Just as a baseball team can put on the shift if it knows a player tends to hit the ball to one side of the field, retailers can deliver more relevant offers to customers if they understand their tendencies.
In both situations, having data is key, and retailers have been investing accordingly.
Typically gathered through loyalty programs, data can provide grocers insight on any number of questions: How often does a shopper come in the store? What items does he or she most frequently purchase? On what items is he or she most sensitive to price? Does the person buy items on ad that he or she does not buy otherwise? Does the person use coupons — paper or digital?
Kroger has already invested heavily in figuring out the answers to those questions and many more, having purchased two years ago the technology platform of Dunnhumby, which uses analytics to suggest pricing and promotion strategies for retailers.
Now known as 84.51°, the data-focused Kroger subsidiary has created thousands of attributes to classify shoppers, allowing the retailer to personalize communication to customers.
Other grocers are also investing in analytics.
Ahold Delhaize, which owns banners including Stop & Shop, Food Lion and Hannaford, earlier this month signed a long-term agreement with IRI to manage and deliver insights from its point-of-sale, frequent shopper program and supply chain data.
Amazon highlighted analytics as a major area of opportunity for Whole Foods and, upon completion of the acquisition, promptly announced it would install Amazon Prime as the loyalty program for the organics-focused company.
Mike Roberts, director of produce operations for Harps Food Stores and a recent honoree in The Packer 25 profiles, recently brought in a category manager for produce, the first one the company has had.
As one might expect, gathering data can be trickier in the produce department than in other areas of the store.
“There’s a lot of random-weight-type products within produce, which sometimes can create problems in understanding what customers purchase and how much they purchase,” said Megan Moglia, senior vice president of customer strategy and activation for 84.51°.
“That’s one of the biggest things I think that I’ve seen, from a data perspective, that the fresh teams have focused on,” Moglia said. “How do I improve my data asset, so I can improve my experience, by selling the products in (other) ways — whether it’s keeping it a random weight but just making sure that the process in the store is more accurate, or whether it’s selling things more (by the each) so that it’s more finite data in terms of what the customer has purchased.”
Companies may survive without joining the data revolution, Moglia said, but it might be an uphill battle.
“Retailers have a choice: to invest in technology and to differentiate their experiences through the data and through personalization, or to sweat it out and invest in price and invest in associates and rely on kind of how to use the experience in-store without technology,” Moglia said. “I don’t think sitting in the middle is going to win anybody anything.”
Ashley Nickle is a staff writer for The Packer. E-mail her at [email protected].