Retailers' 'big-data' questions: How holiday shopping insights will shape stores' 2016 strategies
It was the season for analytics, as big data becomes a bigger competitive weapon for retailers
The holidays are not only the make-or-break selling season that can account for a whopping 25% of retailers’ annual sales. The shopping bonanza, when consumer spending, store traffic, and e-commerce peaks, is prime time for merchants to evaluate their merchandising and marketing strategies to size up what sizzled and fizzled.
As retailers increasingly turn to analytics to make sense of the unprecedented reams of data generated in our digital age, they’ll no doubt weigh insights gleaned during the holiday season to drive business in 2016.
Industry experts shared with Retail Dive the big questions retailers will ask of big data collected during the recent holiday season.
Gauging gift giving versus personal purchases
While the winter shopping spree is the mother of all shopping events, the period also serves up juicy findings for the other key retail promotions sprinkled throughout the year.
“Something we’ll be looking at are the differences in purchasing behavior pre- and post-holiday to inform how we shape campaigns, for example, back-to-school or Mother’s Day, versus personalized offers throughout the year, such as birthday rewards,” Andrew Wong, a partner with Kurt Salmon Digital’s retail-focused digital design consultancy, told Retail Dive.
“That’s a broad data set, including engagement, basket size, browsing, conversion, cross-sells, etc., but the overall theme is an important one across the user metrics.”
Kurt Salmon will mine holiday data for telling insights on what marketing and merchandising hooks nudged shoppers to buy for others and for themselves, and look for purchasing patterns in those behaviors.
“For example, if we look at one specific merchandising construct like product bundles and kits, for example, such as ‘shop the look’ or, ‘other users also purchased product X,’ [we would ask ourselves], ‘how do those perform when customers are shopping for gifts versus for themselves?’ ‘Does the proclivity to purchase other or all bundled items vary based on purchase intent and, if so, how?’ ‘Given like assortments, which products are stronger pre- versus post-holiday?’” Wong said.
“Many of our clients will be looking specifically at holiday data and the differences between gift giving and personal shopping periods to help them shape campaigns through 2016 and into next holiday.”
Customer profile insights
Who exactly are your shoppers, and why do they buy what they do? These are questions holiday data can help answer to shape retailers' insights for the coming year. While retailers have been asking these questions for eons, they’ve taken on a heightened urgency as consumers increasingly demand more personalized offers, and the retail-marketing model goes from marketing to many to marketing to one.
“The amount of holiday data can be immense, so we are always looking to summarize raw data into actionable metrics we can use to further develop the overall customer profile,” Wong said.
“Holiday purchasing gives us great insight into a customer’s purchasing sphere. For example, are they buying for children? If so, are they boys and/or girls? Toddlers or teenagers?” he said.
Holiday shopping data also shines a spotlight on consumers’ “personal interests and values,” Wong said. For example, “Did they buy ski equipment for themselves post-holiday? If so, was it beginner or advanced-level gear?” he said. “For our [retail] customers with strong CRM [customer relationship management] programs, we extract higher-level interests, preferences and behavioral [data], which we cross-profile against the product assortment to provide intelligent and personalized offers throughout the year,” he said.
So if during the winter holidays, a shopper bought boys' sneakers from a retailer, for example, that consumer’s customer profile indicates purchasing for a middle school boy,“ and, therefore, they are included in the back-to-school campaign with age- and gender-relevant promotions.”
Loyalty drivers that double as data-mining expeditions
The holiday season also marks a ripe opportunity for retailers to sign up bargain-hungry shoppers to their loyalty programs, which are portals to rich consumer data. What better time to drive shopper loyalty than during the holidays, when consumers are combing store aisles in gift-finding pressure mode?
“Retail CMOs can use the holiday season to invigorate their customer base and help integrate them into data-generating programs like the company’s online store or loyalty program,” Carein Fleit, senior client partner and leader of executive recruitment firm Korn Ferry's Global Marketing Center of Expertise, told Retail Dive.
“Macy’s does a great job of integrating the online and retail experience through programs like buy online, pick-up in store. Kroger’s loyalty program is exceptional, earning them a 70% coupon redemption rate, when the industry average is about 5%,” she said. “The supermarket generates this high return by tailoring every coupon at the individual customer level.
“When used correctly, insights and analytics can inform a customer-centric CMO with the information necessary to answer the questions, ‘Are we offering what the customer wants? And, Do we understand our customers well enough to offer unique products to the right people?’” she said. “The answers to these types of questions have organization-wide implications, and it’s the responsibility of the customer-centric CMO to ensure each department acts on the gathered customer insights in a unified manner.”