Data analytics is disrupting how retailers merchandise stores, while also changing how business is conducted for the consumer products brands that line their shelves.
While retailers and brands have been analyzing data for years, the reams of consumer information generated in the era of online shopping, coupled with the rise of technology equipped to handle the digital deluge, is upending the way stores and their suppliers evaluate how to sell, what’s selling, what’s not, and why.
Understanding Shopper Footprints Via ‘Kinetic Mapping’
One high-end hardlines retailer found that a competitor was “killing them” on the launch of a hot electronic item, said Shelley E. Kohan, vice president of retail consulting for RetailNext, which provides in-store analytics to retailers, during a Retail Marketing Society seminar in New York last week.
The retailer turned to interactional analysis — insight on how sales associates and customers engage within a given store environment — to understand where it was going wrong. Via kinetic mapping, which illustrates the movement of both shoppers and employees, the retailer found that shopper traffic was tepid where the electronic item was being featured in the store.
Based on recommendations from RetailNext gleaned from its data findings, the product display was pushed beyond the first few feet of the store and out of the “decompression zone,” an entry area shoppers use to literally decompress and adjust to the new space after coming from the outdoors.
Store associates were also offered training demos to sell the electronic item based on its high-tech attributes as well as its differing appeal to both men and women. The changes paid off. “The retailer has continually expanded the enabling technologies in more stores to increase sales and improve the shopping experience,” Kohan told Forbes.
Products don’t sell in a vacuum. The consumer marketplace exists in a larger business, economic, social and cultural context. And today, brands are looking to data analytics to dig up a more granular feel for their customers’ DNA that reflects the external conditions and trends influencing a particular product category.
Giant beer manufacturers Heineken and Anheuser-Busch, which have long enjoyed market dominance, have been doing just that amid the encroachment of small batch craft beers. Indeed, the rise of foodie culture and the maker movement, whereby handcrafted, locally made products are gaining popularity, is also brewing in the world of beer.
In turn, longtime beer manufactures are getting craftier about finding ways to woo consumers who now have a plethora of trendier choices. They’re applying myriad customer insights gleaned from data analytics to create more customized product promotions based on shopper behavior, their leisure activities, even their social-media habits.
Heineken, for one, which boasts 15 million Facebook fans, partnered with the social network to develop personalized, real-time content that was delivered to fans on their mobile devices at sporting events, such as soccer tournaments. The idea was to not just reflect “who he is and what he wants, but also where he is and what he reads and when he buys, and a host of other data points,” according to SmartDataCollective.com.
And at the store level, Heineken has been seeking out a more precise read on how consumers navigate its store displays, interact with the merchandise, essentially, studying the shopper dance that leads to the intent to purchase. Via 3D sensors, the company identified where inside Wal-Mart stores consumers would physically grab a six-pack — be it from themed displays or in the beer section. “That gave the company the insights it needed to develop physical marketing strategies, like changes to shelf placement and packaging, that were driven by facts instead of theories,” SmartDataCollective reported.
Asking The Right Data Questions
It might sound elemental, but when it comes to analyzing the effectiveness of product pricing and promotions, brands need to ask the right questions in their data-mining expedition to glean meaningful actionable insights, Susan Lee, a partner with consultancy Simon-Kucher & Partners, told Forbes.
CPG companies also tap data to gauge their brand equity and unearth consumer insights on price positioning to understand things like, ”how big is the deal-seeker segment in the category? Do we over-index on deal seekers compared to our relevant competitors?” Lee said. And, what are the shopping patterns and product preferences of those consumers who are hunting down deals? “This will inform a brand on the promotion tactic for a product category,” she said.