Merchandising Profitability Now Easier to Determine

The effect of displays on sales of identical products will vary widely, depending on the class of trade. That is the broad conclusion of recently released data from Information Resources Inc. The Chicago-based scanner data research firm has just begun to release scanner data collected from mass merchants and drug stores. Although IRI has been collecting scanner data from grocery stores for more than five years, it has only been able to gather drug store and mass merchant scanner information for only a little more than a year.The chief reason data from these channels has not been available until recently is twofold: Drug stores and mass merchants were much slower to employ checkout scanners and they were less willing to part with the data. More than 500 drug stores, including major chains (such as Eckerd, Walgreen and Osco) and deep discounters (like Drug Emporium and F&M) make up IRI's drug store sample. Mass merchandisers include Wal-Mart, Target, K mart and others.IRI's InfoScan service now gathers data that will allow product marketers who sell their products in all of these classes of trade to better analyze their promotional activities. At the request of P-O-P Times, IRI analyzed the impact of display and discount on the two leading brands in 18 product categories in all three environments. Previous issues looked at six different categories, but all 18 have been combined in the accompanying chart for this issue."Our studies have shown that 'light' buyers in [drug stores] are much more likely to be aware of merchandising and to act on it and to buy more" explains Linda Boland, vice president of market resource analysis for IRI. "So this really speaks to the importance of understanding how merchandising works in drug stores."When we first began looking at drug store data and shopping patterns, there were a lot of indications that merchandising was a key element to look at when trying to decide how to market the same product to different outlets. The shopping frequency and the amounts spent per trip are very different in food stores than they are in drug stores."The access to data such as these, explains Boland, will give product marketers the ability to create their own profitability models based on the measurable impact of display, discount and feature advertising response. While such information has been available from grocery stores for several years, for marketers who sold the same products in other classes of trade, such studies required gross assumptions.But Boland added that the learning process that was necessary with using scanner data from groceries should be significantly shorter with new data from mass merchants and drug stores.

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