The Catalog Market - Catalogs That Sell Catalogs

Along with other cataloging techniques, we'll cover the five "Ps" of cataloging:

1. Positioning
2. Presentation
3. Production
4. Personalization
5. Persistence

Understanding these will give you insight into how the industry operates and the unique advantages that catalogers have built for their companies.

A catalog, in retail terms, is a "shelf' that relies on direct marketing techniques. It can encompass education as well as entertainment. This is not just due to the inherent nature of the catalog—the fact that it's a portable picture book. It's also due to the diligence the industry has given to effective presentation including compelling artwork and persuasive copy. Even several business-to-business catalogs have created interesting dynamics in their books and have added significant value over the years. Trade catalogs may include sidebars explaining specific techniques or procedures and are often perceived as reference materials as well as sales vehicles.

Because the catalog industry is so dependent on repeat sales, it has been critical to develop a rapport with customers by mailing frequently and using effective promotional techniques. Due to these techniques, catalogs have gained perceived value that other shelves have not. Customers often keep catalogs even when they are out of date.

The catalog industry is segmented into business-to-business (B-to-B) and home- or consumer- focused mailers. The two often differ in the size, complexity, and frequency of publication. The business-to-business market varies depending on the industry it supports. Frequently, the catalogs are large reference books designed to facilitate both routine purchases as well as those, infrequent, hard-to-find product searches. These catalogs are positioned primarily for the businesses they serve, and within an industry, it is sometimes difficult to tell them apart. They are often supplemented with more frequent catalogs featuring specials and promotions.

Home- and consumer-based catalog firms, however, have learned to segment along vertical markets and have flooded the market with specialty catalogs. Many catalog firms have decided to focus on more narrowly targeted catalogs for two reasons. First, catalogers have become more proficient at targeting consumers effectively. Secondly, catalog firms found they could cut costs and deliver more timely and relevant materials by creating smaller but more frequently mailed catalogs.

Specialty catalogs often feature only one category. There are catalogs specifically for popcorn, chocolate, shoes, hams, rings, and T-shirts. Sports and hobby catalogs specialize in virtually every activity imaginable. These catalogs bring new meaning to the term "armchair shopping."

Whether a business-to-business or a consumer catalog, positioning serves the purpose of differentiating in a crowded market. Historically, catalogs have evolved in the following ways:

1. First, some companies have spawned vertical-market catalogs from their larger, more inclusive catalogs. Based on historical sales, they have identified opportunities to specialize and have positioned smaller catalogs to fulfill specific needs. They have, on occasion, separated low-volume specialty goods into catalogs that are updated less frequently and cut costs by removing these from the more expensive, larger book. JC Penney focused exclusively on its large catalog until the company separated several specialty categories into smaller flyers. Bridal, special-size apparel, and home & leisure are a few of the vertical specialty markets they serve.
2. Next, retailers have given birth to catalog businesses, and, just as frequently these days, catalog firms have developed corresponding retail outlets—sometimes clearance houses for overstocks. The stores have pre-defined the business and are often the result of emergence on the web. Office product superstores created their own specialty catalogs for frequently purchased items, and sales are supplemented by larger contract stationer catalogs for hard-to-find items. Spiegel owned a thriving catalog business before opening retail outlets to sell discounted overstocks. True hybrids—stores with catalogs designed from the outset to compete on both fronts, are somewhat rarer because most establish one or the other first.
3. Last, some vertical catalog businesses have been created to function in the specialty realm with only a website as an adjunct. Companies with special expertise in a market or those that have embarked on significant research to understand market opportunities are most likely to enter these niches.

Each catalog needs its own identity to create competitive distinction. This position must be firmly ingrained in consumers' minds and deliver a package of products, services, and promotions that meet their needs. Vertical catalogs—catalogs designed for narrow markets—may satisfy product needs, but they must also appeal to the specific customer segment for which they are intended. Because the catalogs are so specialized, the cataloger must know quite a bit about that particular product segment and the corresponding lifestyle of the consumer.

The personality of the catalog is apparent through the use of copy, images, the quality of the paper, and the quality of the products. Graphics and visuals are critical to convey messages. Customers usually browse catalogs rather than read them. Pictures and captions may provide the only opportunity for a cataloger to communicate with his audience.

Other, subtle characteristics, such as the selection of models in the apparel industry, give signals to your customers. It's difficult to gain credibility with older consumers, for instance, if 20-year-old models don clothing meant for the senior consumer. Relevance is key to positioning—especially in the catalog industry where one-to-one marketing is the name of the game.

