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August 28, 2010 / Mike Biggs

Divide your retail shop into ‘customer type’ sections instead of ‘product type’ sections.

A bold statement, but would it work.  Let’s look at what it means and the thinking behind it:

My suggestion is to divide the store into segments that best suit a particular type of customer’s preferred shopping style, and or a specific LEVEL of needs. This is quite different to the traditional method of grouping which is to put the same kind of products together with different quality, service, cost, and value levels jumbled together.

To group according to the values or personal needs of the customer really makes sense.

I am going to use a farmiliar retailer [to me]; Jaycar Electronics. They are similar to Dick Smith, only they still have all the technical stuff, so it’s a good example in that they have some clearly definable sections in relation to the customers needs.

Let’s suppose we had three sections:

  • Self Serve / Thight ar$es
  • Basic Products with directive service / Balanced spender
  • Premium products / detailed service and advice

Note there is no mention of the product type, or how those products would be used etc.

So what are the customer groups that link to each, and more importantly, what are their separating values.

Self Serve

  • These customers are not looking for advice or help [or by selecting this category they are not entitled to it]
  • Customers who are looking for really cheap deals or are basically ‘tight’ would need to use this section
  • Basic products that may be used for further development or combination to form usable product can live in this section
  • Bargain, and Sellout items can live in this section
  • Low price tier items live in this section, irrespective of their product / range category

Basic Products

  • These customers choose to engage with a salesperson at a basic level
  • The products on offer are low to mid range [quality and price]
  • These products are ready to go, and may require some setup but no detailed work to commence operation or installation
  • These customers are entitled to some service, but time spent must be balanced with their relative spend without being rude
  • These customer are aware that they are buying better than the cheap stuff, but are looking for pragmatic good value and a certain level of confidence that they can rely on the salesperson to be honest and support them in the process.

Premium Products

  • This is the deluxe section of the store, a bit like first class in a plane
  • All the best products are there
  • All the best staff are there
  • You can be sure your ‘problem’ whatever it may be, will be solved and you will have a solution in the form of your purchase when you leave
  • The products are the state of the art items, work well, are well supported, and do not need any kind of technical or other stetup to make the most of them.
  • Customer choosing this section are aware that they are buying the best that this shop can offer, and don’t mind paying the proper price for it

The customer is the one that chooses when they enter the shop. There will be signage and information to be digested, there could even be a maitre d’

Advantages

  • This kind of division deals with difficult customers and timewasters as THEY are the ones who make the decision about which TYPE of buying they would like to engage in.
  • It removes the difficulty of choosing between ‘the cheap one’ and ‘the good one’ as products are separated.
  • It funnels the correct level and type of sevice from staff, which is often squandered on customers who do not deserve it

Disadvantages

  • May cause annoyance and misunderstandings
  • Unless a pentalty were implemented, ‘tight’ customers and time wasters could enter the premium section only to leave without making the corresponding purchase.
  • Customers won’t know what they are missing out on in the other sections
  • Upselling would be nearly impossible

Conclusion

This is a great way of splitting a scenario in a different way to gain some different advantages as well as to understand the different forces in play.

I woud like to see this implemented as it really is a very pragmatic way of funnelling customers. The problem is, most people do not have an accurate self opinion, especially the timewasters and tight ar$es. The sum outcome would be a negative impact on the shop’s image and sales.

The upshot? Looking at a scenario though a different lens is a great way to unearth new processes, insights and new ideas that can improve or change the situation. You don’t have to implement this new way of dividing the store to have much value from it.

You could hold a creative session of the key managers in the business and look at other ways to slice or divide your situation and see what comes out of it.

Please leave your thoughts, or share this on the interwebs via twitter….

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One Comment

Leave a Comment
  1. Anthony / Aug 31 2010 5:41 pm

    As extreme as it is, it does sort of have the same mindset you get from shopping at other stores.

    For example, high classed/expensive/boutique style stores regularly alienate customers who do not fit the target market of the stores products (for obvious reasons). Almost in the same way as seeing that people that shop at Aldi or the two dollar shop do so for the savings.

    A bit of a generalisation, but more than often true.
    I think that the real solution to the main problem you have identified, being ‘dealing with time wasters’ is a greater level of customer service. Focused service at the point of entry directly identifies who your greatest customers are. If the customer can’t specify what they are after, then more than likely they arnt going to be the ones you are concentrating on to make a sale (i.e. “just browsing”). Customer service can be the little extra nudge that turns an ordinary shopper into a more valued customer.

    If anything can sway the decision making processes of your average shopper, its the nearby idling of a CSR waiting for you to make it.

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