Enticing shoppers to visit your store is easy. Advertise that you have the products they want to buy, and they'll come. Once in-store, however, it becomes complicated. Not only must you deliver on your advertising promises, but you must also provide a shopping experience that'll entice them to return. And if you want to encourage them to buy more while in-store? That's yet another challenge.
Fortunately, there are many opportunities available to you to increase the average transaction size of any shopper who visits your store. So how can you achieve that? More importantly, how can you achieve it without annoying customers?
About the contributors
Justine Brown joined DotActiv in mid-2019 as a retail space planner, creating data-driven planograms for Makro's Food and Liquor account. She has a Bachelor of Consumer Science in Hospitality Management from the University of Pretoria.
Kelly Cordeiro joined DotActiv in 2017. Since joining, she has had experience running many accounts, including ACDC, Ultra Liquors, Diageo, JDE Coffee, GSK, Shield, Permoseal and Pick n Pay.
Nadia Duvenage joined DotActiv in late 2020 as a space planner to work on a variety of our ad-hoc accounts including Indigo Brands, Pioneer Foods and Vital. She has since joined our Food Lover's Market account. She has a BCom (Honours) in Marketing from Stellenbosch University.
Runet Kritzinger has been with DotActiv since 2015, primarily managing the Makro Food and Liquor account. Today, she works on one of our first major overseas services accounts. She has a Bachelor of Consumer Science with a Business Management degree from North-West University.
What is average transaction size?
It's not difficult to understand what we mean when we talk about average transaction size in the context of retail.
In plain terms, it's the average amount a customer spends during a single shopping trip. How much money do they spend in your store when they visit?
You'll also often hear it referred to as average ticket size, average basket size or sales per customer.
As for how you calculate it, that is also straightforward.
You can calculate the average transaction size by dividing the total sales for a period by the number of transactions that happened during the chosen time.
As a retail metric, it's also worth noting that you can compare it hourly, daily, weekly or monthly, a point backed up by the North American Retail Hardware Association in a case study conducted to understand it better. The period you choose depends on how strict you want to be when measuring your sales figures.
Regardless of how you measure the average sales per customer, you must complete such an analysis. After all, by completing it, you're in a better position to understand whether or not you're offering the correct product assortment.
In reality, it can impact far more than that. It also influences how you design your floor plan, in-store merchandising decisions and more. These are all separate topics that deserve focus. However, one idea should carry through them all - you must do it in a way that doesn't annoy your customers.
How can you increase the average transaction size of your customers?
Above, we mentioned the idea of increasing the average transaction size of any customer without annoying them. We understand you want to increase your sales and profit - that's the goal of retail.
However, it's difficult, if not impossible, to achieve that without considering the other objective - pleasing your customers.
In plain terms, you can't hope to increase your sales without first pleasing your customers. In reality, providing for your customers should come first. Thus, it's critical to consider their needs whenever you're making any decisions.
1. Cross-merchandise products
If you're looking to increase the average transaction size of your customers, one of the best tactics to use is cross-merchandising.
That is because of this simple fact: when done right, cross-merchandising makes the shopping experience more convenient for your customers. If you're looking to increase the basket size of anyone who visits your store, you need to create an experience that makes them forget that they're shopping. That's what can happen with cross-merchandising.
Seeing complementary products next to each other can remind customers of any additional items they need.
Let's take the example of effective cross-merchandising in a liquor store. Here, you could place mixers next to spirits. If your customers visit to purchase gin, adding tonic water nearby or in the same area means they don't have to walk around looking for it if they want it. Instead, you're allowing them to find what they want, thereby saving them time.
Your customer might even decide to purchase something else, be it on an impulse or because they realise they have more time. Because you cross-merchandise, you're also exposing shoppers to more items. It could be an item they might not purchase on its own. However, because they see it sitting in a stand next to their intended purchase, there is a good chance they'll add it to their basket.
Another example is related to any retail store where you'd expect to buy meat. Nearby your butchery or your meat section, you could cross-merchandise chips, firelighters, braai equipment and anything else that you'd associate with a braai or barbeque.