Today's catalogs are so varied that the industry has spawned a new phenomenon—catalogs selling catalogs. These flyers list a variety of unique specialty catalogs, and the reader can order any of them for a small fee. They fulfill two needs—they create awareness for specialty catalogs that otherwise would be unable to gain distribution, and the responses feed into a database qualifying consumers based on interest while updating current demographic information. In addition to receiving revenue from the sale of catalogs, these firms also receive advertising revenue from the feature placements and are able to sell their databases to other catalogers.

Customer-Retention Methodologies

Most companies focus their activities on acquiring a customer. For example, they may provide a toll-free number for pre-sales information. However, after the customer purchases, she may be required to pay for any support received from the company—including asking questions.

True customer retention and relationship marketing address the entire purchase and support cycle throughout the lifetime of the product and the lifetime of the relationship with the customer. When products need replacement, the hopeful intent is for the customer to return to the company that stood by her side when she needed help.

1. Good Customer Service—A Customer Requirement

Good customer service is not only a customer requirement, it is also a fundamental methodology in a store's customer retention strategy. Nearly three-fourths of online customers surveyed said they would discontinue conducting business with a company if they experienced poor customer service.

For multi-channel stores, this integration becomes imperative. If a customer has a problem with a catalog order, he will not understand why the same company's physical store will not take the item back as a return. But this is still often the case. Now with online shopping, ease of returning products—no matter what the reason—is essential, and some retail outlets now provide for this customer need. They recognize that a customer's bad experience with a store's online business transfers in the customer's mind to all of its sales channels.

2. Privacy and Security

Customers need to know they will be protected while accessing your website. If they feel at risk, they can't offer their loyalty. Guaranteeing their protection is crucial if they are to provide personal information.

Building trusted relationships depends on delivering secure credit card transactions, protecting the consumer's privacy and personal information, gaining permission to contact customers on the web, and preventing virus activity.

There is a direct correlation between offering a strong privacy policy as part of an overall CRM program and increased profits. This information that customers provide is the cornerstone to developing strong customized programs.

Emotionally, the online customer needs to feel safe. Selling names or lists for use by other websites will degrade the trust that your customer has built with you. It may also violate some legal regulations globally.

Credit card transactions must be secure as well. Companies offering ways to circumvent posting card numbers on the web are perceived as providing an extra service. Some creative ways to manage credit card privacy include establishing codes, pre-authorizing by phone, or setting up an Internet or company-only card that will later transform to the authorizer's credit card.

Determine your risk vulnerability frequently by auditing your site. Hiring independent security firms will give you the best results. Verify your system internally often to ensure that your security systems are intact, and find ways to reassure the customer. Anyone can claim that transactions are secure. You must prove it.

Many companies now employ chief privacy officers (CPOs) who operate on the same level as COOs and other executives. Their primary responsibility is to protect the privacy of their customers' personal information. Establishment of the position is in direct response to increasing legislation to protect consumer privacy—especially their medical and financial records. In addition, reports of corporate abuse of personal data has put pressure on companies to ensure that records are not misused and that there is no intrusion into the privacy of their customers.

Employing privacy programs requires companies to conduct complete audits of their systems to determine what information they hold and what they ultimately do with the data. These programs have also been extended to ensure employee privacy and link with suppliers to create seamless protection.

Online stores have access to customers' names, addresses, credit card numbers and other sensitive data. It's prudent not only to protect the information from web hackers, but also to secure the information within the company itself.

The Customer Lifecycle

How do you monitor your customer throughout the lifecycle? Each customer enters the buying process at a different stage. This is most apparent with technology products and is not necessarily transferable to a commodity.

However, the Internet is, in essence, a technology product from an adoption perspective. Understanding how the customer interacts with your site or your products and when will help you target the correct intervention point. Pinpointing your communications to lifecycle stages will avoid a shotgun effect and will solidify your relationship with your customer as an evolutionary process.

Identifying Your Most Valuable Customers

You can identify your top customers by analyzing historical sales for dollar volume and frequency of repeat purchases. The data must be carefully analyzed because repeat customers can be more valuable over time than one-time, large ticket item purchasers. This analysis must then be matched up with the demographics and other attributes and characteristics you've previously identified in your customer segmentation. Integrating all of these elements gives you a good picture of your key customers. You will also need to include customers you want to have in your cultivation plan.

