Retail Decision Landscape to Optimize using Analytics

Clustering stores

Stores can be clustered on the basis of various store performance metrics and differential treatment strategies can be adopted. This could be with respect to the

1) Store format to be adopted for each store cluster

2) Mix of merchandize to be stocked for each store cluster

3) Pricing strategy for each store cluster

4) Promotion mix strategy for each store cluster. Coupons vs Temporary price reduction vs Gift off

5) Instore experience strategy . Lighting vs staff per square feet vs Displays vs sampling

6) Shelf placement strategy

Stores can be clustered on a variety of attributes like

1) Price sensitivity to strategic products

2) Footfall in store

3) Spend dispersion observed in basket across categories like grocery, hair care, electronics, juices etc

4) % revenue accrued from loyalty card holders vs anonymous buyers

Retail analytics roadmap

How does one go about isolating the retail scenarios which are relevant and the order in which they must be deployed ? A re

Customer sentiment analysis using Unstructured Text mining

There are 6 steps to mining consumer sentiments from the blog they. They are

1. Sourcing the comments from http://www.mouthshut.com/ or http://www.yelp.com/ or http://www.eopinions.com/

2. Indexing

3. Filtering 'noise' words

4. Stemming

5. Geneating themes and summary gists

6. Analysis of sentiments

Product Cannibilisation analysis

Product cannibilisation is said to occur when one product starts 'eating' into the sales of the other product. For example when a 1 litre bottle of juice is offered at a 8 % discount its conceivable that a consumer purchases that instead of a 1.5 litre bottle juice or a 0.5 litre bottle juice. There are 2 types of cannibilisation
1) Internal cannibilisation
2) External cannibilisation

Internal product cannibilisation can happen when a companys own product eats into the sales of the other product. External cannibilisation occurs when a competitive product eats into the sales of the companys product

Another way to classify cannibilisation is on the trigger which was responsible for the cannibilisation to begin. It could have been triggered by 2 events
1) New product launch triggered cannibilization.
For Ex : A new lemon flavored juice is introduced which cannibalized apple juice
2) Promotion triggered cannibilisation
For Ex : A temporary price reduction scheme has been introduced on a particular soap which induces price sensitive customers to switch to the new soap

In subsequent postings we can discuss a quantitative framework to measure cannibilisation. How do we quantify cannibilisation ? What data is required to quantify cannibilisation

Overall Retail outlet/store analysis framework

10 overall store data sets

9 surgical store actions

Shopper behavior segmentation - 9 Shopper questions

Segmentation is a basic first step a retail organization can undertake to understand the behavioral characteristics exhibited by the shoppers and to build a comprehensive behavioral portrait of the customers shopping at the store. Segmentation is basically the process of dividing shoppers into meaningfully distinct groups.

Once shoppers are grouped into distinctive segments each group can be offered a different marketing mix plan depending on behavioral characteristics they exhibit.

Segmentation is both an art and a science where behavioral niches are identified and pin pointed marketing actions are initiated as opposed to “carpet bombing” the entire customer base. It is a very selective demand stimulation strategy which the retailer can adopt.

Before getting into the actual process of segmenting shoppers in your store it makes sense to get an understanding of the flavor of business questions which can be answered using a loyalty based segmentation framework based on raw POS, Store and Loyalty card data.

What are some interesting business questions which are available in the raw data but remains unanswered in most organizations

1) Do you know the behavioral portraits of your customer? Are they price sensitive? Brand conscious? Convenience shoppers? “Once a fortnight” weekend grocery shopper?

2)Which customer segments drive repeat purchase behavior?

3)Which customer segments exhibit propensities to you strategic categories and brands?

4)Do you know what the drivers of behavior are for each of your customer segments?

5)Do you know what behavior discriminates one customer segment from another?

6)How are segment memberships changing over time ? What does it tell us about our product mix, price and any competitive activity in the market where the store is located?

7)How can customer behavior portraits be used to drive customer treatment strategies and targeted outbound campaigns?

8)How can customer behavior portraits be used to drive in store experience and merchandise mix?

9)How can you use customer behavior portraits to increase the intimacy level with the customer?