32 Imagine being able to combine the one- to- one experience a customer enjoys in their local store where the shopkeeper knows their likes and dislikes, with the range and cost savings of a large supermarket. Isn't that the holy grail for modern retail? And indeed for modern customers? The previous chapter showed how insight informs relevant innovation; customer data also informs a more personalised service as the rest of this chapter will demonstrate. Rigorous, clever analysis of customers helps retailers offer a more bespoke experience to customers. It helps remove all the headaches from shopping, making choices easier. Caffeine choice For example, interpreting Kroger's data showed dunnhumbyUSA that a customer's first decision- making process when buying coffee was whether it was caffeinated or decaffeinated. It wasn't about brand, it wasn't about fair- trade just a simple either or choice. So Kroger reorganised the way its coffee products were laid out on the shelves, dividing coffee into caffeinated and decaffeinated. It sounds so simple but it was an important decision because it was led by customers, not the category manager, not a coffee brand, but the customer. A category manager might have wanted a top- selling brand to dominate the shelves, whereas a coffee brand manager would want all the different products grouped together to make more impact. On a much bigger scale, customer data enables supermarkets to stock the products they know their loyal customers like and need. Most retailers looking to streamline their shelf space will just consider the lowest- selling items. Some of their loyal customers might value these niche products and there is a danger that if they remove an item, there will be no viable alternatives. For example, in the bread aisle in Tesco, a product like milk loaf may not be a big seller but it is a crucial item to keep in stock. This is because the customers who buy milk loaf do not want a substitute, if milk loaf is not there, they will go elsewhere to find it. Retailers need to understand the difference between key products and substitutable items. While some items can always be substituted any colour you like as long as it's any colour you like Retailers need to understand the difference between key products and substitutable items
33 custom experience with an agreeable alternative, some key products cannot be replaced. If a retailer does not ensure these valuable, niche products are in stock, they will lose some of their customers. The margarine uproar Returning to Kroger is another good example of how a customer strategy can ensure valuable customers can buy the products they really want. Mark Hinds, now general manager for Tesco at dunnhumby was part of the four- man team sent over to the US to help Kroger realise how powerful customer data could be in helping them making the right decisions about strategy. As part of the pilot, dunnhumby analysed some data on ' yellow fats', products like margarine, butter and vegetable spreads. By analysing the data, Mark was available to make a series of recommendations about a number of products Kroger could remove from the shelves without annoying its loyal customers. He made sure that customers had an option to buy an alternative and also that Kroger's most valuable customers would not be disgruntled by the changes. Then he was called by Kroger management who were dismayed by a huge number of customers complaining about the changes. It turned out that Kroger had accidentally removed one of the products dunnhumby had said was essential to keep. It was the only margarine in their range suitable for Jewish customers so no surprise there was uproar. The customer data had revealed how crucial this product was to a critical group of Kroger shoppers. Customer- focused businesses are different. They think about things in a different way. They don't just look at low- selling items but at what their customers buy. They make sure they don't delist items that are valuable to their customers. Christmas shopping for distant relatives A helpful analogy involves Christmas. When you buy Christmas presents isn't it easier to buy presents for the people closest to you than distant relatives? The more you know, the easier it is. It's the same for retailers who use customer data, by analysing what their customers like and don't like, decisions become simpler. Customer data and insight informs and empowers our clients' decision making.