The opportunity equals the combination of customer retention and the value of all future profit plus those customers you deem to be potentially valuable over the lifecycle—minus the investment required to keep and to acquire them. It also includes future profit made by referrals. Prospective customers who visit your website prior to purchase are much more likely to become buyers than to become non-visitors.

Investments in personalization, promotions, and communications depend on the ranked value of your customers.

It's equally important to establish the identity of the consumers that do not measure up. Spending time and money on this group drains the company of the ability to cultivate new and more attractive customers.

Direct mail companies use a similar technique to determine their mailing investment to each customer segment. After dividing the customer base into ten equal groups, they then rank based on profit potential. These companies must ensure the cost of catalogs is worth the ultimate customer value.

After customer segments are defined, the data are incorporated into future forecasts to make product selection, pricing, inventory management, and promotion decisions.

Business-to-Business Relationships

Up to this point, we have used the terms "customer" and "consumer" interchangeably. Consumer package goods companies normally focus on the consumer as the end user and reserve "customer" for other businesses, resellers, and distributors. Manufacturers and retailers with business-to-business relationships know that these customer relationships can be among the most profitable.

A one-to-one system with a company must still focus on an individual. Each functional area will approach the relationship uniquely. Depending on whether you're dealing with a professional purchaser, a technical specifier, or an administrative assistant, the customer's needs will vary. Simplifying routine purchases by offering custom lists or access to prior purchase invoices is critical for those tasked with frequent purchasing responsibilities. Ordering expensive or technical products may require justification and additional information.

Environmental information should be easily accessible along with health and safety materials data. Customized web pages address individual company requirements and purchaser needs. Automated ordering and delivery systems can be linked to other systems for integrated purchasing, billing, and supply-chain management.

Many mid-sized companies worldwide will use or plan to use the Internet to purchase supplies and equipment in the near future. While personal calls by sales reps could be construed as true one-on-one marketing, busy business managers perceive time as money. They don't want a sales pitch: they want to order and receive services their way. Convenience, speed, and cost are the main drivers.

Usage Behavior

We've examined shopping behavior, lifestyle, demographics, and other factors that influence customer purchasing and loyalty. How products are used, at home or in business, may also have an impact on web-based shopping. For instance, if a web designer knows that a customer routinely purchases a spare product in addition to a regular order, he may bundle two products together or offer an online reminder. If segment data confirm that most customers purchase two products together, a promotion may be offered to customers still purchasing the single item.

Historical purchasing data will be useful to monitor usage behavior. The best way to thoroughly understand customers and how they use the products they purchase is to visit representatives of your top segments in their homes or offices. Following them for a day or two will give you invaluable insight that you cannot achieve in a sterile test environment.

The analysis of customer behavior over time must be measured to get an accurate picture of usage. This is best managed with a permanent program rather than a one-time research project.

Predicting the Success of the Customer Relationship

Relationships between customers and merchants are very much like other typical relationships between people. Understanding what makes a relationship successful with your employees, spouse, children, or co-workers helps you determine how to measure a good relationship with a customer.

Relationship studies conducted by the University of Denver indicate that marital failure is predictable to a surprising degree. This means that, for many couples, the seeds of divorce are present prior to marriage. The study was grounded in understanding how to prevent marital failure and determining how prediction can lead to better interventions designed to help couples reduce the risk of divorce.

Dr. Howard Markman, Department of Psychology at the University of Denver has identified the steps in a relationship and potential danger signs and patterns in his book, Fighting for Your Marriage: Positive Steps for Preventing Divorce and Preserving a Lasting Love (JosseyBass, 2001).

Once a relationship is established by two partners, problems can develop. Escalation occurs, which can be resolved, ignored or neglected. Continued neglect implies invalidation, and contempt usually follows. Negative interpretations, withdrawal and avoidance lead to indifference. These are danger signs and patterns of a relationship headed for failure.

The same patterns and principles can be applied to the customer relationship. By reducing risk factors and increasing protective elements, you can preserve a fragile relationship. How the customer "feels" at every point of contact with an online store influences the relationship. Points of contact can be shopping on the website, asking a question of the customer service department, returning a product, or tracking an order. At each of these touch points, a customer must feel important, appreciated and respected.

The large group of people called "customers" must now be narrowed down to specific individuals. When you think of these individuals less as "targets" and more as "partners," you begin to get the idea of how powerful a relationship can be. The customer is not someone we do something "to"—the customer is someone we do something "for." It's a symbiotic relationship in which we have to give something of value.

