Retail: 5 initiatives to regain margins through Big Data

Since the 1990s, marketing has strived to understand how consumers think to sell to them better and more. Several factors complicated this task and made it costly: an increasing competitive pressure and amount of data to be processed, and demand’s versatility. But understanding the consumer’s mind remained vital for retailers.

A retailer’s success will now depend on consumer insights: how precise it is, how rapidly it can be delivered, and how cleverly it is used.

Consumer insight is computed using a multitude of data from e-commerce, point-of-sale such as receipts, loyalty cards, multi-channel customer journey analysis, quantitative/qualitative studies, etc., which are cross-referenced and analysed via different indicators. The frequency of analysis varies. Some strategies require the processing of massive data flows on a continuous basis in order to adapt to market changes. This article provides an overview of retail initiatives to regain margins through data analysis. is computed using a multitude of data from e-commerce, point-of-sale such as receipts, loyalty cards, multi-channel customer journey analysis, quantitative/qualitative studies, etc., which are cross-referenced and analysed via different indicators. The frequency of analysis varies. Some strategies require the processing of massive data flows on a continuous basis in order to adapt to market changes. This article provides an overview of retail initiatives to regain margins through data analysis.

1. Refining customer typologies or « buyer personas, » an essential step in guiding strategic choices

In 2017, Leclerc – one of France’s leading retail brands – changed the way it classifies consumers by cross-referencing data from its sales receipts with socio-economic data in order. Its CEO declared that the objective was to « ensure the vitality of the brand.” « The old typologies no longer correspond to reality, » explains Michel-Édouard Leclerc. Five typical profiles emerged: « The pretenders » (20%), « The besieged » (25%), « The patrons » (18%), « The changers » (11%), and « The creative » (26%).

According to the CEO, « This will be useful for shop managers, and these studies will be translated into action plans by our managers from our HQ. »

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2. Optimise your marketing in each catchment area based on shopping basket analysis and predictive sales analysis

Several pure players have opened physical shops that offer a selection of products based on in-depth knowledge of their customers’ habits, e.g.

• the first physical Amazon bookstore which opened in Seattle (13 openings in 2 years),
• the Spartoo shop in Grenoble (15 openings in France in the same period of time),
• the « Cdiscount » corners in Géant Casino hypermarkets,
• or Gymshark , the sportswear brand recently opened its first physical store in London, combining brand experience and sales.

3. Offering the right prices at the right time and in the right place

It is essential to consider consumers’ price sensitivity and various parameters such as the products’ seasonality, the competitive intensity of the catchment area, or the food specialities of the region.

Dynamic pricing, which is particularly effective online, consists of adapting prices (up to several times a day) according to continuously analysed parameters to allow for a high degree of reactivity in an area where prices are frequently compared. This is the case in the toy sector, for example. Mathieu Charent, Procurement and Marketing Director at PicWicToys, shares with ITRnews the challenges of pricing and omnichannel strategy for the brand.

4. Make sure communication between operations and promotions is cost-effective

By identifying loyal customers and reconciling their related data collected through the company’s various distribution channels, it is possible to send them much better targeted marketing content and promotions at the most relevant time for them.

This approach is at the heart of Intersport’s strategy, which is showing double-digit growth and whose loyal customers represent 70% of its turnover. « We want to strengthen our relationship with them by sending them personalised offers, whether in terms of promotions or content and by inviting them to events according to their affinities, » explains CEO Jacky Rihouet. « They should feel even more privileged.”

By recently equipping itself with a cloud infrastructure to solve its Big Data problems, Etam has greatly enhanced its ability to quickly identify relevant promotional operations, as the E-commerce & Innovation Director can attest: « We retrieve the receipts from 450 shops in France in less than 10 minutes, which means that we can measure the performance of an operation in less than 10 minutes as well. »

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5. Optimise cross-selling and, therefore the shopping basket

The cross-selling technique consists of grouping « families » of products (for example: the green suit with the blue shirt, beer, and crisps…). Online it is possible to recommend additional products to customers thanks to algorithms (complementary, similar products, or products bought by other customers). Inditex is applying this to its London phygital Zara pop-up store: it includes connected mirrors that suggest additional purchases to customers when they scan the RFID tag on their item.

In-store there are many possibilities offered by merchandising or POS. Some retailers, for example, rearrange products according to consumption patterns: islands of products consumed at breakfast, for snacks, or dinner.

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Going further with Mercio:o

Mercio’s price optimisation software is designed to continuously analyse all the dimensions that go into price construction, whether they are relatively simple (« cost plus » or strict competitive alignment for example) or whether they integrate complex factors such as margin rates, offer analysis, competitive environment, seasonality, stocks and much more.

It allows you to make the most of customer data shop by shop and department by department to offer prices adapted to their preferences. The aim is to inject all the value of the brand, its image, and its services into the prices, and thus to improve margins without losing volume.