With increasing costs of doing business and high competition from industry rivals, businesses are feeling the pressure of maintaining reasonable selling prices and gross margins. So, suppliers and retailers are finding new ways to package better through store profiling, in order to improve the return on investment in stock, marketing, and pricing.

So, What is Store Profiling?

In simple terms, store profiling refers to the process of identifying the key store characteristics and attributes that directly impact the store’s range, merchandising, advertising, promotions, and pricing. For instance, a supplier or chain of stores can enjoy economies of scale by simply grouping stores with the same set of characteristics together, allowing for more targeted space management, merchandising, and promotional and advertisement propositions to be developed cost effectively.

Store profiling is the exact opposite of the “one-size-fits-all” approach. It allows a store to specifically target key shopper groups and competitors to optimize floor and shelf space, and employ the most effective marketing tactics. This ability to focus on consumer needs and wants cuts down on waste:

Wasted Investment In:

• Holding stock that will soon become obsolete
• Allocating shelf-space to slow-selling lines
• Discounting lines with limited appeal to the store’s shoppers
• Advertising and promotions that do not encourage shoppers to spend more or shop more often

How Store Profiling Works

There are two ways that a retailer can undertake store profiling. First is profiling the total store assists in the development of the overall store offer, marketing campaigns and store layouts / dept. placement; and second is profiling categories within the store to provide direction as to how to maximize shelf layout, category ranges, promotional support, and pricing levels.

After defining a store profile, the next step is to thoroughly review the ranging, pricing, merchandising, advertising, and promotional activities of the store in order to identify areas of waste and missed opportunities. With this kind of information, the retailer can develop and implement action plans that address the problems and opportunities, refining the store offer to optimize operational efficiencies, shopper appeal, and competitive advantage.

Some independent store owners and managers probably already manage their stores on the basis of this process, though in an unstructured, informal, and inconsistent way. Using a formal and structured approach can lead to even greater improvements.

Monitoring the Effectiveness

After profiling the store and implementing an action plan, you need to determine how well the plan is working. One way to do this is by comparing the performance of the store against one or more “benchmark” stores, using information obtained from sales results or comparing similar suppliers and third-party distributors. Applying data analysis models will allow retail teams to determine the asset and attribute configurations that achieve the the best results. In the process your teams will come to learn where investments in new fixture and communications will net the best ROI.