“We have three branches of supermarkets in our province which have been successfully operating for fifteen years now. We would like to offer online shopping plus delivery to gain more sales and to differentiate ourselves versus other supermarkets here. Is this a good move?”   - Mildred
 
The advent of large retail chains like Shoemart, Robinson’s, Puregold, and Gaisano in the provinces has posed a dreadful challenge to local supermarkets to rethink their strategy or die. Some of the traditional retailers quietly faded away due to stiff competition and changes in shopping preferences of consumers. It would be interesting to see a study of how some local supermarkets are able to thrive in the midst of retail giants invading their home turf.
 
Your letter is quite scant with important details. I will just assume that none of the national retail giants is in your territory, and that your local competitors are not yet offering grocery shopping online. Many companies across different industries have tried to utilize the online channel to sell their services and products to end-consumers. Most of them failed for various reasons, one of which is the failure to understand how, where and why their target consumer segments prefer to buy. So, before you jump into that online shopping alternative, begin to understand if that will be of value to your target shopper segments.
 
As we do in this column, I will give you some helpful tips or guides to help you eventually decide for yourself if shopping online will bring you increase in sales and high differentiation. 
 
Begin to Segment Your Shoppers on a Per Store Basis
 
Do you know how your shoppers are segmented? What types of shoppers go to each of your stores? What are the buying preferences of each segment per store? What services do they demand? You need to find a way to effectively segment your shoppers so you can serve them according to their service preferences. Will all the segments per store be interested in online grocery shopping?  To answer questions like these, you need to out-source a research agency to help develop the segmentation for your retail company. Yes, it costs! But let me give you a secret how you can implement this without spending your own money.  I can sense I’m really getting your utmost attention now.
 
First, you need to know that some of your top suppliers (especially category captains) would be very much willing to partner with you in this segmentation project.  They need the information so they can also tailor fit their in-store value proposition and allocate their resources more effectively. I suggest you select one or two leaders in each of your top product categories with whom you will discuss this project. Partner with two to three of them.
 
Your case brings to mind how a supermarket in the US segmented their shoppers through a research firm. This supermarket discovered for the first time that their store has three types of shoppers: a) Single, Working - they only buy selected brands and prefer home delivery. They comprise 18% of shoppers; b) Absolute Low Price Seekers – they would normally compare products and prices, they enjoy the shopping experience because of the social interaction it brings.  They comprise 43% of the shoppers; and  c) Efficiency Seekers – they look for fast and efficient buying process. They comprise 39% of the shoppers.
 
They discovered that 43% of segment A shoppers (working, single) are heavy internet users. This means that almost 8% only (i.e. 43% of the 18%) of the shoppers who prefer home delivery are most likely to shop online. Since the numbers weren’t compelling, they dropped the idea.
 
I’m not suggesting you do the same. An attempt to segment your shoppers effectively should already allow you to generate insights and develop strategies.  Happy selling!
 
 
 
 
 
Emilio “Bong” Macasaet III is Partner and Chief Distribution Strategist of Mansmith and Fielders, Inc. (www.mansmith.net), the leading marketing and sales training company in the Philippines.  For inquiries, please email info@mansmith.net, call (+63-2) 584-5858 /412-0034 or text (63) 918-81-168-88. Please also send your marketing, sales, strategy and innovation questions to mentors@mansmith.net.