What Retailers Know About You

Retailers now have access to more information than ever. They're using loyalty cards, cameras, POS transaction data, GPS data, and third-party data in an effort to get shoppers to visit more often and buy more. The focus is to provide better shopping experiences on a more personalized level. Operationally speaking, they're trying to reduce waste, optimize inventory selection, and improve merchandising.

The barrier to personalized experiences is PII (personally identifiable information), of course.

"[What retailers know about you] is still largely transaction-based," said Dave Harvey, VP of Thought Leadership, branding and retail services provider Daymon. "Information about lifestyles, behaviors and attitudes are hard for retailers to get themselves so they partner with companies and providers that have those kinds of panels, especially getting information about how people are reacting through social media and what they're buying online."

Transactions Are Driving Insights

The most powerful asset is a retailer's transactional database. How they segment data is critical, whether it's transaction-based reach, frequency, lifestyle behaviors, or product groupings. Retailers can identify how you live your life based on the products you buy.

"The biggest Achille's heel of transaction data, no matter how much you're segmenting it and how much you're mining it, is you're not seeing what your competitors are doing," said Harvey. "Looking at transaction data across your competition becomes critical."

As consumers we see the results of that in offers, which may show up in an app, email, flyer or coupons generated at the POS.

Social media scraping has also become popular, not only to gauge consumer sentiment about brands and products, but also to provide additional lifestyle insight.

Some retailers are using predictive and prescriptive analytics to optimize pricing, promotions and inventory. They also have a lot of information about where their customers are coming from, based on credit card transactions. In addition, they're using third party data to understand customer demographics, including the median incomes of the zip codes in which customers live.

They're Watching Your Buying Patterns

Retailers monitor what shoppers buy over time, including items they tend to buy together, such as shirts and ties or eggs and orange juice. The information helps them organize shelves, aisles, and end caps.

"There's a lot of implications for meal solutions and category adjacencies, how people are shopping in the store, how that might lead a retailer test way to offer a right combination of products to create a solution somewhere in the store," said Harvey. "You can't be everything to everyone, so how can the information help you prioritize where to focus? The information you can mine from your transaction database, your loyalty card database can help you become more efficient."

Information about buying patterns and price elasticity allows retailers to micro-target so effectively that shoppers visit the store more often and spend more money.

They May Know How You Shop the Store

Shopping carts and baskets are a necessary convenience for customers, although the latest ones include sensors that track customers' paths as they navigate through the store.

"They can get the path data and purchase data about how much time you spend at stations, and they can use it to redesign the store or and get you move through the store much more because they know the more you move through the store the more you buy," said PK Kannan, a professor of marketing science at the University of Maryland's Robert H. Smith School of Business.

Retailers also use cameras to optimize merchandising to better understand customer behavior including where they go and how long they stay. Now they're also analyzing facial expressions to determine one's state of mind.

Driving Business Value from Analytics

Different kinds of analytics result in different ROI. If a retailer is just starting out, Kannaan recommends starting with loyalty cards since other types of data capture and analysis can be prohibitively expensive and the analysis can be cumbersome.

"The ROI on loyalty cards is pretty good," said Kannaan. "The initial ROI is going to be high and then as you go into more of these cart or visual data, video data, your ROI is going to level off."

Strategies also differ among types of retailers. For example, a specialty retailer will want data that provides deep insight into the category and shoppers of that category versus a store such as Walmart that carries items in many different categories.

"If you're a retailer trying to sell a ton of categories you want to understand how people are talking about their shopping experience," said Harvey. "There's still a lot of untapped opportunity in understanding social media as it relates to doing better analysis with retailers."

They're Innovating

Retailers are working hard to understand their customers, so they can provide better shopping experiences. While personalization techniques are getting more sophisticated, there's only so far they can go legally in many jurisdictions.

Kannan said a way of getting around this is to take all the informational content, remove any PII, and then extract the resulting information out of the data.

"It's like I'm taking the kernel from this thing because I don't have the space to store it and keeping it is not a good policy, so I am going to keep some of the sufficient statistics with me and as new data comes in, I'm going to combine the old data with new data and use it for targeting purposes," said Kannan. That's becoming more of a possibility now, and also it's a reality because data volumes are increasing like crazy. That way I don't have to store all the data in a data lake."

Do You or Have You Analyzed Retail Data?

If so, what did you learn? What would you like to learn that you weren't able to learn? What were the outcomes? What's your take as a consumer? Are retailers getting you to visit more and buy more? What's working and what isn't? We'd love to hear your take in the comments section.

Lisa Morgan, Freelance Writer

Lisa Morgan is a freelance writer who covers big data and BI for InformationWeek. She has contributed articles, reports, and other types of content to various publications and sites ranging from SD Times to the Economist Intelligent Unit. Frequent areas of coverage include big data, mobility, enterprise software, the cloud, software development, and emerging cultural issues affecting the C-suite.

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Industrialized PII tracking?
  • 1/15/2018 12:35:07 PM

Lisa Morgan writes

Retailers now have access to more information than ever. They're using loyalty cards, cameras, POS transaction data, GPS data, and third-party data in an effort to get shoppers to visit more often and buy more. The focus is to provide better shopping experiences on a more personalized level. Operationally speaking, they're trying to reduce waste, optimize inventory selection, and improve merchandising.

The barrier to personalized experiences is PII (personally identifiable information), of course.

This makes me wonder whether we'll be seeing the emergence of a new industry (or cluster of companies) compiling comprehensive PII, including all kinds of commercial transactions, much like credit-scoring firms like Equifax do with respect to personal credit histories. Technology plus public tolerance would seem to make that possibility increasingly plausible. 

