Actionable Insights From APT's Retail Practice
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“Uber” Convenient: The Impact of Grocery Delivery Services

September 30th, 2014 | Posted by Katheryn McKee in Retail - (Comments Off on “Uber” Convenient: The Impact of Grocery Delivery Services)

With the announcement last month of its Corner Store experiment in Washington D.C., Uber joins a list of prominent companies, including Google and Amazon, that are experimenting with grocery delivery services.

Beyond whether these services are profitable for the delivery companies (i.e. Uber, Google, and Amazon), the proliferation of grocery delivery services raises a number of questions for grocery retailers, including:

  1. Should grocers that don’t currently offer delivery service begin to introduce it? How does delivery’s effectiveness compare to other similar services, such as “Click and Collect”?  Should they do both?
  2. Will impulse purchases and cross-sell decrease as a result of these programs (e.g. merchandise at checkout counters, end caps, etc.)? If so, will transaction frequency increase enough (from both new and existing customers) to offset a potential decrease in basket size? How does this vary by location?
  3. Should grocers build their own delivery service or partner with services like Uber that already have the necessary infrastructure in place? Or both?

These questions are not necessarily new ones—this blog has discussed similar topics before, such as “click and collect” (read more here). However, considering the fact that Google, Amazon, and Uber have all introduced similar programs, these services may gain more traction in the coming years.

As with all new product or service introductions, anticipating the profit impact of delivery for grocers is challenging without first trying it.  Testing the service in a few markets will allow executives to gauge whether these initiatives are profitable, and help inform the optimal rollout strategy.

5 Things to Consider Before Removing Menu Items

September 30th, 2014 | Posted by MHarper in Restaurants - (Comments Off on 5 Things to Consider Before Removing Menu Items)

Many restaurant organizations make menu rationalization decisions based on basic financial metrics like item sales and number of checks. However, incorporating more robust check- and guest-level metrics into the analysis can help restaurants make more profitable decisions. Five important metrics for executives to consider when identifying which items to rationalize are:

  1. Item Profitability: Start by identifying items that have low sales and margin. With this list, executives can begin digging deeper into the analysis.
  2. Attached Sales / Margin: Consider the sales and margin associated with checks containing each item. If an item has low sales and margin on its own, but high sales and margin in the rest of its check, restaurants could be losing much more than they initially realized if they delete that item.
  3. Item Loyalty: Focus on items with lower item loyalty to increase chances that demand will transfer to other, similar items (e.g., guests who used to order a Grilled Salmon sandwich might switch to a Grilled Chicken sandwich).
  4. Guest Lifetime Value: Make sure to recognize your best guests. Take into account not only item loyalty on its own, but also which items are ordered by your most loyal guests to reduce the risk of losing those guests.
  5. Guest Satisfaction: Encourage guests to shift to higher satisfaction items by removing those items with lower satisfaction.

Click here to read about how one restaurant evaluated these metrics to create a new menu to build guest loyalty.

APT Index Reports August Restaurant Sales Up 3.3%, Highest This Year

September 18th, 2014 | Posted by MHarper in Uncategorized - (Comments Off on APT Index Reports August Restaurant Sales Up 3.3%, Highest This Year)

Restaurant same-store sales increased 3.3% in August 2014 compared to August 2013, with check size up 3.2% and transactions up 0.2%, according to data from the APT Index. Areas that performed better included those where unemployment decreased and where median income is less than $50K. Click here to view the top and bottom performing cities.

APT Index Reports Restaurant Transactions Down 1.5% in Q2

September 17th, 2014 | Posted by MHarper in Uncategorized - (Comments Off on APT Index Reports Restaurant Transactions Down 1.5% in Q2)

Restaurants continued to struggle to drive traffic in Q2 2014, according to data from the APT Index. The APT Index showed that same-store restaurant transactions were down 1.5% from the second quarter in 2013, while same-store sales were up 0.8% and check size was up 2.4%. The APT Index, generated based on actual sales data from tens of thousands of restaurant locations, provides additional insight into restaurant sales performance, showing that the five worst performing states were in the Northeast. These states were New Jersey [-4.6%], New York [-2.9%], New Hampshire [-2.6%], Connecticut [-2.3%], and Pennsylvania [-1.0%]. We can break these comps down further to understand how performance varies by local market characteristics. In areas where temperature increased in Q2 2014 versus Q2 2013, the APT Index reported that same-store sales increased 1.1%, whereas sales were up only 0.4% in areas where temperature decreased. Additionally, the Index showed that areas where median income was less than $50K had a 2.0% sales increase, while areas where median income was $50K or greater had a sales decrease of 0.2%. With specific data points like these, at the national level and for each specific restaurant, executives can begin to understand their “true comps” after accounting for uncontrollable factors in the surrounding environment.

Banks Think Bigger than Free Toasters

September 17th, 2014 | Posted by JDouglass in Financial Services | Uncategorized - (Comments Off on Banks Think Bigger than Free Toasters)

As competition closes in on all sides for retail banks (e.g., growth of online-only providers, new mobile players, brand consolidation, and more), organizations are doing all they can to bring in deposits. Adding to the pressure, rates are expected to rise fairly soon, which makes it essential for banks to acquire new accounts now. Just like community banks of generations past, financial institutions today are enticing customers with incentives and “freebies” to spur new account generation. However, this isn’t your mother’s free toaster! Today’s marketers are offering cold, hard cash to customers who meet certain requirements. This raises the essential question for bank executives: is this all worthwhile in the end? Are we needlessly spending hundreds of dollars per customer to increase new account generation? How can we know the exact payoff of such offers, and what can we do to make these programs as profitable as possible?

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August Retail Sales Up and Sales Performance on Tax Free Weekends 25% Higher

September 11th, 2014 | Posted by MHarper in Retail | Uncategorized - (Comments Off on August Retail Sales Up and Sales Performance on Tax Free Weekends 25% Higher)

Retail same-store sales increased 0.3% in August 2014 compared to August 2013, or $1 billion, according to data from the APT Index. The APT Index also showed the states with highest sales performance during Tax Free Weekends. These states included Massachusetts (+63%), Tennessee (+43%), and New Mexico (+34%). Click here to view the top and bottom performing cities in August.

Is It Time To Take Your Space Planning Beyond Average?

September 2nd, 2014 | Posted by CCorman in Uncategorized - (Comments Off on Is It Time To Take Your Space Planning Beyond Average?)

When Isaac Newton famously created his third law – “for every action, there is an equal and opposite reaction” – he may not have known he was also talking about allocating space within a store. Space planning involves a series of trade-offs whereby when one category receives additional space, another category loses space. Newton was only partially right, though. Yes, when one foot is given to Category A, Category B must lose one foot of space. However, the sales impact is not usually equal and opposite. Every category generates different sales per unit of space. Even more importantly, every category generates different marginal sales, that is, the amount of sales it generates for each additional foot of space it receives. (more…)