Segment and keep segmenting!

Last November Nielsen published an article called El Retail del Futuro (The Retail of the future - where they define 2 main pillars that lead to 5 trends that will transform the current shape of retailing. Those 2 pillars are Technology and Information availability.

These pillars are translated into 5 transformational global trends impacting the industry:

Portoflio segmentation
Business beyond the store

All five trends, in my opinion, can easily be grouped in one big concept:segmentation. And this powerful concept is the cornerstone for what´s coming for FMCG and Retail companies in terms of future strategies. Attracting, delighting and keeping the shopper should be priority for every leading company.

And what does segmentation have to do with delighting the shopper? Well, the shopper as a unique group of people is kind of unaccurate. The right way to describe is that there are as many shopper types as people in the world. But for business purposes, every retailer (and therefore every FMCG company) have to invest time and resources in identifying the most relevant groups of shopper, that share critical shopping behaviors that can lead to specific strategies and activations.

The most common attributes used for store segmentations are demographics and consumption occasion. I remember that in 2003 when I started serving Wal Mart as KAM for a major company, they already been working on the Store of the Community concept. Basically, they adapted assortment, communication and promotions to the community each store was serving (spanish shoppers, asian, rural, convenience, urban, etc.)

And the other most common attribute used for store segmentation is price. The trick here is that the segmentation is not shopper driven but profit driven. Retailers try to identify stores whose shopper is able and willing to pay higher prices (mainly due to lack of competition in the area or premium competition nearby).

As you can see, the 5 big trends can be summarized as segmentation: segment stores by convenience offering, by assortment range, by price, by shopability or additional services outside store facilities. Each of these attributes should be activated depending on shoppers demand on each area.

The most important takeaway of the Nielsen article is that no type of segmentation work can be done without information. Every company that agree to reach shoppers in a more effective way through the whole path-to-purchase need to invest in information. Shopper research. Basket analysis. Shopping preferences. This is the information era. Possibilities are huge.

And Retail is detail.


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