How to Get Local

 

Tough sales and a wary consumer have moved several big retailers to focus on "getting local".  Getting local is defined as providing an assortment and in-store experience that speaks specifically to an individual store's customers.  WalMart and Macy's have been in the news recently and are both investing time and money on this goal.  This is not just for national/international chains.  Every retailer with more than one location can benefit from this strategy.  Here are some admittedly high-level thoughts from someone who has actually been responsible for localizing assortments.

Ask yourself this: do you think that the customer in Miami is the same as the customer in San Francisco, in Kansas City, in New York, in New Orleans?  Even if you are in one region or one city and have multiple locations, do you think all your customers are the same?  Of course they aren't.  Do you think they will appreciate it if you demonstrate to them that you know and respect that?  Of course they will.  The key to winning in retail has always been getting the customer to drive by your competition to shop in your store.  
  
While this is certainly not the only element of winning this loyalty, your customer will definitely prefer your store if you demonstrate that:

• You have recognized and respect the fact that you're doing business in their neighborhood.
• You have taken the time and energy to understand their specific needs and preferences.
• You have responded with an assortment that speaks to these needs and preferences.  

The first step is to determine the differences and degree of differences between the stores.  There are many ways to do this - community demographics, census information, outside services, and so on.  While these are all useful, they share one common shortcoming - they only tell you about the people that live in the community.  They don't tell you much about the people who are shopping in your store and what they like/dislike about the store.  You can also (and should) do a gap analysis of relative performance by category by store to highlight the variances. 

The most powerful way to get at this information, however, is also the simplest - just ask.  Start with the associates in the store.  They are with the customer every day.  In an earlier post, I discussed the power of having a strong relationship between the field and the home organizations.  That relationship is a critical element of success here.  This communication must be structured, specific, and quantifiable - what is unique/different about the customers in each store, what percentage of the total base does this represent, what are they asking for that we don't carry, what are the local independents carrying that we don't carry that is consistent with the brand, etc., etc.  Again, be specific - vendors, style numbers, price points, UPC codes for products you don't carry along with the number of competitors carrying the product, number of requests the store is getting for these items.  Typically, you will find that the difference in preferences fall into relatively few dimensions with some overlap - ethnicity which can drive sizing and color preference, geographical/climate, and average family income.  The good news is that just a 5% allocation of store level inventory towards location-specific merchandise can make a powerful impact.  The key is getting the maximum exposure and credit for these store-specific buys.  

As an example, in certain parts of Miami, there is a large Cuban-American population.  They enjoy a very strong, very sweet coffee.  Their preferred way to make this coffee is in a relatively inexpensive stove-top Italian espresso maker.  Filling a drive-aisle endcap with these coffee makers costs around $500 (cost) and sends a strong message that you recognize and respect who shops in this store.  The biggest challenge is keeping the endcap filled.  Regardless of the business you're in, there are hundreds of examples of this around the store if you take the time and energy to look for them.
  
Now for the hard part - managing the complexity of varying assortments by store.  The impact (and resistance) comes primarily from the merchant organization.  From a merchant point of view, the time it takes to negotiate and buy items for a single store is the same time it takes to make a chain-wide buy, but lacks an attributable lift in chain-wide sales.  Secondly, this is a headache for whoever is responsible for managing store presentation since this means managing multiple presentations simultaneously, also without an attributable bump in chain-wide sales.   Lastly, it adds complexity to the field management organization since there will now be structural inconsistency from store to store.  Making this work requires shared responsibility and authority between the home office and the field organizations.  It also entails reviewing and adjusting job responsibilities and reward structures along with high-level recognition for the inevitable success stories.

The final, and biggest, hurdle is Newton's First Law - Inertia.  Making this work means change in process.  In some cases, it is a change in company culture.  Making a change like this is difficult when business is good (why should we?).  Making change when business is tough is just as hard (can we risk it?).  Getting the organization over this hurdle requires leadership - from the very top on a sustained and consistent basis, visible throughout the organization.

In the current environment, the winners will be those who give their customers a reason to drive past the competition to get to their stores.  This is a powerful strategy to help realize that dream.

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