Some retailers are shifting their marketing efforts from an "Attention shoppers!" approach to one that sounds more like "Hey, Joe! We know what shirts you like, and they're 10 per cent off today". Using data warehouses, retailers are looking to establish relationships with individual customers, rather than launching broad promotions to many people.
The ultimate goal that retailers are approaching in their stores is the one-to-one personalisation that's already achievable on the Web, said analyst Donald Bellomy at the Aberdeen Group.
Quality Stores, a Michigan chain of 350 farm and garden stores, was able to increase the average spending of respondents to an experimental Mother's Day promotion by 47.4 per cent, said sales director Helm Kraus. The store sent out custom newsletters that offered discounts on certain items, like benches, that Kraus' team thought would complement items each customer had bought in the past, like garden supplies.
The company has only begun to mine its 10-year, 200,000-customer purchasing data in a Retail Target Marketing Systems Archer database. The database can help manage campaigns and includes reports down to the individual transaction level. But like most retailers, the company had devoted its energies to finding new customers, not increasing sales to existing ones, Kraus said.
Because the cost of acquiring a new customer is about 10 times the cost of catering to an existing one, retailers can win big by focusing on their star shoppers, Bellomy said.
Smart and Final, a $1.6 billion wholesale grocery chain based in California, is testing the idea of offering specialised pricing to its 1.5 million card-holding customers.
The company would offer caterers a discount on napkins or janitors a discount on floor wax, said store systems director Bob Graham. The system will be built on top of database and checkout systems provided by NCR.
Just For Feet, a $775 million sneaker retailer based in Alabama, is also jumping into the game. CIO David Meany said the company plans to buy detailed demographic data about its customers so that it can match product data and customer purchasing histories with vital sneaker-related statistics such as whether households have kids who play sports.
The data from Integrated Marketing Solutions in Nashville and the Corema targeted marketing software from London-based ICL will power targeted mailings from a 2.5TB warehouse that will offer consumers deals on products they might want and "make them feel like they are unique when they come into the store", Meany said.
To Graham, fine-grained marketing is the way of the future: "The companies that don't embrace the new way of thinking will be in trouble. There is only so much market share out there."