Grocery superstars stock up on analytics

Around the world, analytics is transforming customer relationships, reducing waste and improving marketing in the grocery industry

Consumers worldwide are tightening their belts, but smart grocery organizations are turning tough times into opportunity by understanding and adapting to customers' changing demands.

The businesses that can give customers what they want, when they want it – and at the right price – are on their way to retail nirvana: changing from "the store" to "my store" for more and more customers.

How do organizations reach this retailing peak? By analyzing customers' behavior and buying habits, companies can forecast inventory needs, better understand and serve customers and determine which customers will be interested in what products.

Two of the many grocers using SAS Analytics to do just that are Waitrose in the UK and the Pão de Açúcar Group in Brazil. In the US, Catalina Marketing uses SAS to enhance technology that has been helping grocers succeed for years.

Waitrose improves stocking, reduces waste 
With 190 branches carrying more than 15,500 product lines, Waitrose, the UK's best-known grocer, needs to predict demand accurately to supply the right products to the right stores in a timely way. Ordering the correct stock is essential to maximize sales and ensure the least waste possible. On a regular basis, it's also important to ensure the right stock is in place for specific events and promotions: chillers full of special-offer ice cream as the heat wave hits and shelves stacked with mince pies as Christmas approaches.

With the help of a SAS demand forecasting solution and support from SAS partners, Waitrose is achieving more accurate store replenishment, satisfying the needs of its valued customers and balance sheet alike.

"We have achieved increased productivity, efficiency and financial gains," says Gail Richmond, Manager of Branch Ordering Development. "With the help of SAS we have been able to reduce stockholding by at least 8 percent and reduce wastage by 3 to 4 percent. In addition, we can look at past events and see if mistakes were made, at Christmas say, and put them right next time. Or look at successes and try to replicate them."

A model of analytical retailing in Brazil 
For Brazilian grocery giant Pão de Açúcar Group, customer behavior is a driving force in the company's business decisions. This focus on customers began in 1995, after the company began storing data from commercial transactions and analyzing buying habits. The company uses this technology for customer segmenting, where consumer groups are identified and classified based on consumption profile similarities, not just on characteristics such as age, gender, income or residence.

"It's an enormous amount of information," says Patrícia Harumi Tsuji, Manager of Market and Consumer Knowledge. "There were 6 billion data points stored last year, and we were only able to process them thanks to SAS solutions."

The SAS solution has done more for the company than help the retailer understand and better serve its customers; Pão de Açúcar Group's data is now centralized, and tasks that were manual are now automated. The number of media campaigns that the company conducted increased dramatically as well. "Before SAS, we conducted five media campaigns a month," says Tsuji. "After we implemented it, that number has jumped to 18."

Catalina Marketing helps predict and influence customer purchases
Catalina Marketing engages with shoppers based on purchasing patterns, preferences and buying decisions. If you've ever purchased an item at a grocery, drug store or big-box retailer and received an incentive or communication at check-out, then you're familiar with Catalina Marketing, the largest print media network in the world. The in-store media company analyzes and predicts shoppers' buying decisions to generate customized communications at the point-of-sale at more than 50,000 retail locations worldwide.

Before implementing SAS, Catalina Marketing selected which message to generate based on the shopper's current transaction. Today, a two-year window into shoppers' purchasing patterns, preferences and buying decisions are used to develop mass customized campaigns. With an audience base of 90 million, three times that of American Idol, the ability to engage with shoppers based on actions and not intentions delivers much more efficient and effective media spending for retailers and consumer packaged goods manufacturers.
  
"We've been helping our clients reach the right people with the right messages for 25 years," says Williams. "But with the predictive capabilities we have with SAS tapping into the historical purchasing data of almost every grocery shopper in the US, we're able to do it with more precision than anyone else in the market."