Creating such an area allows you to increase the sales for those three or more items that you cross-merchandise in the area. More importantly, you're providing your customers with a better shopping experience as they don't need to go searching for these products in your store.
2. Improve your store layout
How you layout your store has a direct impact on your sales. It also influences the basket size of your customers. How?
For one, a seamless store layout ensures that your customers can find the items they need without fuss. Good clear signage, be that at the end of your aisles or on the shelf helps. A well-thought-out floor plan is just as effective.
That leads to a better shopping experience. More importantly, it can lead to more sales for you because they'll want to spend more time in-store.
Let's consider the example of a chaotic store layout to explain further.
Ideally, you'd want your customers to browse your store, moving from aisle to aisle in a logical manner. When shopping one category, they'd expect complementary categories nearby. Think your dairy section with milk, cheeses and other refrigerated items. They might expect to find frozen items too or your cold drinks section.
As they shop more of your store, that logical category or product flow will keep them engaged and purchasing more. However, imagine the layout and presentation you've chosen doesn't make sense. That makes it increasingly difficult for your customers to locate any products.
Would you expect them to shop in your store if they can't find what they need? It can only lead to frustration and cause them to leave, never to return.
Besides that, there is also the problem of congestion. A poorly planned store layout can lead to high traffic in hot spots. It's one thing to have lots of customers coming to your store. However, it won't make for a pleasant experience if they get there and you've placed all of your top-performing items in one area.
If you’re looking for ways to improve your store layout, you can read up on a few top tips that you can use here.
3. Build data-driven planograms
A third way to increase the average transaction size of your customers when they visit your store is to use data-driven planograms.
By building and implementing data-driven planograms, you can provide the appropriate shelf space for your top-performing products. That includes forward share, which means it's easier to find. If the products are more visible, the result is more sales. It's that straightforward.
There is another reason why it's so necessary. Because you're using data to build planograms, you identify what products to place where on the shelf. You'll also know what your customers want, so any item in your store will meet their needs.
Let's say, for example, a certain 2l cold drink item is your faster seller for the month in its category. You'd thus want to give it more facings on your planogram and, therefore, in your store. Doing so increases your stock levels for that item, yes. But it also means more purchases and thus more sales. What would have happened if you built your planogram and didn't give that item the facings it deserved?
Not only would you lose out on sales, but you'd also frustrate your customers. When they visit the shelf to choose the item, it might be out of stock. With a data-driven planogram, you can prevent such problems. There is also the point that we've made a few times in this article - it can lead to an increase in time spent in your store.
Because you're creating a shopping experience that makes it easy to find what they want, they'll likely spend more time shopping. That leads to increased sales and profits for you. And it’s not only short-term sales and profits. As you continue to provide shoppers with what they want, you garner a reputation as the go-to retailer for the items they need.
Of course, it's one thing to build data-driven planograms and another to implement them correctly.
4. Analyse your retail data
A final, but certainly not least, way to increase the average basket size of shoppers is to look at your data. We already alluded to the importance of your data in the above point and its connection to planograms.
We don't mind reiterating its importance.
Data analysis should inform all of your efforts as a retailer. With retail data, you can identify your top-performing products. Your retail data can also help you identify low stock levels or frequently out of stock items. It can inform you of what items to stock and how many of each. On the other hand, it can also help you understand which items are not worth stocking.
Here's an example to further explain.
After analysing your data, you notice that chutney-flavoured chips are selling well. They are the top-performing item in the category. Meanwhile, BBQ-flavoured chips have low sales. With this information on hand, you can choose to discontinue the BBQ-flavoured chips and replace them with a different product. It could be another chutney-flavoured chips brand or another flavour that sells well.
By emphasising top-performing products and ensuring increased visibility in-store, you can draw customers to the shelf to buy them. You could even use your data to know which items to cross-merchandise with others. You can do that by looking at customer data (collected from your POS systems) to learn which items your customers purchase together.
Increasing the average transaction size of your customer’s baskets is key if you’re looking to maximise your sales and profits. However, you first need to know how to please your customers because if you fail to do that, any of your other efforts will fall flat.
Do you need help choosing the right products so you can please your customers and maximise your sales? Book a custom exploratory consultation with us here or visit our online store here.