The wisdom of the crowd
The use of industry‑wide data is now vital for any retailer wanting to achieve better business results because it reduces the individual biases and beliefs that can contribute to poor decisions.
I have spent the last 20 years mining pharmacy sales data to find useful patterns and trends that can predict successful retail opportunities. As a retail scientist, my goal is to make sense of huge volumes of retail data and to use this knowledge to show retailers how to make smarter, more profitable decisions.
One of the most surprising things that I continue to come up against is the strongly held belief by individual store staff and owners about what their customers want. These mistaken beliefs are often informed by a single, memorable customer experience or the influence of a sales rep. And yet, when I provide evidence of significant data that disproves their view, people often refuse to change their mind.
The 80:20 rule
An example of this bias is the ranking of top‑selling products in New Zealand pharmacies. In every category, for every need, there could be tens of different product options. But in a clear example of the 80:20 rule in action, just one or two market leading brands often represent 80% of sales. Therefore, it makes sense to make these products easily available in your pharmacy.
Here are a couple of examples that illustrate this point:
Top selling vitamin C product*: Livon Lypo‑Spheric Vitamin C sachets
Top‑selling brand of supplements*: Go Healthy
* Based on RPM sales data from 200 independent New Zealand pharmacies
These two examples have been true for many years, with the sales data gathered from pharmacies in all parts of New Zealand, of all sizes and across all types of socio‑economic communities. Therefore, it represents the popularity of these products from the New Zealand public. I like to think of it as the “demand signal”.
When I present these examples to pharmacy staff and recommend that they should stock these products if they want to increase their sales, I am surprised by how often I hear, “But my pharmacy is different”.
While I understand that each pharmacy has some local, unique product trends, my measurement has consistently shown that the most popular products are being sought out by pharmacy customers everywhere.
If your customers are not buying the best sellers from you,
it is because they are buying them from your competitors!
Product ranging – knowing what to stock and what to recommend – is one of the critical success factors in retailing because it enables you to invest the right number of resources into the products that are most likely to satisfy your customers’ needs.
Focusing on the best‑selling products not only increases the likelihood that customers will find what they are looking for, but it also makes the job of retail sales staff so much easier.
With thousands of products in stock and the high turnover of retail pharmacy employees, it is no surprise that most retail sales staff lack the necessary knowledge about what to recommend.
Putting up‑to‑date market data containing the wisdom of the crowd in the hands of all retail sales staff will improve their confidence to make product recommendations. The result will be more sales and more satisfied customers.