Introducing Private Label Products: A Retail Case Study
An international multi-line retailer with over 1,000 locations
The retailer planned to introduce a new line of private label products, but was unsure of how it would affect overall sales. The client also needed to know in which of the two merchandising formats would the launch be more effective. Format A was more modest, with a narrow range of SKUs, and Format B carried the company's entire product range.
The retailer chose APT's Test & Learn™ software to conduct a rigorous analysis of the private label product launch and the associated merchandising options. The software found that the cannibalization impact of the Private Label product was smaller than expected, suggesting an aggressive promotion strategy that might spur additional sales of the new item. Test & Learn™ also identified a significant difference between merchandising formats A and B. Together, these insights helped the retailer customize its launch strategy according to the various needs of different stores.
The retailer’s Test & Learn™ analysis created actionable insights regarding its merchandising strategy. The client was able to roll out in-store signage and end-cap displays tailored to the unique needs of each store.
An international multi-line retailer with over 1,000 store locations introduced a new private label product in a limited number of stores to evaluate its effectiveness across a number of key dimensions.
The APT client decided to evaluate the product within two different in-store merchandising contexts. The retailer wanted to evaluate the effectiveness of different store signage in driving sales and the relative impact of end-caps that varied by format type and store location.
Using a rigorous Test & Learn™ process, the client was able to quickly and reliably assess the impact of the new product on the entire store.
The difference between the two formats was dramatic and led to immediately actionable recommendations regarding investments in both in-store signage and end-cap displays.
An international multi-line retailer with over 1,000 store locations
To optimize performance, the APT client decided to evaluate the product within two different in-store merchandising contexts. Format A was a much smaller format with a more narrow overall range of SKUs, while Format B carried the company’s entire product range. The retailer wanted to evaluate different in-store merchandising approaches at both types of stores in order to determine the best signage and end-cap strategy for the product introduction, and whether the strategy should differ by store format. Specifically, the retailer wanted to evaluate the effectiveness of different store signage in driving sales and the relative impact of end-caps that varied by format type and store location.
Using Test & Learn™ software, the client was able to quickly and reliably assess the total store impact of the new product.
In this case, the cannibalization impact of the Private Label product was smaller than expected, suggesting an aggressive promotion strategy that might spur additional sales of the new item. The high level of statistical significance reported on each factor provided management with a high level of confidence in the potential of the new product to drive incremental sales and increase margin.
With respect to the display’s placement within the store, APT helped the retailer identify a clear and measurable difference between the two alternative merchandising strategies. End-caps adjacent to the product aisle were largely ineffective, whereas non-adjacent end-caps performed very well. These combined insights led to a customized and highly-effective strategy for launching the private label product based on differences in store format.
In support of the new product launch, the retailer sought to experiment with a substantially higher level of Internet Search advertising than had been used in the past. Using the APT Suite, the private label product team examined the impact of these search ads, which ran only on certain days and in certain targeted markets, and measured both the absolute impact of the Internet campaign on incremental new product sales, as well as increased consumer awareness maintained during the period of “off advertising.”
In addition to understanding overall performance of the Internet campaign, the APT tools provided the client with the ability to break down the overall result and identify specific markets and customer groups that responded most positively to the new private label product message.
The media-driven insights provided the Private Label team with the information necessary to better target their search advertising and achieve a higher ROI than would have otherwise been possible. APT’s Customer Subgroup Analysis allowed the company to break down the results and identify the demographic correlates of Internet advertising performance. Specifically, the advertising was demonstrated to be far less effective in areas with low population density, such as non-urban environments. With the demographic data in hand, the private label team had additional options for re-targeting Internet content to expand appeal and target spend in communities with greater overall media support ROI.
The difference between the two formats was dramatic and led to immediately actionable recommendations regarding investments in both in-store signage and end-cap displays. Specifically, the test revealed that:
The product performed measurably better in the store format with a more narrow range (Format A).
Format A stores received far less benefit from additional signage when compared to the larger, more extensively ranged (Format B) stores.
Based upon this ability to quantify the overall returns on the signage investment, the company was able to make a highly informed, strategic decision regarding where to invest in additional signage. Additionally, measuring the impact of the end-cap display provided useful information to inform the rollout. The end of aisle display was very effective in the narrow range, small format stores, driving significant incremental sales, but end-caps had negligible sales impact in the larger Format B stores.