Shrinking the World

If e-commerce mirrored the actual composition of the world, it would be very diverse. Marianne Williamson, noted author and speaker on world issues, presents a new way to look at the people of the world:

"If we could at this time shrink the Earth's population to a village of precisely 100 people, with all the human ratios remaining the same, it would look like this:

1. There would be 57 Asians, 21 Europeans, 14 from the Western Hemisphere (North and South), and 8 Africans.
2. Seventy would be nonwhite; 30 white.
3. Fifty percent of the entire world's wealth would be in the hands of only six people. All six would be citizens of the United States.
4. Seventy would be unable to read.
5. Fifty would suffer from malnutrition.
6. Eighty would live in substandard housing.
7. Only one would have a college education.

As web shopping gains adoption throughout the world, human factors engineering becomes even more critical. The Internet used to be a domain of technology aficionados and game-playing teens. Truly understanding the customer and designing for the future demands that you stay abreast of the changes in the population at large as well as feel the pulse of the shopping environment.

Major changes are usually addressed at the strategic level of a business. Yet, as soon as a belief about the customer is ingrained in a corporation's culture, it tends to be perpetuated. That's why many major corporations still believe that Internet use in the U.S. is dominated by men.

Subtle changes are even more difficult to acknowledge or track. Continual customer contact, whether through individual or group research, is the primary guard against complacency. Monitoring secondary research and staying in touch with customer advocacy groups will give dimension to growing customer needs.

Often, one channel will spot change faster than another. Even if your company uses only one channel—a pure-play web merchant, for example—it's still critical to understand how the customer shops in a variety of modes, what they prefer in each, and how a best practice can be replicated in another domain. Each channel can learn from the other because they take different approaches toward helping the customer have the best possible shopping experience.

Research on a Shoestring Budget

Research can be classified as primary or secondary. Primary research is new research either conducted in-house or contracted from companies specializing in the discipline. Studies may be qualitative or quantitative, and methodologies vary depending on the nature of the research. Qualitative research is usually conducted in small groups or individually because the intention is to probe for opinions and reactions. Quantitative research requires large sample sizes to validate the findings and usually presents results with some degree of numerical certainty.

Secondary research may be purchased from agencies, consultants, or other research providers. It is also available by contracting on an annual basis with any number of data firms. General or specific information is available on your competitors or customers both locally and globally.

Most often, secondary research can provide general demographic information. In order to capture intimate knowledge of the consumer, primary research is conducted to provide psycho- graphic, attitudinal, and behavioral research.

It's important to differentiate between a customer's attitudes or beliefs and his actual behavior. Normally, asking the respondent about his feelings in a study or focus group—a small gathering of targeted participants—will reveal his opinions and attitudes. But to determine his behavior, he must be observed as he is performing a task. It is most effective to observe the subject when he is unaware he is being watched. This behavior can be observed in a usability testing or other research facility or in an actual shopping environment.

Not all research needs to go through the formality of focus groups or purchased demographic information. "Next bench" research—what typically happens in an engineering environment when a developer asks the person at the "next bench" to do an impromptu or informal test— gives first-pass insight and creates a "best guess" consideration for a model. The model is not perfect, yet it is better than asking no one at all. This method is used more extensively when the product is a technological breakthrough and can relate to new ideas in web design. Later in the process, though, it's important to gain real customer response to the model.

Use caution when testing or researching strictly in an engineering environment, however. Research becomes tainted with "feature creep" that may provide elegant solutions for problems that have yet to be discovered.

This kind of research can be used when budgets are small or non-existent or when timing is short. "Next bench" research in today's environment can be extrapolated to talking with your neighbors, friends, or business associates that most closely resemble your target customers. It can be as simple as asking someone in your office or a parent of your child's friend to give her honest opinion regarding ease of use on a simple website task. For example, you can present a scenario, such as the following example, to test websites that sell clothing and have her search, find, and purchase a product based on the task's directions:

"You have a 14-year-old son who is six feet tall and weighs 135 pounds. On the website (yours, if you have clothing), find a pair of pants that have waist and inseam measurements of 29x34." People search with specific attributes in mind. Most clothing sites do not allow for a search by size. Determining the difficulty through personal testing may help you refine your prototype before moving on to more expensive testing."

Hostage Programs or Loyalty Programs?

