Actionable Insights From APT's Retail Practice

You got the munchies? We are open

December 23rd, 2011 | Posted by CLepine in Restaurants - (Comments Off on You got the munchies? We are open)

Only five percent of American consumers eat three square meals a day, but they aren’t starving—they’re snacking. Restaurants worried that their high-margin meals are vulnerable to this trend should think about how to capture some of the snack market, or how to lure busy consumers back to sit-down meals.

USA Today reports how chain restaurants are adapting to all-day eating habits: McDonalds is making its new limited-time item the “Chicken McBite” rather than a sandwich, Dunkin Donuts has begun to sell its lunch sandwiches in the morning, many Applebees franchises are extending their hours to midnight, IHOP sells a to-go pancake that fits in a car cupholder, and Denny’s marries breakfast and dessert in its bacon maple sundae.

As these chains demonstrate, restaurants can grab share from conventional snack manufacturers by marketing like them. One way to do this is to embrace aggressive branding—Taco Bell, for example, now sells tacos on a Doritos shell. Another is to follow IHOP in selling take-away food like a convenience store does—the question is how to adjust your type of food to snack portions and commute-friendly packaging.

A restaurant’s correct evolution to the snacking trend requires testing changes one by one, and eliminating the risk of losses before rolling out new products nationwide. Click here to read more on how testing can help introduce new items.

Another Day, Another Two Dollars

December 23rd, 2011 | Posted by Jatin Atre in Restaurants - (Comments Off on Another Day, Another Two Dollars)

Since Wendy’s launched its ninety-nine cent menu in 1989, consumer demand has led to value menus in many fast-food chains, and in this economic climate dollar menus are especially popular.

Rising food costs, however, have shrunk the already small margins on dollar deals. At the same time, cash-strapped customers are less likely to buy the full-ticket items on the menu.

Enter the TWO-dollar menu. What one consumer psychologist calls a “magical price point” has appeared on the menus of KFC, Taco Bell, and, most recently, Subway, USA Today reported. Taco Bell’s take on the two-dollar deal included chips and a drink, and Subway’s two-dollar sandwich is also marketed as a full meal, making the items on McDonald’s dollar menu look like snacks by contrast.

The two-dollar menu might be catching on quickly, but its effect will vary. (more…)

ATM Network Expansion

December 20th, 2011 | Posted by Will Weidman in Financial Services | Uncategorized - (Comments Off on ATM Network Expansion)

JP Morgan Chase recently announced it will add 800 new ATMs in California and four other Western states. Many other banks have also been making investments to expand the ATM network. Investing in ATM expansion is a good idea in our current economic environment if done right and has two main potential benefits.

First, it could reduce the need for customers to transact in the branch. The branch is by far the most expensive channel of service, so this could help banks reduce costs. But to actually realize these cost savings, banks need to understand the impact to the branch on metrics like the total number of teller transactions and transactions by time of day. This could allow banks to reduce teller staffing or cut back on hours while still meeting customer needs. Without understanding the impact on the existing network, banks will simply be adding in more cost.

Second, having a more convenient network could bring in new customers or help retain existing customers. Major ATM network expansion should be accompanied by marketing campaigns to make current and potential customers aware of the bank’s investment. Ideally, banks would experiment with different marketing approaches (e.g. radio, local marketing, or social media) to find what is most effective.

Banks should also measure the impact on new account generation and retention for branches near the new ATMs and identify whether there are particular cases where the new ATMs are most effective to inform future investments. Do they have more of an impact when placed close to the branch or further away? Do demographics or competitive factors influence the effectiveness of the ATMs?

Investing in ATMs can be a smart idea as banks try to find the right service model and make the most of less expensive channels. However, just adding ATMs is not enough by itself and can simply be one more additional cost. To make ATM expansion successful, banks need to market the new ATMs, locate them in the right places, and identify opportunities for offsetting cost reductions in the branch.

Win the Business of Mass Affluent Customers

December 8th, 2011 | Posted by Will Weidman in Uncategorized - (Comments Off on Win the Business of Mass Affluent Customers)

As banks struggle to maintain revenue and profitability with low rates and increased regulation, mass affluent is a segment where banks can achieve success in this difficult environment. For example, Bank of America recently reported strong growth in mass affluent despite the significant challenges in retail banking right now.

In fact, A relatively small percent of customers have always driven the majority of profit for banks.  However, this is even more true today as it becomes harder to make money from customers with smaller relationships (due to shrinking debit card and overdraft fees).  All banks are competing fiercely for these mass affluent customers and the larger, more profitable relationship they bring to the bank.

How can you win the business of these valuable customers?  With the current rate environment, banks cannot easily provide the special pricing that has worked in the past, and the offer would not be that compelling to most customers anyway.  For example, providing a significantly high deposit interest rate may only mean 20 basis points. But banks can still achieve success by focusing on excellent service for these customers and rewarding and recognizing their loyalty. (more…)

Mobile apps and your business this holiday season

December 1st, 2011 | Posted by Jatin Atre in Retail - (Comments Off on Mobile apps and your business this holiday season)

Imagine this scenario: a shopper with a half-filled basket perusing the aisles of your store stops for a moment to inspect an item. She pauses, pulls out her smartphone, and, using one of many apps available for this purpose, scans the barcode pulling up a price comparison that spans both your nearby brick-and-mortar competitors, as well as online retailers.

Depending on what she saw, she may opt to buy out the stock, or, at the other extreme, walk out of the store, leaving her basket behind. Likely, she will simply not buy that item if the price differential is too high and her desire for immediacy too low.

While some shoppers have always compared prices, with nearly 70 million U.S. consumers armed with smartphones and a plethora apps, never has the barrier to price comparison been so low. As of July 2011, smartphone penetration hit 40% of the mobile market, while RedLaser, a popular barcode scanning app, has been downloaded an estimated 12 million times. (more…)