STORES Magazine - February 2008 - (Page 70) CONSIDER THIS/ POINT OF VIEW Closing the Loop: Real Estate, Marketing and Merchandising BY DEVON WOLFE The real estate, marketing and merchandising departments within a retail organization often operate in silos, at best, duplicating efforts centered around customer analytics and, at worst, embarking on divergent or contradictory paths. will focus on supporting a successful grand It seems intuitive that having a clear picture opening and building brand/store awareness or profile of the core customer is key to the with high-potential customers. It comes as no success of any retail organization: How can surprise that a key ingredient to marketing efyou beat the competition and best meet the forts — whether it is buying billboard space, needs of your customers if you don’t have a radio or television media spots, selecting solid understanding of “who” and “where” newspaper advertising zones for flyer distrithey are? bution or implementing a direct-mail camCustomer profiles can range from relatively paign — is the target customer profile. simple demographic profiles (single houseThe stores have to be merchandised, and hold, homeowner, income of $50K plus) to the restaurant’s menu tailored to regional multi-faceted profiles that include not only preferences. This merchandising relies heavdemographic attributes, but psychographic ily on location intelligence and customer proand lifestyle variables, as well. Two cusfile to identify and stock the right products tomers who appear very similar based on de- Devon Wolfe is managing based on the proportions of various cusmographic attributes alone may turn out to director of strategy and anatomer segments within each store trade have very different lifestyle and consumption lytics services, the Americas, area. patterns. In reality, one may be an ideal for Pitney Bowes MapInfo. prospect to shop at your store or patronize your restaurant, while the other has a very low likelihood of Linking POS and customer location information choosing your brand. When using a geodemographic segmentation system, a The insight provided by the customer profile gives retailretailer will take its database of customers and append a ers the ability to locate near and better understand their cluster code to each record. The basis for the match of key customers and to tailor the marketing messages, procustomer to cluster is some geographic “key” such as ZIP motions and merchandising mix more effectively. code or address, so it is essential for the retailer to capture this location information for all its customers. Ideally, customer location information will be gathered at Location intelligence the point of sale and linked to transaction information. This The retailer’s real estate department often develops a allows the retailer to determine the relative proportion of customer profile and uses it in tandem with location intellivarious customer segments that shop its brand, correlate gence technology to drive its overall market expansion customer profile to per-capita sales and determine the relastrategy, generate sales forecasts and evaluate specific tionship between transaction amount and the distance of site locations. the customer from the store location. The goal: opening stores in locations with trade areas Given the obvious importance of the customer profile, it that have the greatest concentrations of high-value “in prowould seem like common sense that all departments within file” customers – and which are strategically positioned relan organization should be operating from the same view of ative to the competition and sister stores. the customer. Advanced predictive analytic models can literally evaluFrom both an efficiency and effectiveness standpoint, it is ate tens of thousands of prospective locations based on best for an organization to have a single, standardized, core geodemographic, competitor and site variables to help the customer profile and location intelligence platform from real estate department prioritize opportunities based on rewhich to operate. This will allow real estate, marketing and alistic measures of sales potential and sales transfer from merchandising to support each other and the organization’s existing locations and competitors. overall goal of better serving the customer’s needs. Once a location is chosen, the retailer’s marketing efforts 70 STORES / FEBRUARY 2008 WWW.STORES.ORG http://WWW.STORES.ORG
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