Did you know, that one percent point increase in Target’s Share of Wallet (SOW) in Frequency Categories (Target Hierarchy) will yield ~$5.9BN in additional sales for Target? So how does this translate to your business? And what exactly is share of wallet?
Although SOW is a powerful retail loyalty measure, not every marketer has a solid grasp on how it is calculated or why it’s so important. SOW (also known as wallet share) helps gauge a company's competitive position – what percentage of a customer’s spending for a type of product or service goes to a particular company. For e.g., if a guest spends $100 on groceries and $50 of that amount is spent at Target, Target has a 50% SOW for that customer.
When marketers are inundated with tons of data, it can be difficult to process the data and take actionable steps. However, using data from the IRI Target Collaboration Network (TCN) and a structured approach, suppliers and marketers can truly leverage SOW and use it to identify growth opportunities for both Target and for the brands.
How loyal are your customers? With the proliferation of formats and stores, and other factors driving rapid changes in retail, customer loyalty remains incredibly important. It is harder than ever to attract new customers to make a trip to the store, and retailers are striving to meet the needs of customers that are already there. This is exactly what SOW determines, making it a unique and powerful measure. A low share of wallet in a category implies that, even though the shoppers visit the retailer stores, they end up purchasing the category at another retailer or retailers. And knowing this, opens up new opportunities to increase conversion and drive greater sales.
SOW captures the share of dollars for the retailer among its shoppers. In the example below, SOW for the top two shopper segments would be 26% (=$52/$200).
In the chart below, Target has a SOW of ~4% in Dairy and ~15% SOW in Hair Care. This implies that there is a bigger opportunity in Dairy than in Hair Care. The chart also helps prioritize growth opportunities by identifying attractive classes (large classes that have strong growth) where Target has relatively low SOW (dotted rectangle below) versus smaller classes where Target already has a strong SOW.
Please contact Paul Auberry
or Sri Pankanti
on how IRI can help you develop a strategy customized to your needs to drive more growth with Target.