Actionable Insights From APT's Retail Practice

Menu Innovation Using Transaction Data

July 24th, 2013 | Posted by CCorman in Restaurants - (Comments Off on Menu Innovation Using Transaction Data)

APT President Patrick O’Reilly talks about how restaurants are using Test & Learn and Menu Analyzer to understand the true incremental impact of menu changes on key performance metrics before taking an action across their entire network.

For What It’s Worth: A Different Look at Value in Today’s Economy

July 23rd, 2013 | Posted by CGreenbaum in Retail | Uncategorized - (Comments Off on For What It’s Worth: A Different Look at Value in Today’s Economy)

The recession may be over, but the American consumer doesn’t know that yet. Even as the economy improves, spending habits acquired during the recession are sticking. A recent survey, reported in Time Magazine, found that more than half of respondents are saving more, reducing debt, and building an emergency fund. A National Retail Federation survey similarly found that since the payroll tax break expired at the end of 2012, consumers are spending less overall, dining out less, limiting travel, and reducing energy use. All of these changes point to the fact that consumers are still looking for value in today’s retail economy.

Millennials, the cohort that has grown up in an era of economic uncertainty, increased frequency of recessions, and lingering difficulties, have acquired value-oriented spending habits too. Nearly half of millennials will “go out of their way to shop at stores offering rewards programs,” according to a recent study. 56% are willing to switch brands for a promotion, and 63% have purchased off-brands to take advantage of a sale or promotion.

As millennials continue to comprise a larger percentage of the American consumer market, and older generations change spending habits to save more, spend less, many retailers are asking themselves, “What is value, and how do I deliver it for my customers?”

The challenge of answering this question and attracting value-conscious consumers is by no means a simple one. For example, J.C. Penney overhauled their pricing strategy in the name of delivering value for their customers. Then CEO, Ron Johnson, announced that he would simplify their pricing strategy to deliver Every Day Low Prices (EDLP). He slashed prices and got rid of sales and promotions. However, customers abandoned the retailer, sending shares nose-diving and same-store sales down 25% in less than a year. Within a year of the change, promotions were back, and Ron Johnson was out. The lesson taught the retail community that there are multiple approaches to “delivering value” and it is difficult to predict how value shoppers will react to pricing changes.

Losing Market Share to Retail Meals?

July 18th, 2013 | Posted by CCorman in Restaurants - (Comments Off on Losing Market Share to Retail Meals?)

A recent report from the NPD Group suggests that restaurants are expected to lose market share over the next decade to retailers selling prepared foods, who are estimated to increase sales in this category by 10%. This growth is likely to have the greatest impact on QSRs and fast casual chains, who offer a similar combination of price and convenience. It will be interesting to see how this trend impacts pricing, marketing, and menu strategies over the coming years. Stay tuned…

How can Kroger and Harris Teeter optimize innovation post-merger?

July 16th, 2013 | Posted by Dan Schreff in Retail - (Comments Off on How can Kroger and Harris Teeter optimize innovation post-merger?)

In a recent Progressive Grocer article regarding the Kroger/Harris Teeter deal, APT CEO Anthony Bruce discusses the importance of testing business decisions prior to broad roll-out: “Kroger and Harris Teeter are both known for continually introducing innovations to drive growth. The challenge going forward is that some of the programs that may have been successful in one banner may not have the same impact on the other. For example, what worked in Kroger stores may work well (or not at all) at Harris Teeter, given differences in geographies, customers and brand positioning.” Post-merger, Bruce said, it will be critical “to systematically test new ideas prior to broad rollout to de-risk innovation and allow for optimal targeting and tailoring.”  Click here to read the full article.