Reversing Hidden Declines in Sales Performance

Department stores have an image problem. While characterized by iconic brands -- some world-recognized for customer service and merchandising savvy -- the most loyal fans of the channel tend to be Baby Boomers and older. While quarterly reports may show growth, there's clearly a long-term challenge at hand.

Recently, Precima tackled this problem head-on with a high-profile department store chain and published summary results of its investigation in a case study.

While the retailer was maintaining a respectable 3 percent annual growth rate, shopper-based analysis revealed that the strongest results were skewed toward its most mature families and post-family segments. Meanwhile, growth in its young adults and young family segments were well below the market. In essence, its future prospects were gradually drifting away toward youth-oriented chains.

The writing was on the wall, however, a generalized strategy of "becoming more youthful" could become potentially wasteful and alienate loyal customers. The objectives became clear: determine precisely where sales growth was coming from, which segments were most vulnerable to erosion and which offered opportunities for growth.

Precima's experts applied a comprehensive Value Segmentation analysis in three phases:

1. Identifying and analyzing hundreds of unique shopper segments by combining rich transaction, shopper and market data;
2. Formulating a definition of the retailer's priority shopper segments based on insights into current and potential value;
3. Developing a shopper-centric strategy for growth by comparing current performance with market trends.

Insights into Action
Applying Precima's insights and recommendations, the retailer launched an aggressive plan for marketing and merchandising to underserved younger shoppers. A new array of products and brands was brought to market in record time, shortening the traditional development cycle from years to months.

Results confirmed dramatically that the retailer's new strategy was working, as sales to the two youngest adult segments increased by 45 percent. More importantly, the retailer was positioned for sustained growth, both from traditional shoppers segments as well as new, high growth segments.

See the complete case study from Precima...

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