James Tenser

Family Dollar Tests Basket Analysis

March 11, 2010

FROM RETAILWIRE:
In a project last year, Family Dollar worked with Applied Predictive Technologies to understand what's happening at the basket level. How do you think better access to basket analysis insights can help retailers and vendors?      [more...]

Market basket analysis is a key component of in-store sensing that focuses on what may be inferred from a close and detailed look at the transaction log. It is absolutely necessary for refining one's understanding of promotion effectiveness, but we shouldn't stop there.

One very promising aspect is derived from understanding product interaction effects. Putting laundry detergent on a sharp deal may favorably influence the purchase of companion items--like the fabric softener bump mentioned in this case. However, it may also influence the purchase of apparently non-related items, if the advertised deal affects trip mission or timing.

Tests that reveal which promotions trigger trips (not just item lift) will help retailers refine choices about what to feature on circulars. To fully grab hold of those insights may require a bit more than basket analysis, but this is a an excellent start.