Insights at the Speed of Shoppers’ Lives

Jun 30, 2010
George Anderson

By George Anderson

Listening to professionals in the area of shopper insights
and marketing, it’s easy for the uninitiated to get the impression that we’ve
entered something of a Wild West era when it comes to bringing order to the
information chaos that surrounds us.

Martin Hayward, former director of strategy
and futures at Dunnhumby, told RetailWire, “For
the first time ever, the speed and granularity of data available about shoppers
exceeds our ability to deal with it. Store and loyalty data is available hourly
for millions of shoppers and only technology can make sense of this volume
of data. As the technology improves, those with access to it will enjoy great
competitive advantage.”

Recently, Mr. Hayward discussed his experience
with his former firm where the data feed from Tesco reached 4.8 billion pieces
of information per week. The ability to translate that information into actionable
insights quickly is key to success, but the process will become even trickier
as more data sources are added to the mix. These include:

  • Loyalty cards.
  • Financial transactions.
  • Media consumption.
  • Internet interests and transactions.
  • Telecommunicaton behaviors.
  • Consumer location.
  • Medical history.

Target last week announced it was taking steps to more effectively manage
its customer data in a deal with DemandTec (a RetailWire sponsor). Up
to this point, Target has used the technology firm’s services for tracking
and assessing the effect various types of promotions and pricing had on individual
product sales to forecast demand for future events more accurately. With this
next step, as a piece on the GigaOM website pointed out, Target is looking
to track entire market baskets along with consumer demographic data to more
fully understand causal relationships in purchasing.

“As insight becomes more specific about
the needs of smaller and smaller groups of shoppers so the relevance of pricing,
promotion and assortment decisions for those shoppers increases,” Mr.
Hayward told RetailWire. “The
new technologies being developed are building on the pioneering work on loyalty
data analysis to add continuous decision making advice from the insight to
make the insight ever more actionable at a store, category and shopper level.”

the data sources that will prove a challenge for retailers in the future will
be social media. “It’s still in the early days but social media are just another
source of insight about consumer attitudes that can be overlaid onto behavioral
data,” Mr. Hayward said.

Discussion Questions: How much of a competitive advantage would retailers
have with the type of timely delivery of deep consumer insights promised in this
article? Is the technology to pull this off within the range of most retailers
today or is it still limited to larger chains such as Kroger, Tesco and Target?

Please practice The RetailWire Golden Rule when submitting your comments.

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14 Comments on "Insights at the Speed of Shoppers’ Lives"

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Nikki Baird
Nikki Baird
10 years 10 months ago
Asking if it would be a competitive advantage to have access to timely, deep insights about customers is like asking if transporters (a la Star Trek) would make travel easier. The easy answer is YES! The problem is how to get them. Unlike with transporters, I think the technology is there to support deeper customer insights, delivered timely. That’s a vast over-simplification on my part–a lot of retailers have the technology, and they have the data, but do they have it in a state that makes for easy analysis? No. But the harder part is knowing the right questions to ask–the art side of customer insights. It’s not the destination, it’s the journey–I believe that it’s almost impossible to just “skip to the end” and have a magic set of questions that tells you everything you need to know about your customers. You have to travel through the data, you have to explore the nuances, and you have to test to see if the causal effects that you think you see are real or imagined.… Read more »
Paula Rosenblum
10 years 10 months ago

I think adding “location aware” data into already known interests and tastes is the next big thing. I can see it being particularly powerful in the food and hospitality industry.

Max Goldberg
10 years 10 months ago
For years, retailers have been talking about harvesting the mounds of data that they receive from consumers, yet few have really done it. It’s a costly undertaking and retailers don’t like to take on new costs without finding someone (manufacturers) to pay for them. Many retailers have gotten out of the business of selling products, as they have pursued slotting fees and other give-backs from manufacturers. So it is exciting to read about Target’s initiative. Great data mining is an expensive proposition. There are so many bits of information and variables that need to be gathered, fed into the system and analyzed. At present, this is a game that only the big retailers can play. Mid-sized retailers may come together to form data cooperatives, effectively pooling their resources share information. The article does not discuss what the retailers do with this information. And that is the where the rubber meets the road. Do they scare consumers by demonstrating the amount of personal information they know, or do they engage in a mutually rewarding dialogue with… Read more »
Derek Smith
Derek Smith
10 years 10 months ago

Shopper insights can be extremely valuable to both retailers and manufacturers, but only when they are actionable. Exposing these insights “at the point of decision” is a requirement, especially if you want to get the merchandising team involved and on board. Merchants need to know how to price, promote, and assort their products. They need to understand the implications of these decisions on their total business and on each of their shopper segments.

At the same time, manufacturers need to make more informed trade decisions, collaboratively, using the same insights at the point of critical trade decisions.

Incorporating shopper insights as part of their existing processes helps bring those insights to life and enables real and valuable action–leading to the competitive advantage all retailers seek. This concept has been a cornerstone of our development efforts at DemandTec and has been validated in all of our discussions with customers and the broader retail community.

Dr. Stephen Needel
10 years 10 months ago

George raises many questions. First, if it’s a deep insight into consumer behavior, timely is likely to be much less important. A deep insight, by definition, would refer to an ongoing and underlying pattern of behavior that can be exploited. Whether you learn this in a week, a month, or a year may be less relevant than whether you learn it at all.

There is an implicit assumption that larger retailers are using all this data to gain deep insights. It’s just data–the fact that one retailer has more or less of it is not the question, it’s what you do with it. Just because you have hourly data doesn’t mean it’s useful–it’s just data.

Joan Treistman
10 years 10 months ago

WISE use of data requires paying attention to the “WHYs?” Too much attention on pounds of data does not produce insight, but rather TMI.

