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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

35 For example, Tesco has six broad segments it considers in every management decision - upmarket shoppers, health- focused shoppers, traditional cookers, mainstream families, convenience shoppers and price sensitive shoppers. It also has 17 distinct customer groups which include brand loyals, dieters, calorie loaders, adventurous eaters, promotion junkies, ethical, green and so on. Tesco's Clubcard data helped the retailer reconsider what ranges it would stock in its petrol stations a bit more carefully. Previously, Tesco had left the decision to the local petrol station manager. He or she would take a trolley to the supermarket and decide what products to stock. These decisions could be quite random, one petrol station might be full of car accessories and not much else, and another might have ten varieties of jelly. dunnhumby analysed what kind of products Tesco shoppers tended to buy in its small petrol stations and placed them into three categories. First, Toppers would consist of extras like bread and milk, Impulse Buys would include stuff like chocolate and magazines, while Car Buys would feature items like sponges, de- icer and maps. Using this information as a starting point, Tesco petrol stations were classified in terms of these three categories and restocked accordingly, to ensure they were offering the items that customers really wanted. So what's the right balance between making every store distinctive and right for every individual customer and having an efficient distribution model? Where is the happy medium? Tesco, for example, has around 10 classes of store, such as Metro, Express, Extra and Superstore, to appeal to different clusters of customers. It's a compromise between efficiency, standardisation and personalisation. It's the hardest juggling act for any retailer. But the financial performance of retailers like Casino, Tesco and Kroger suggests that interpreting data strikes a compromise that customers are happy with. The rebirth of modern retail? Go back in history to the birth of modern retail when great retailers like Marks & Spencer, Selfridges and Macy's were first founded. custom experience It's a compromise between efficiency, between standardisation and personalisation