7 Ways to Drive Up the Average Ticket
Retailers have three notable ways to increase top line sales: increase price, attract more customers, or get existing customers to buy more items. That’s why a key measure is the average ticket. Defined as the average dollars spent per transaction, it is a reflection of a lot of things done right or wrong in the store.
Here are seven key factors that matter:
1. In-Stock Position
If you don’t have it, they can’t buy it. A recent survey determined that North American retailers together lose $129.5 billion in sales annually due to out-of-stocks. That’s equivalent to 4.1% of sales. Since that field includes many highly sophisticated chains with high-tech inventory systems, we have to assume that the percent of lost sales for independents is likely to be much higher. Home improvement retailers should think in terms of projects, since that’s the way customers shop. That means stocking all of the products customers will need to complete identifiable projects in stocked categories in appropriate quantities. Alternatively, they risk losing the entire sale or at least the opportunity of getting the profitable add-on sales that are needed for the project.
2. Impulse Merchandising
The main objective of every good merchant is to have their customers leave with more in their shopping cart than they came for. Costco is a master of this and has earned the reputation that “any item you go there for will cost you $300.”
An impulse purchase is defined as any purchase a customer makes which was not pre-planned or “on their list”. A 2012 Bank of Montreal study found that the average Canadian spends over $3,700 on impulse purchases a year. Impulse purchases must be seen to be bought, which means they should be prominently displayed in a main aisle, clip-stripped, adjacent to related categories, readily visible at service areas, or at the cash. Ideal impulse items are priced under $10 and are high margin.
I know of one hardware dealer who pulls over a million dollars a year in sales from impulse items in his main aisle. Canadian Tire does a masterful job of filling your shopping cart with items you didn’t know you needed. An 8-store chain in the US Midwest added sidewinders to all of their end caps and filled them with ‘A’ items already merchandised in the store. The average margin on these items was 10% higher than the store average. Sales of these items increased an average of 180%.
3. Attentive Sales Staff
Well-trained sales staff can have a huge impact on the average ticket. Armed with product knowledge, they should have the confidence to engage customers to learn more about the projects they are working on and suggest complimentary add-on items the customer will appreciate. One of the best categories for this is paints. A heads-up sales person can make suggestions for useful sundries while the paint is mixing. This can double the sale at margins exceeding 60% and leave the customer confident that they have all the tools they need to do the job right.
4. Handy Baskets and Buggies
Customers can’t buy what they can’t carry and will head straight for the cash when they start dropping items. A 7-store hardware chain in Florida increased the number of baskets available at the front of the store and in several other strategic locations (e.g. the Electrical and Plumbing aisles). They also asked employees to offer baskets to customers entering the store. This simple change increased the average tickets in all 7 stores and by a range of 10 to 30%.
5. Clean and Appealing Ambiance
The longer a customer stays in the store, the more they will see and the more they will buy. This makes ambiance important. A recent study determined that 93% of U.S. consumers would stop visiting a retailer if they experienced some unpleasant issue with the store. A general bad odor would drive away 78% of consumers, and dirty restrooms would deter 66% from visiting again. Clear aisles, polished floors, faced-up and dust-free merchandise all set the right tone. Adding non-intrusive background music is easy, with many services available today, and does a lot to raise the spirit of staff and customers. Make sure your signage is crisp, clear, and looks professional.
6. Encouraging Store Layout
Expose customers to as much merchandise as possible. That means moving service desks farther back into the store and running as many aisles perpendicular to the main traffic areas as possible. Costco puts its fresh foods at the back of the store for a reason, as customers need to pass by a wide array of tempting merchandise on the way in and again on the way out. Make sure products are easy to find so that the time customers have to spend in the store is most productive. That means proper directional signage and well thought out product adjacencies to encourage a more complete sale.
The last way to increase the average ticket goes back to pricing. In 1999 at the height of increasing competition from Home Depot, Toronto-based Lansing Buildall staff were defensive and gun shy about pricing and the impact of the Depot price guarantee. They decided to do a thorough price check and quickly realized that, beyond the top 100 items, they were priced lower on a wide range of items. So, they increased their prices to match on several thousand SKU’s. Not one customer noticed (at least to their knowledge) and they increased the overall margin by almost 2 points, raising both the average ticket and the bottom line. They then reassured staff they had nothing to worry about.
Burlington Merchandising & Fixtures provides innovative merchandising solutions to both retailers and vendors with a focus on driving sales and profitability. Contact us today to get started!
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