Yes the data should be integrated in a meaningful manner…AND aligned with the “WHYs” for productive consumer insight. Otherwise the vision becomes lots of headless chickens chasing the food in the yard not knowing which particular direction but moving quickly nevertheless.

What’s the barrier to reaching for full understanding? Could it be that it requires capturing primary data…which takes a bit more time and is not as collapsible as digitized transactions?

Ben Sprecher
Ben Sprecher
10 years 10 months ago
Yes, the technology exists today to make this type of data analysis manageable, and yes, it is (finally) within the reach of retailers of any size (not just Kroger, Tesco, and Target). As others here have pointed out, just because a technology exists doesn’t mean that it’s a magic bullet–chains that want to get full value from their shopper data need to incorporate it into their business decisions at all levels. Also, to paraphrase Nikki’s point, chains need insights, not just algorithms. The best way to increase the quality and quantity of actionable shopper insights is to engage brands in the process and leverage their deep knowledge of their own products, categories, and shoppers. Our company provides the technology to enable chains to both analyze their own data much more rapidly and easily than is generally possible today, while at the same time to share appropriate data with outside brands and let them do the same. And we do it at a price point that any chain–large or small–can afford. But whether a chain works… Read more »
Ed Rosenbaum
10 years 10 months ago

Having shopping preferences down to the nth degree is certainly going to give some retailers a competitive advantage. But I wonder how far this can go? Personally I think they are doing a good job with the data now. For example, we have a preference for a certain brand of cheese. Publix three miles South of us does not carry it because it is not a good seller in their demographics. Publix 3 miles North carries it. Their demographics buy it.

One small example and probably well above the depth discussed in this article. Sometimes I think we carry this too far. But having said that, it is going to happen and we will be better shoppers because of it.

Kevin Price
Kevin Price
10 years 10 months ago
Having personally conducted several specific investigations using shopper data, I have seen the enormous potential strategic and financial rewards such analyses can provide the retailer. However, I have also seen that, in the face of direct evidence, retail management has an extremely difficult time ‘pushing the button’ to change habitually comfortable actions, thereby never realizing the rewards. To be sure, conducting these analyses can be somewhat costly…say $50K and 6 weeks for a specific issue. But when one finds that (for example, ‘double-couponing’ done in a market for ‘competitive reasons’) discontinuing an action can save $2 MILLION, plus has strategic advantages (such as letting go of the ‘bargain-only’ shoppers who you make little or no money on)…yet, you see the retailer ignore the facts, you quickly realize organizational structures, incentives & habits play a material role in NOT realizing the benefits of shopper marketing programs. The good news, to address the question asked: There is enormous competitive advantage potential, both strategic and financial, in the “deep consumer insights” referred to in this article. And “the… Read more »
Gene Detroyer
10 years 10 months ago

The first issue that a data user must consider is how much better the conclusion will be as additional data is added. Statistically, the cost of slight increases in precision causes the cost of data to multiply. That is why one sees various media polls with an error range of +/- 4 points. To cut that variation in half might require increasing the sample base 10 times. It is similar with this data. How much more would decisions change with various levels of data?

In addition, does the data lead the retailer down the wrong decision path? If the Target data says it should behave more like Wal-Mart, should Target change its brand position? When it comes to branding, great care must be taken on how data is used.

Brian Hart
Brian Hart
10 years 10 months ago
Many great points have been made, including point of decision, customer segments, engaging the brands, top management support, and the challenges of cultural change. The reality is that the software industry has not met the needs of the retail industry…even though access to customer data though loyalty cards has existed widely for 15 years! The unique opportunity that our software has is to create a single customer data platform that provides actionable assortment and mass promotion insights WITH a targeted marketing CRM system. We’ve equipped the leadership with the ability to make strategic customer segment decisions, and the rank and file with the ability to execute in a consistent and measurable fashion. Localize the assortment of your brick and mortar and leverage the new cost effectiveness of digital communications to personalize the shopping experience with relevant communications and offers. The retailer that empowers technology to create an organization and supporting supply chain that can manage these complexities will thrive. We’ve entered an age when consumers have unprecedented amounts of information and retail choices; the most… Read more »
Lee Peterson
10 years 10 months ago

I totally agree with Stephen. Just about every retailer in this day and age has more customer data than than they’re able to process, but not very many of them are actually making good use of the insights OR even know what to do with all the information they’re collecting. Effective STRATEGY, based on deep insights, is still ultimately the missing element.

Mark Burr
10 years 10 months ago
There is such a thing as too much information. It becomes paralytic leaving retailers to act on what they think rather than what they know. Actions then are taken on instinct and emotion rather than fact. Examples are pushing through so called loyalty programs without the capability or will to utilize even the basics. The constant banter about loyalty programs is the goal of directing your efforts towards the 20% that drive 80% of your business. The fact is that if you spent even 20% of the time dealing with the basics of the information, there would likely be a minimum of 80% success. All of which could be done with out the $ millions in investments that create the paralyzing effects in the first place. Basics, basics, basics! Focusing on the blocking and tackling always wins. Maybe the gathering of data should be stopped by most retailers until they determine the basic information they can act on in the first place. First things first. There is often the approach of “Oh! What about this?”… Read more »
Jerry Gelsomino
10 years 10 months ago

The answer is definitely “yes” but how do you get it? The consumer is ready to jump from product to product, store to store, just to fill an immediate need.

On the other hand, ‘experts’ are coming to conclusions too fast just to have a product or service to sell. The bookshelves are filled with so-called solutions to branding and marketing challenges which are either out of date or basically saying the same thing in another way: “Satisfy the customer in everything you do and stick to doing the best you can in your core business.”


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