Expanding Basket Size with Retail Tech
Why basket size is important for retailers
Basket size metrics, also known as average transaction value (ATV), refer to the average value of items purchased by a customer during a single shopping session. It is a key performance indicator for retailers that provides valuable insights into customer behavior, sales performance, and overall business profitability.
Basket size is a traditional metric that helps retailers better understand customers’ spending habits. By tracking basket size metrics, retailers can identify trends in customer behavior, such as the average number of items per transaction, the average value per transaction, and the most popular items sold, data that retailers can use to improve inventory management, product placement, and pricing strategies.
Along with conversion rates, loosely defined as the number of store visitors that made purchases, basket size metrics help retailers understand the strengths and weaknesses in their sales strategies. Consistently low basket size metrics may indicate an unappealing product mix or uncompetitive pricing. It might also indicate salespeople need support with cross-selling or improvements in product positioning.
How retailers can expand basket sizes
Retailers are constantly working on strategies to increase the number and value of units that find their way into customers’ shopping carts. Cross-selling and upselling are key to expanding basket size in all retail categories.
Cross-selling, offering products or services that complement or supplement a customer’s initial purchase, and upselling, convincing consumers to opt for a higher-priced option, can be achieved both by direct selling from a salesperson or organizing product in a way that shoppers make their own decisions based on suggestive positioning and in-store communications. Retailers are constantly running tests to determine the impact of staff and product placement on sales, always looking for the winning combination that can help boost revenues.
Cross-selling and upselling require quality data about the product and consumer trends. Retailers can leverage insights from objective data to improve engagement and brand loyalty programs, shorten layout and placement testing periods and match staff positioning to shopping trends.
What is the role of tech in merchandising optimization
Capturing the type of objective data needed to support these efforts was a laborious and often inefficient practice. Retailers sometimes monitored in-store performance manually but often could not generate sufficient data points to make reliable fact-based decisions.
A tightening labor market has added urgency to the push to find methods for supporting cross-selling and upselling in physical stores. A growing number of brick-and-mortar retailers use sophisticated sensor-based data capture systems to immediately increase revenue and reduce operational costs.
The scope and sophistication of automated data capture solutions are varied, but the more advanced ones can measure customer engagement--measured by observing view direction and in-store journeys--in real-time and in observance of evolving data privacy rules.
A/B testing is a common practice in the retail industry, where retailers regularly test the impact that changes have on customer behavior. When retailers can accurately measure customer engagement at the category and sub-category levels, they shorten layout testing periods and improve positioning. And capturing real-time data about customers’ in-store journeys is crucial for ensuring that the right staff members are in place to help customers, expanding conversion rates and basket size.
Many retailers globally use Xovis’ award-winning, privacy-first 3D sensors to implement or improve their data analytics practices. Demand for durable and sustainable tools that can deliver value in both the short and long term is growing, which is not surprising considering the performance improvements that can be achieved from day one.
Tags: | retail | basket size | merchandizing optimization| KPI | upselling | cross-selling
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