Aisle Redesign - English

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Aisle Redesign: A Case Study

A major North American grocer was evaluating a beverage aisle designed to drive traffic to the center of the store.

Initial analysis indicated a slight sales lift but not enough to pay back the cost of the program.
APT automated de-averaging revealed that the program caused initial disruption to sales, followed by a larger long-term sales lift than previously observed; in addition, APT identified a shift toward higher-margin premium products.
APT segmentation analysis was used to identify the most profitable variation of the program, as well as the types of stores where it would generate the most profit.
The optimized rollout generated millions of dollars in incremental profit for the grocery retailer.

The Company:

A major North American grocer with 500+ stores

The Challenge:

Preliminary analysis at a major grocer with over 500 locations showed that the aisle feature slightly increased beverage sales, but the results were not compelling enough to drive a clear decision.

The initiative presented two opportunities for optimization. First, the program came in four variations – “Gold,” “Silver,” “Bronze,” and “Simplified Bronze,” and the grocer wanted to know which of the four program variants drove the highest sales increase. Second, the grocer wanted to identify the demographic segments most likely to respond positively to the feature. The grocer used APT Test & Learn™ software to perform a detailed analysis, and identify winning characteristics to be used in a targeting model.

The Solution:

Using APT's Merchandise Optimization solution, the grocer was able to automatically track the performance of stores undergoing the redesign and compare it to the performance of well-matched control stores during the five months since the aisles had been changed.

In part, the APT software reinforced the results that the grocer had already seen. Although beverage sales were nominally higher in test stores, the increase was minor compared with historical noise in beverage sales, and statistical confidence was not high enough to drive a management decision.

However, the results were more complex than they initially appeared. The APT software was next used to perform customizable time-period analysis, producing clear findings. This time-series view revealed that the installation caused initial consumer disruption, and this disruption had disguised a long term trend far larger than the lift that had initially been observed. The initial disruption was followed by a spike in sales as consumers restocked, and, after three months sales, reached a stable plateau. On one hand, the grocer was disappointed that the feature was causing sales disruption – but, on the other hand, the long-term impact of the program was much better than previously thought.

Although the sales impact was moderate, it masked a much larger shift in purchasing patterns. Automatic drilldown analysis using APT’s software revealed that consumers were moving beverage purchases toward more premium choices. As a result of this shift, improved gross margin rate meant that the program was more profitable than sales analysis alone would suggest.

Next, the APT software was used to evaluate the four aisle configurations. All four variants resulted in initial sales disruption; the “Gold” option drove significantly higher sales, followed closely by the “Silver” option. The “Gold” option was, however, the most expensive, and from an ROI perspective, “Silver” was therefore more profitable.

The software also quickly analyzed a wide range of store characteristics to identify those most correlated with superior store performance. This store-based segmentation analysis showed that the program worked particularly well in stores with trade areas serving a younger demographic.

The Results: