I was in Bed, Bath & Beyond this weekend to pick up a new shower curtain liner for the kids’ bathroom. It had been a while since I’d been in the store. At first, everything looked familiar, but as I rounded the first corner, I had an eerie feeling that I had somehow ended up in the wrong store.
There were shelves full of…toothpaste, toothbrushes, shampoo, conditioners, hair care products. In other words, it looked like I was in the drugstore. What’s going on?
Earlier this year, we did research with homeowners to find out where they go to buy products across a whole bunch of home improvement, repair and care categories – from plumbing supplies to paint to live plants to home cleaning supplies. We found that Lowe’s appeals most across more categories than hardware stores or Home Depot and saw that these types of stores do well in several categories of “consumables”. Like Bed Bath & Beyond, they use these faster turning and impulse categories to get people in the store more often, and also use these items to increase the average ticket.
Clearly, BBB and stores like it are looking for ways to be useful for more occasions than the rare times we are shopping for linens or furnishings for bedrooms, bathrooms or kitchens. BBB's move into home cleaning products was probably an attempt at increasing shopper frequency. Based on this last visit, I’d guess the move flopped since that department is now shoved in a corner and dramatically smaller than it used to be.
So, we have BBB, Lowe’s, Home Depot and Ace Hardware stores (and probably others!) offering and adding consumables typically found at drug and grocery stores. Meanwhile drugstores like Walgreens and CVS continue to offer and add small appliances and other small durable goods often found at home stores. Best Buy just started selling iPhones and Wal-Mart is rumored to start later this month. Wal-mart already offers a broader assortment than any of the stores I’ve mentioned. More category killers are running into the Wal-mart juggernaut.
All this got me thinking about how retailers should approach extending into new product categories and about who has done it well.
To extend into new product categories effectively, a retailer has to address unmet or under-met needs of current customers with products and services they can credibly offer to meet those needs. Amazon and Zappos come to mind as interesting examples. Both started out selling a single category of merchandise – Amazon started with books and Zappos started out selling shoes. What they really sold was a great customer experience. This platform has allowed both online retailers to move into new categories. Amazon now rivals Wal-mart for assortment breadth. And Zappos has moved into clothing, handbags and accessories.
For the offline world, I have to think harder. Stay tuned for my POV. Which store-based retailer do you think has extended into new product categories well?