunning stuff, but now you know.

Last month also saw some interesting news from Morrisons:

Firstly they were forced to apologise for turning the ‘Angel of the North’ into a giant advert for their baguettes. Like all the big four supermarkets they’ve been losing out to Aldi and Lidl so they slashed the price of some 1,200 lines before projecting a 175 foot long image of a baguette onto the famous sculpture. The statue stands alongside the A1 in Gateshead and is one of Britains most popular pieces of public art and locals were not amused. ‘I’m cheaper at Morrisons’ may be true but someone should have asked the Council first. Morrisons promptly apologised and begged Geordies to continue shopping with them.

Secondly, consumer data researchers Shopitize confirmed Morrisons is a best place to pick up a date. 60% of Morrisons shoppers on Tuesday are girlies but Sainsburys on a Saturday is a better bet if you’re interested in blokes. 13% of trolley pushers have swopped telephone numbers, 6% have dated and 2% have married. There are several websites offering help and advice on pick-up techniques with tips like displaying a big bunch of bananas. This is, apparently a blatant come-on.

This sad news confirms we’re now more likely to judge someones’s personality by inspecting their shopping trolley instead of shouting over the music in the Wallsend Working Mens Social Club.

A (dodgy) urban myth suggests USA retailer Wal-Mart (who now own Asda) used to place six-packs of beer next to their babycare products in ‘blue collar’ neighbourhood stores. Loyalty card research identified men as the principal purchasers of nappies, having been sent out by mothers to buy supplies. The men were happy to do so to avoid nappy-duty but liked to reward themselves with a six-pack for the inconvenience.

News-Horses racing

A couple of interesting news events emerged from the ‘Big Four’ Supermarkets in March – Morrisons are going online and Tesco have bought-into the Restaurant chain ‘Giraffe’. Look and learn.

Firstly, Morrisons – the Bradford-based chain is definitely worth watching. They announced as from 2014 they’ll be selling online so are negotiating a delivery deal with Ocado. For the last 13 years their management was sceptical about online sales but that has now changed. In the meantime they’ve swallowed-up the Safeway chain with less difficulty than predicted, dodged the horsemeat scandal because they run their own abbatoirs and developed their in-store ‘Market Street’ offer which, I have to say, is not bad at all.

But last year Morrisons lost market share from 12.4% to 11.8% and like-for-like sales fell by 2%. The resulting 7% fall in before-tax profits was their first for several years although sales in London and the South East grew strongly. But they recognised they had a couple of problems and announced in February:

‘We are at a structural disadvantage as we do not yet have a meaningful presence in either convenience stores or in online, the two fastest-growing sectors of the market.’

Not for long though, because they then snapped-up 62 stores in the South East from failed retailers Jessops, Blockbuster and HMV. This was much to the relief of High Street landlords and town centre managers. They were acquired at rock-bottom prices thanks to the recession and will now be converted into ‘M Local’ convenience stores. Nice timing.

So what else made Morrisons’ change their mind about online sales? Maybe because they recognised it as THE growth area in retailing and maybe because they’d done their homework. The essence of running a profitable supermarket is keeping overheads down e.g. food handling (use self-service) and transport to the consumer (offer free parking and get them to come to you).

Morrisons hit on the strategy of purchasing a 10% stake in New York-based online grocer Fresh Direct.

The problem with selling online is you get lumbered with the costs for stock-picking and deliveries, so an ever-cautious Morrisons hit on the strategy of purchasing a 10% stake in New York-based online grocer Fresh Direct. They then sent a team to the USA to learn how to run online sales profitably and are now using that experience to put the screws on Ocado. That’s the way to do it – learn from someone else’s experience.

Secondly, Tesco: The Company announced a purchase of the 50-unit Giraffe restaurant chain for some £48million as part of it’s strategy to turn Supermarkets into ‘all-day destinations’.

This is common enough in Europe where edge-of-town Supermarkets often occupy the same building as smaller shops – jewellers, bakers, newsagents etc – and Tesco have already tied-into coffeehouse chain Harris and Hoole, bakery group Euphorium and online film service Blinkbox.

Their commercial director, Kevin Grace said: ‘We’ve been doing a lot of thinking about retail destinations and how our stores might become somewhere that people spend more time, as well as shop. With more general merchandise moving online we have a great opportunity to rethink how we use the space in some of our larger stores. We want the dining experience to feel separate from the weekly shop because it’s a place where customers can take a break and relax.’

Being stuck all day in a Tesco sounds like the stuff of nightmares to me, similar to searching for an exit in an Ikea store. I’d question whether this can work outside the South East where retail sales are still buoyant. It all sounds a bit London’ish to me.

So finally, what lessons can be learnt from this: Self-service, free parking, online sales with a delivery service or a more leisure-based experience? Now that you have a long queue of impatient shoppers waiting to be served the dilemma is: How many tills do you need to provide?

At this point you need to study so-called queuing theory developed by Danish statistician Agner Erlang to improve the Copenhagen telephone exchange. Look it up on Wikipedia – this is heavyweight statistical probability stuff used by Supermarkets to calculate how many checkouts they need. It takes into account factors like balking (customers refusing to join a long queue), reneging (leaving a slow-moving queue) and jockeying (switching between queues). Somehow a Poisson comes into it as well – isn’t that French for ‘Fish’? You can also entertain yourself by testing the theory on your customers e.g. who has the sharpest elbows or heaviest handbag etc and gets served first?

Which got me wondering – could queuing theory be used to outwit Bookies? If there are X number of horses in a race over Y number of hurdles then making allowance for balking, reneging and jockeying will queuing theory predict which horse comes in first? I tried this at Cheltenham Gold Cup instead of my usual ‘bet on the jockey, not the horse’ system. And I lost the lot. Boo Hoo. The theory didn’t know that Barry Geraghty and Bobs Worth had won the Hennessy Gold Cup back in December but the Bookies did.

The Gold Cup destroyed my belief in queuing theory and replaced it with barefoot theory. This predicts that you will never see a Bookie’s children walking around in bare feet.