The most popular loyalty program among retailers today is the loyalty or affinity card. Consumers are issued a card with the promise of rebates, access to special prices, or promotional merchandise. In exchange, the customer furnishes personal information to the company and allows the monitoring of future purchases.

Since the programs have proliferated, consumers are now inundated with wallets full of plastic or cardboard affinity cards. Each time they make a purchase, they have to search for their "special" cards in order to get discounts that they were able to receive without cards before the programs were enacted.

Few companies have been able to use the data collected effectively. Hallmark has been at the forefront of the movement and is an exception. The card manufacturer created a "Gold Standard" rewards program. Purchases at Hallmark stores are credited to an account developed for each customer. At certain dollar thresholds, consumers are mailed certificates redeemable for merchandise.

Many of these programs, however, have fallen short of their objectives. It's true that companies have been able to collect consumer data. Unfortunately, by the time systems have been designed to utilize these databases, the information is usually too dated. Some firms never even get that far and wind up in a perpetual collection mode, while consumers keep digging for the cards.

In the 1950s and 60s, green and blue stamps were offered with many purchases. The stamps were redeemed for merchandise at special redemption centers. Popular with consumers, the stamps did not differentiate merchants because they were so widely distributed—even gas stations presented them with each purchase. But customers did notice when they were not available. They looked forward to pasting the small stamps into specially provided books so they could ultimately exchange them for luggage, lamps, and dishes. Consumers were disappointed when the stamps were no longer offered. Banks, gas stations, and other industries vying for the same customers supplied them with gifts and cash as substitutes.

If affinity cards disappeared tomorrow, would customers be outraged? Not likely. Some, such as frequent flyer airline programs, enjoy popularity. However, supermarket and drug store cards are often viewed more as an annoyance. The key to profitability is building long-term relationships with customers, and that requires connection and interdependence.

The true measure of loyalty as opposed to a hostage situation is if the customer would continue to purchase or use a service if there were no monetary incentive. With the lure of valuable hotel points and frequent flyer miles, how would a company know that the customer would stick by them if those programs were no longer available? Is the customer loyal to the company or loyal to the program? It could be that a customer is just waiting for something better to come along, and when it does, he will switch.

Measuring loyalty helps you track results over time. An index based on value, intent to recommend, and intent to repurchase is a good indicator of the degree of a customer's loyalty. Current loyalty program offers must be factored in, however, because programs may or may not be ongoing. Comparing the loyalty index during and after a program gives you a more precise loyalty metric.

Online Retail Trends to Watch

The future is difficult to predict. But the following trends are in progress and will continue to pick up steam as time progresses. Some, like CRM, will become a condition of doing business in the future rather than a trend.

1. One-to-One Marketing/Loyalty Programs

One-to-one marketing programs or customer-relationship management programs (CRM) are the latest trend in retailing, web-based marketing, cataloging, and manufacturer relationships. Retailers have jumped on the bandwagon, looking for new ways to create connections with individuals.

One goal of CRM programs is to provide singular insight of all customers and every interaction they have with a retailer. The main goal, however, is to act with this information in mind every time a customer visits a store or makes a transaction. That will be the major transformation in retailing in the future. Any loyalty strategy, of course, will need to employ offline and online marketing. In the future, customers most likely will refuse to provide their information to more than one agent in the same company. This will force businesses to integrate customer information.

2. Customized Programs and Services

As an adjunct to their CRM programs, retailers will be adding customized programs and services, and manufacturers will be creating customized products. As a result, retailers will have to modify their supply-chain processes to meet the demand. Logistics and warehousing will need to evolve to remain competitive.

The demand for customized products will result in shorter product lifecycles and smaller production output. Because it will require more flexibility, retailers will need to respond as well. The cycles for resetting the stores may need to move from the traditional fixed dates and seasonal planning to responsive, just-in-time planning. The store of the future will have to be very different to accommodate real-time consumer demands.

3. Aggressive Differentiation

In the past 20 years, retailers were very aggressive in expanding their chains through the building of new stores and consolidating with other companies to become larger and more powerful. In their haste to build new stores, some stores have almost become clones of one another. Warehouse-type superstores, for instance, all tend to look like one another. Other "big box" formats and club stores are hard to tell apart as well.

Now retailers realize they must close some of the stores they built so quickly and differentiate the rest of the stores in their chains. They will be adding more interactivity and special services. In order to be successful, retailers will need to help the consumer associate a unique benefit with their stores that is different from their competition.

