Segment for Gold: Retail Store Segmentation in FMCG

You will find this helpful if you are looking to identify the ‘Gold’ stores – which account for 80% of your FMCG sales – in order to deliver targeted Route to Market execution and achieve higher sales through effective allocation of resources.

Segment for Gold is our Retail Store Segmentation methodology which is part of also Step 6 of our 20 Steps to RtM Excellence methodology. It is particularly useful if you are looking to respond to the changes in consumer behaviour which has occurred since the start of the pandemic.

Do you know how Covid-19 has impacted the behaviour of your consumers?

There is growing evidence to suggest that the pandemic has had a monumental effect on consumer behaviour which has directly impacted consumer goods companies. These include:

• Less people in urban and crowded areas – for example 1 million less consumers in central Paris and 1.5 million less in central London.
• Limited commuting to work, staying in suburbs or relocating – study finds city footfall levels down 45%.
• Not traveling or moving around as much – study shows 65% reduction in people movement in many countries.
• Shopping either online or in different locations –  in some cities retail sales is down almost 40%.

Nielsen has reported significant changes in ‘Golden Store’ rankings i.e. those that account for 80% of FMCG sales:

• 40% of stores moved up in ranking and became more important
• 60% of stores moved down in ranking and became less important
• Retail sales in cities are declining more than 15%
• Retail sales in many suburbs are growing more than 15%

How should FMCG companies respond?

As a rule, when there is a significant change in the market, such as mass shifts in consumer behaviour, footfall & habits, competition, pricing, launches, switching, etc. FMCG companies must act quickly or get left behind.

In our experience FMCG companies should focus on re-assessing Retail Store Segmentation. In general, this includes the following:

1. Apply the Pareto Principle. Identify the 20% stores = 80% sales.
2. Rank / Order your Retail Stores against specific criteria including:
   • External & Internal Market Analysis including Footfall, point of interest data, volume, share, population, location, consumer profile & behaviour, size, format, channel, etc.
3. Cluster Stores into specific groups -E.g. Gold, Silver & Bronze stores.
4. Target Stores & Audience based on segments -E.g. resourcing, promotions, pricing, assortments, positioning, etc.
5. Benefit from targeted execution – maximising resources and increasing sales.

At Enchange we are Route to Market experts and have conducted Retail Store Segmentation for multiple clients.

Segment for Gold is our Retail Store Segmentation methodology. It provides FMCG companies with insight and targeted RtM execution to drive sales.

Deliverables of the Enchange approach are the elements of Targeted Execution:

1. Where to Play
   • Post-COVID vs pre-COVID analysis
   • Consumer Behaviour / Footfall changes
   • Macro & Micro Segmentation – channel, geography, stores, etc.
   • New Store Clusters
2. How to Play
   • Portfolio & Mix, Assortment, SKUs
   • Execution & Toolkit (order capture, POS/display, coverage, etc.)
   • Resource allocation (people & money)
   • Reach, channel & geography approach & focus
   • Role of Distributor/Wholesaler/3PL/Partners
   • Set Execution Priorities (In store Activation)

All Enchange Route to Market Programmes Deliver a Sales Uplift, Typically Starting at 15%

What you should do now

• If you would like to benefit from Segment for Gold – to address your Retail Store Segmentation requirements, contact us for a Free RtM Session.  During this free phone consultation, one of our experts will discuss your  goals and suggest strategies to achieve targeted RtM execution to drive sales.

Additional RtM Resources

• Find further details on each step of our 20 Steps to RtM Excellence methodology on our blog. See related posts here.
• To understand what is involved in distributor assessment download our  Distributor Assessment Guide here.
• To understand the capability of your distributors to achieve your sales objectives download our Free Distributor Assessment Tool here.
• To learn practical, hands-on advice on how to improve your FMCG distribution operations in CEE and developing markets download our RtM & Distribution in CEE E-Book here.
• For help with implementing 3rd Degree Partnerships download our Guide here.
• Download our step by step guide to review, build  and/or transform your RtM Strategy and Execution.  20 Steps to Route to Marlet Excellence – A Guide to Implementation is availble here.