Consumer decision trees take on shopper decision trees
Call a decision tree what you want, but shoppers don't shop trees.
Consumers don’t shop decision trees. The evidence is overwhelming that shoppers don’t make rational, linear decisions to consider the full breadth of category variety and drill down to a single item selection.
That is not to say that Customer Decision Trees (CDTs) are unimportant. When done well, CDTs are a clear and simple depiction of product consideration hierarchies, and give a guide to product substitutability. This representation of category attributes is extremely helpful in making assortment recommendations and evaluating product development or brand positioning.
However, a CDT is not a planogram. By conflating the two, practitioners in our industry often get themselves in trouble.
Many take planogram development too lightly, thinking of it as tactical, low value work. Yet people who create planograms make critical decisions about what items are carried in which stores, how much space they receive, and how they are arranged – hardly a process of low importance. Ignore it at your peril.
CDTs should exert influence on an effective planogram in two areas:
Assortment: including or excluding specific items should be made with an understanding of the relevant competitive set (the lowest nodes on the CDT signifying most substitutability).
Arrangement: grouping products at shelf in building blocks corresponding to the CDT will help shoppers make sense of and navigate the selection.
Arrangement is often referred to as “shoppability” and it offers two main potential benefits. It helps the shopper find their desired product (which they often decide in advance), and it encourages the shopper to view and compare alternative and complementary products.
These two potential benefits must act in harmony to realize a category’s full potential. When it’s easy for shoppers to find a product, research shows an increase in their happiness, as well as the amount of money they spend and their likelihood of becoming a repeat buyer.
But a CDT on its own is insufficient to develop a winning planogram.
Planogram arrangement must balance multiple priorities, including operational imperatives (e.g., days of supply, sufficient packout), retailer strategies (e.g., corporate brands, retailer differentiation), and aesthetics (blocking similar packages types, sizes, and brands) in addition to the shoppability considerations from a CDT.
There is no singular analysis, algorithm, or software program that can lay claim to generating the perfect planogram, though many have tried. But perfection should not stand in the way of excellence.
While many aspire to be shopper-centric, keep in mind that your interpretation of a shopper-driven arrangement is likely not the same as your competitor’s. When you attempt to create greater visibility for something important to you, there may well be negative consequences somewhere else on the shelf. For all these reasons, retailers maintain caution when implementing change.
Many categories are in desperate need of a refresh, and bold, breakthrough solutions are often the needed prescription. Forward-looking CDTs can help you create strategic options for category reinvention. Test those big ideas so you can predict with confidence, minimize your risk, and secure the acceptance of your retail partners.
TELUS Decision Insight’s CDT method brings the context of the store into the exercise, measures direct substitutability, and allows for the inclusion of your next generation innovation.
Our virtual platform enables you to quantitatively test discrete in-store environments with alternative arrangement, signage, assortment, or pricing.
We are focused on helping our clients make better decisions and apply them to winning retail strategies. We have a passionate, creative, and experienced team to pull it off.