Then retaulers and other firms could purchase access to this vast data ocean and use the information to fine-tune marketing and other activities.


Re: Knowing your competitors
  • 1/11/2018 8:23:11 AM

Yes, things like this do exist. In store coupons and pricing matching (which requires a receipt from the retailer) work into this program.  There are a handful of apps out there that allow you to scan every receipt that you get and do the price matching between stores for you.  On the back side of this they store your purchase history including where the items were purchased. This data is then sold to retailers for this type of competition gazing which allows them to do things like send coupons to an individual for their store based on purchases at other stores.  

Re: Knowing your competitors
  • 1/10/2018 10:31:54 AM

The small business owners in my small town certainly have a difficult time competing against the Walmart on the outskirts of town. While some are able to compete on prices on some products, and getting personal help at the small stores is way easier, it's still no easy task for those smaller stores to attract shoppers like Walmart does.

Re: Knowing your competitors
  • 1/8/2018 6:37:00 PM

I was thinking of something similar. I wondered why competition gazing wasn't already available. I suspect barriers include personal information attached to purchases. Do retailers own customer purchase data generated from thier stores?

Re: Knowing your competitors
  • 1/8/2018 4:14:16 PM

Lisa writes

We hear about keeping an eye on competitors.  What about competitors watching you?  I think it would be interesting to get insight about what competitors are monitoring and how they're using it to inform innovation and the business.

And of course this made me start wondering whether a whole industry (mostly new) of "competition surveillance" might arise, with tools ranging from minuscule surveillance drones or other monitors placed in stores to engaging hackers to penetrate the data/info storage of competitors.

Probably some of this has occurred already, but (especially with recent and current technology advances) I can imagine a great blossoming in this field ...


Re: Knowing your competitors
  • 1/5/2018 8:48:32 AM

@Ariella, That's interesting to see and does relate to the point I was getting at with larger retailers and local stores.  Mass production and supplying a product that the masses need is what got Unilever to where they are but it sounds like they are seeing niche products cut into their sales enough that they want to look more like one of those market disruptors.  They aren't alone in this tact either, AB-InBev owns many brands that people would never guess are "big label" owned or related companies.  They haven't really been quiet about it, but the average shopper has no idea how many brands in the beer aisle are related, many of them branded as small breweries.  

Re: Knowing your competitors
  • 1/4/2018 10:36:31 PM

@SaneIT - we're thinking of different types of retail. I'm thinking of Nordstrom, Macy's, Kohl's, Target and other retailers who have dominated brick and mortar sales for decades. They're big enough to have loyalty programs and online sales. But, to different degrees, they've all focused on what worked in years past and it may be catching up with them now.

The small specialty shops in our area know the local market niches better than any new entrant could ever hope to. Disruption will come from outside.

Re: Knowing your competitors
  • 1/4/2018 11:38:36 AM

@SaneIT there was a very interesting WSJ article on this point with respect to manufacturers rather than retailers. The title is "Outfoxed by Small-Batch Upstarts, Unilever Decides to Imitate Them"

The world's biggest brands are facing a broad-based revolt among shoppers, threatening a business model that has served them, and their investors, for decades. Consumers in rich countries once embraced the consistency, convenience and affordability of their offerings, from disposable razors to ready-to-boil ravioli. In other parts of the world, a growing middle class clamored for many of the same trusted, Western brands.

Investors loved these standbys, too, for their dependable if modest growth. Consumers needed these home, personal-care and food staples in good times and bad, the thinking went. In past sales downturns, companies ratcheted up research and development—rolling out "new and improved" versions—and tapped their vast marketing budgets....


Today, that isn't good enough. Shoppers have gravitated in droves toward smaller, niche or locally made products. In many cases, they are seeking out healthy alternatives and more natural ingredients. Manufacturing costs have fallen, allowing small players to seize quickly on trends. Social media and e-commerce have made marketing and distribution easier.

"Basically there are no entry barriers," says Peter Ter Kulve, a 20-year Unilever veteran tapped as its "chief transformation officer" to lead the counterattack.

More than a decade ago, he said, Unilever centralized decision making, believing consumers in similar income brackets, from Miami to Mumbai, would be drawn to the same global brands. Instead, "the more things globalize, the more people want to affiliate with everything that is local," he said. "This has led to unbelievable fragmentation."


Re: Knowing your competitors
  • 1/4/2018 8:29:44 AM

@PC, as a small retailer I think I would worry more about other small retailers locally, they have the flexibility and presence locally to carve into the niche that protected you when the big retailers came.  The near infinite selection at Walmart tends to cover "average" needs across a very broad population.  Specialty shops feel a little bit of a pinch when they come to town because Walmart will probably sell something like what they offer but the market is still there for more savvy discerning customers.  If another small shop pops up that does what you do and if they do it better they are going to do real damage to your business. 

Re: Knowing your competitors
  • 1/4/2018 8:15:49 AM

I suspect that even large retailers have difficulty monitoring what small companies are doing.  I know that when we typically talk about retailers we think of large companies like Walmart and the changes they brought to nearly every town in the US.  I have no doubts that Walmart has extensive data related to their customers but what about those small shops that survived when Walmart moved in?  Can Walmart keep track of how those stores are doing and where they cut into the local market?  I was thinking of this more from both sides of the monitoring.  Small businesses can see what Walmart is doing to them fairly easily, they probably know the other small business owners that they compete with but can't really tell what effect those other stores have on them and Walmart probably can't see much of anything that either small business is doing.  I agree that it would be interesting to see what a company like Walmart is looking at with regard to small businesses in areas that they operate and how the small businesses are looking back at Walmart for example. 

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