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.
34 One customer might start shopping elsewhere if their favourite supermarket doesn't stock organic bread. For another customer, the deal breaker might be a well- stocked fresh fish counter or a gluten- free range. Customer- focused retailers make sure they use their knowledge and insight to listen to what customers want. It's much simpler being a price discounter. They only worry about price. But Tesco, Kroger and Casino listen and try to give their customers all the different things they want, the best match they can, because they truly understand what each individual likes. A different kind of strategy Early on, it became clear that Kroger was attempting to compete with Wal- Mart on price alone. Kroger's business was in decline, so the decision to focus on price was clearly not working. dunnhumby's long experience with Tesco had shown that different customers are price sensitive on different products; they're also not price sensitive on everything. There is also likely to be one cluster of customers who are especially focused on discounts. Subsequent analysis of Kroger's data confirmed that the same was true in the US. This insight enabled Kroger to ensure it was getting its pricing right for the customers who really cared about bargains. " Everyone is in a price war at the moment. It takes a really smart retailer to use customer data for a better understanding of the customer. My sense is that those who focus on the customer will come out better than the ones who don't," says dunnhumby's Mick Yates. Being clever about customer data helps retailers balance two opposing views of the world. It helps them stock the right product ranges at the right prices for loyal customers. Previously, retailers had one of two choices. Either they could try and stock everything, which is very inefficient. Or like the discounters, they could stock a limited range at a low price. Personalising petrol stations Of course it wouldn't make business sense for these customer-centric retailers to cater to every individual preference of their shoppers. But analysis of the data enables them to overlay similar customers, spot patterns and form broad customer clusters whose needs and wants are considered on a daily basis. any colour you like as long as it's any colour you like