How franchisees are benefiting from product category alignment strategies

product category alignment strategies
The right analysis can unlock the secrets to each store sales potential. (Source: Supplied)

One of the many changes to come out of Covid lockdowns is the hybrid work from home model most businesses in the services industry have adopted. This has meant less people in the office and more shopping locally wherever they live.

Geotech Information Services has seen this as an opportunity to provide greater clarity for franchisors in terms of retail precincts that have increased transactional activity and spend, as well as how consumer spending has changed and what areas now provide stronger opportunity for growth.

Another element to what we have seen is the need for franchisors to consider how to better align the products and services they offer with the types of people now frequenting their stores.

We call this Product Category Alignment Strategy Modelling. To break it down, we would normally model total store sales across the entire store network to determine the variables highly correlated to store sales performance. We call this “identifying the key sales drivers” which provides the business clarity around what is really driving sales, so they can focus on the things that matter.

Taking this a step further would then be to model store product category sales to identify the demographic variables driving individual products. Some clients have a very diverse product range and this type of analysis is critically important. Two such examples are:

  1. Clark Rubber
  2. BBQs Galore

Both brands operate in the “big box” segment, offering a diverse range of products in every major market in Australia and much more complex than your average franchised business.

Clark Rubber

Clark Rubber sells pools/spas as well as foam and rubber amongst other ancillary products.

Naturally you would think pools would sell better in warmer climates which may be obvious, however, what about their other products? Interestingly the demographic skew for people buying pools is not what you think it might be and completely different from consumers spending on foam products.

The bottom line is that it is important to understand the relationship between different products and types of consumers likely to purchase them. It is definitely not a one size fits all so undertaking Product Category Analysis has flow on effects for operations and marketing. It does not mean setting up and merchandising every store the same way.

BBQs Galore

BBQs Galore also has a diverse product range from BBQs, heaters (indoor and outdoor), furniture, as well as camping, garden supplies and even beer and wine. Given BBQs are their core business, you automatically assume that sales would be higher in warmer climates? Actually, you’d be surprised that state market differences have a significant affect on sales.

How do all these products interact? What’s the correlation between BBQs and heaters? By diving deep into Product Category Analysis, we can unlock the secrets to individual store sales potential. This analysis will help operations and marketing align the products most likely to sell within the demographic skews of the brand.

These two examples might seem extreme, however we are seeing this type of analysis benefit the pharmaceutical, liquor, convenience, food and clothing industries in particular. Intuitively a brand like Kathmandu should sell more puffer jackets in Southern cooler climates, but the types of consumers buying this type of product in the greatest numbers might not be who you would expect.

The bottom line is that without proper analysis and an integrated operations and marketing strategy that includes demographics, catchment population, state market bias, and even store size can be costing individual franchisees money in lost product sales through misalignment of product demand.