In the future, customers will want to be able to experiment in the store, enjoy face-to-face interaction with a variety of demonstrations, and participate in entertainment. Retailing will need to become more active than passive. Stores will incorporate interactive technologies and offer instant training rather than classes. Of course, retailers will have to conduct research to determine which technologies customers prefer. Some shoppers dislike using a handheld scanner that tells them which product matches their personal profile. But the same shoppers would like handheld scanners to conduct price checks, verify sizes, or place orders. Just because a tool is electronic does not guarantee its acceptance.

Increased differentiation will include these new tools and new techniques. But the main emphasis will be on building brands to gain recognition of store value and service.

4. Channel Blurring

Channels aren't as distinct as they once were. Drug stores sell milk, and grocery stores have pharmacies. More than 40,000 products are now sold in supermarkets. Consumers just want convenience and shopping speed. Retailers know that if they are able to satisfy most consumer needs in one shopping trip, there will be less need for the consumer to shop at another store. Retailers would like to capture as many of the day's shopping dollars as possible.

Watch for this channel blurring to continue. While consumers today favor European-type shopping, being able to purchase fresh foods daily or satisfy other needs without pre-planning, retailers may replicate the hypermarket concept to provide all needs under one store roof.

Customers are also moving toward using more than one channel to make their purchases. While online sales are just a fraction of traditional retail sales, the web complements all sales by providing supporting information for purchase decisions. Retailers will increasingly rely on the web to learn more about their customers and offer specialized services and promotions. It's important that the customer has a consistent experience across all of the channels.

Channel blurring has extended to the Internet as retailers have pushed customers online with web-specific promotions. Many companies still pursue web sales for the immediate cash return and low overhead dollars, rather than building the channel or contributing to a brand. The Internet customer relationship in the future will be perceived as a long-term asset, not a short- term sale.

One retailer can span channels within its own organization. Kroger owns chain drug stores, convenience stores, supermarkets, and mass merchandisers. Wal-Mart has its conventional mass stores, supercenters, Sam's clubs, and Neighborhood Store supermarkets. The future may include more blending among these.

5. Security/Trust Focus

Over the past several years, there has been an increasing issue with security and trust of both merchants and manufacturers. When appliances break before their time, when services cost more but provide less, or when fashion designers force new fads on the public without alternatives, the retailer is often the one to take the blame.

Cybercrime is also rising. An unprecedented number of websites have been infected with some type of computer virus. Other attacks have ranged from defacement of a site to disabling a site entirely. Victims include e-merchants, manufacturers, and financial institutions.

Higher costs, more self-service, and crowded checkout counters don't contribute to furthering trust. Retailers are trying to re-establish themselves as trusted advisors and service providers. Both resellers and manufacturers have dedicated resources to ensure that the products they sell and the environments in which they sell them are safe and secure. This trend will become more critical to conducting business.

6. Problem Solving Programs

Home discount centers used to be merely warehouses stocked with remodeling materials like countertops, sinks, and faucets. Now these companies provide a consultant to work with the consumer not only to select these products but also to recommend entire remodeling services. In addition to the products, home discount centers offer contracting services to install the new kitchen fixtures.

Retail solution centers will increase in virtually every store. Instead of staffing with sales associates, retailers may add category experts to their stores in major metropolitan areas. The trend will extrapolate to virtually every type of business.

7. Category Expansion

Over time, categories tend to divide as more specialized products are developed. The paper category used to consist of writing paper and typing paper. Then the advent of the computer created the need for printing paper. Now, the category has expanded to include specialty printing paper as well—glossy, resume, and brochure paper to name a few.

While companies are merging and integrating, they may mistakenly believe they have gained synergies in categories. The opposite is true. More categories are being offered in each store, and more categories are being created as they divide and multiply.

The result—for traditional as well as online stores—is the ultimate capping of product assortment. Offering too many types of products only confuses the consumer. The retailer will have to carefully prioritize even more in the future.

8. Store Expansion/Remodeling

Stores are running out of room. It is always a struggle for the retailer to determine which products go on the shelf due to space constraints. There are now more than 50 versions of Crest toothpaste, and other brands offer nearly as many. Only consumer-preferred variations will be placed on the shelf.

But store expansion is limited and not merely focused on making more space for more products. Retailers are updating their stores to create meal solution services and interactivity. Grocers feature more prepared foods and have expanded the perimeter—the most popular area of the store—to focus on high-profit, interesting products and services.