An article written by Rhys Jones, Director of Retail Alchemy, for FMBE Magazine which poses the question around just how much time should clients be spending in store to make the most put of their visit.
A commonly asked question by many of our clients is exactly what amount of time they should be spending in store. After all, as the saying goes, ‘time is money’ and optimising the time you spend in store is crucial to ensuring that maximum possible ROI is extracted from a visit.
But how do we go about measuring the optimum time? The answer, as it turns out, lies within a fundamental economic theory called the law of diminishing returns. First postulated by famous economists like Adam Smith and David Ricardo, the law states, basically, that there will come a point where adding additional amounts of a raw material that is used in a production process will actually cause the incremental gain in output to fall. In classical economics, this fall was attributed to a decrease in the quality of input raw materials as more and more were used, but the same logic can be applied to activities typically undertaken on a field visit in-store.
Take, for example, merchandising activity within FMCG: initially, fixing on-shelf gaps in a store that has many gaps will provide a high rate of return vs the cost of time associated with visiting that store. However, as more and more gaps are filled, there will come a point where the gain in sales from fixing an additional on-shelf gap does not outweigh the cost associated with the additional time required to fill it. Similarly, but perhaps less obvious, is the relationship between time spent running technology demonstrations in-store and the rate of customer conversion to sales as a result of those demonstrations. Too many demonstrations and the quality of those demonstrations suffers: too few and your ability to catch the right consumers at the right time reduces.
Of course, all of this is just a theory without the empirical evidence to back it up. Our work with a range of different clients for tens of thousands of field visits across many different categories has allowed us to prove that just such a relationship exists:
Interestingly, although time in-store varies from client to client, category to category and activity to activity, one overriding theme emerges: that clients, as a whole, simply don’t spend enough time in-store as they should. Our findings suggest that our clients should increase time in-store by anywhere between 7.7% to 46.9% in order to maximise ROI. Quite clearly then, agencies need to give equal thought to optimising time on visit if they are to truly maximise the efficiencies of their operations and in turn deliver maximum value to their clients.