Why shopper insight isn’t just for the big boys

For years, the mults have invested millions in sophisticated data analytics systems to help them glean insights into their customers, understand shopping trends on a deep and granular level, and - most importantly of all - secure customer loyalty. Armed with this wealth of information, they’ve marched further and further into c-store territory. But could indie retailers use the same methods to mount a fight back?

Some independent retailers and wholesalers believe they can and are investing in increasingly sophisticated data analytics software to gain a new level of insight into what their customers want.

Take Musgrave. The company, which operates SuperValu in Ireland and the Budgens and Londis fascias in the UK, has been working with Symphony EYC, a company that specialises in delivering customer loyalty analytics to the retail sector, since 2005.

It already provides a range of services including supply chain management software, space planning and planogram automation to the wholesale group, but last month Musgrave made a significant investment in extending its partnership with Symphony EYC to include customer analytics. The project began with the SuperValu brand in Ireland and is set to be rolled out to Budgens next year.

The SuperValu project will see Symphony EYC gather core customer insights across multiple disciplines from assortment, shelf layout and promotions to targeted marketing, enabling Musgrave to tailor its offer more closely to the needs of its customers.

“Data analytics needn’t be time-consuming and it pays dividends if done correctly”

Paul Alexander, Beyond Analysis

“Consumer insight for us is about a clear understanding of the needs and motivations of our shoppers,” says Edel Russell, director of innovation, consumer and IT at Musgrave. “As market leaders, we must stay ahead of the curve, we must predict and understand emerging consumer and needs, and deliver on them faster and better than anyone else. Every day, 300,000 consumers visit a SuperValu store and half a million visit a Centra. To keep them coming back, we need to give them what they want, every time. And to do that, we need to understand what matters to them and what will make them shop with us.”

Musgrave isn’t the only symbol group trying to harness the power of data in a more sophisticated way. Nisa currently uses data from suppliers to inform planograms and assortment in store - but it too recognises the need to get closer to the consumer and says it is currently recruiting for its first ever customer insights manager and customer insights executive to: “increase understanding and recognition of end-customer service needs and expectations and source, interpret and analyse large quantities of data to understand our customers’ behaviours and preferences”.

The new recruits will also be expected to lead quantitative and qualitative customer research analysis, provide insights into consumer patterns and trends using market research data and set up and run data reports, develop questionnaires, clean data specifications and write and interpret study results.

Spar has also recognised the potential benefits of qualitative research. It runs a bi-annual customer survey to assess consumer trends and attitudes towards its range and brand, using the insights to not just just customise its offer and store layout but to inform its marketing and NPD.

Meanwhile, Costcutter is focusing on the insights that can be gleaned from sales data. This September, it introduced a new category management and merchandising programme to help retailers maximise sales by analysing store sales data to determine the ideal amount of space that should be allocated to each category. Following a review of sales data from one of its West Midlands retailers, it designed a new store layout that removed 20 bays and more than 2,000 lines and introduced 500 faster selling lines.

“The results have been excellent with a 47% weekly sales increase for this store,” claims Craig Farrington, Costcutter director of sales developments. “A secondary benefit of this data analysis approach is making the store easier to operate, with fewer products to handle and more stock on shelves and less in the store room. This in turn improves cash flow for retailers as less cash is tied up in the stock room.”

Data averse

Although these retailers have firmly grasped the importance of data, not everyone is convinced. In this month’s business barometer, 93% of indies say they don’t currently capture customer data and 68% wouldn’t know what to do with the data even if they had it.

The idea that using data is too difficult and costly is clearly proving a barrier to entry for some, but Paul Alexander, group CEO at data company Beyond Analysis, says retailers should think more carefully about the potential benefits. Data-centric companies can expect to better manage risk, cut costs, satisfy escalating consumer expectations, drive informed decision making and maintain a high level of business integrity, he argues.

“Data analytics needn’t be time-consuming and it pays dividends if done correctly,” he adds. “In today’s tough climate - where fickle customers shop for the best prices and promotions - the most successful businesses will be those that understand their customers’ needs: how they shop, when they shop, where they shop and how much they are willing to pay.”

“It’s quite an expensive game to get into, but they have to do it otherwise they can’t compete”

Mark Croxton, Symphony EYC

Retailers can also mitigate some of the cost of investing in data by thinking outside of the box. Musgrave is partially offsetting the cost of its work with Symphony EYC by sharing its data with its key suppliers, for instance. Selling on the insight creates a win-win situation both for Musgrave and its suppliers, who can work together to create tailored offers.

Mark Croxton, head of global customer support at Symphony EYC, acknowledges the additional costs associated with these tools can put indies off, but warns of the consequences if they fail to act. “It’s quite an expensive game to get into, but they have to do this because otherwise they can’t compete,” he says.

“In the long term, the indies are under some threat as it’s the convenience sector the mults are focusing on. As a result, we’re seeing all the large independents starting to react. The indies are now realising that their advantage of knowing the market is being challenged by the mults who are using the data in a sophisticated way to drive customer-driven assortment.”

Recognising that this shift in attitude has taken place, a number of software companies have developed products aimed specifically at independent retailers. Last month, analytics company MicroStrategy launched Analytics Platform, a desktop program aimed at small businesses that enables retailers to input data sets, which are then interpreted as easy to digest graphs and charts. According to Dominik Hertzog, VP for international field marketing at MicroStrategy, this makes it easier for independent retailers to view complex data sets. Anyone can download Analytics Platform, and it’s free. “We really want to make every employee able to analyse data; it’s a trend we’ve seen establishing over the past few years,” says Hertzog, adding that analysing data allows retailers to sharpen up their offer by answering three key questions: where a product came from and when, where and when it went on shelf and when it was sold.

Data answers questions

Laurie Miles, head of analytics at SAS UK & Ireland, a company that specialises in running in-depth retail loyalty analysis for major businesses including Nectar, agrees that data can help indies to identify answers to complex questions about their operations.

To this end, SAS recently launched a new service called ‘Answers’. The project-based solution isn’t free, but for indies afraid of handling complex data, it’s ideal, he claims, as it allows retailers to send data to SAS’ in-house experts, who then analyse it to spot trends and patterns that impact that retailer. “Price is a tool the big boys can use against the independents, so the smaller retailers are in a situation where they need to differentiate from the big boys,” he says.

Independent retailers can use Answers almost like a pay as you go service, he adds. The indie poses a question - for example, about identifying customer segmentation - and then analysts at SAS look at the company’s data for trends and patterns that will enable the indie to sharpen their offer.

“People are often put off by the complexity of data but this is the beauty of the service,” he says. “They are totally protected from that. We look at patterns and trends with sales over the year and build recommendations based on sales data, taking things like seasonality into account.”

If independent retailers want to compete with the mults, they have to get to get to know their customers as well as the mults do theirs. While some symbol groups have identified the benefits of data, too many retailers still seem to have their heads in the sand. It won’t win them any new customers - indeed with people expecting an ever more tailored offer, it’s more likely to do the very opposite.