Searching for ways to revive the electronics chain The Source, Charles Brown noticed that shoppers were snapping up headphones, especially pricey ones.
Armed with analysis of sales data, the president started to stock more upscale lines, with top prices rising to about $650 today from $150 three years ago. The strategy is showing signs of resonating with customers – over that same period, the retailer’s sales in the category surged more than 40 per cent, he said.
As he pored over data, he also saw core categories such as low-cost cables, electronics parts and large speakers were slumping, prompting him to ditch or scale back on those products.
“Consumer electronics is a really tough marketplace. With the data, you’re able to compete, I believe, way more effectively,” said Mr. Brown, who took the reins at the faltering retailer two years ago and, before that, was its chairman since it was bought by Bell Canada in 2009. “You’re able to get much greater productivity out of your assets and you’re able to improve your customer mix, your product mix and drive up margins, which is hard to do in this business.”
Mr. Brown and other retail executives are betting more heavily on data amid fierce foreign competition and shoppers who are finding better deals online.
In addition, some chains are moving beyond sales data and traditional market research, gathering information from real-time chatter on social media and other websites, including online product reviews. The volume of research is increasing, forcing retailers to move even faster to analyze the numbers while facing off with new rivals that already are cashing in on the analytics.
In 2011, businesses in Canada created and replicated more than 1.6 trillion gigabytes of information. That figure will reach 90 trillion gigabytes by 2020, according to market researcher IDC in Toronto. But Canadian companies lag in embracing “Big Data,” laments the report, which was issued in December and titled: Big Data in Canada: Challenging Complacency for Competitive Advantage.
“In comparison to the rest of the world, we have started late,” IDC’s white paper says. “The use of Big Data will become a key basis of competition and growth for individual firms. … In most industries, established competitors and new entrants alike will leverage data-driven strategies to innovate, compete and capture value from deep and up-to-real-time information.”
This month, Canadian retailers will get a jolt from one of retailing’s savviest data analyzers: U.S. discount chain Target Corp. The company, which will open its first Canadian stores soon, is skillful enough to pinpoint when a young female customer is pregnant – based on her purchase history – and thus receptive to promotions for cribs or baby clothes.
Target already is touting its REDcard loyalty program, which provides discounts on purchases and allows the chain to track purchasing habits. Domestic retailers Hudson’s Bay Co., Canadian Tire Corp. and Loblaw Cos. Ltd. are racing to develop their own rewards programs.
REDcard holders shop almost two times more every month – and browse 2.5 times more departments on each visit – than customers without a card, said Kathee Tesija, the company’s executive vice-president of merchandising.
Cardholders also have broad demographic backgrounds, chief executive officer Gregg Steinhafel said. “It’s very well dispersed and balanced, and we think that’s a very positive attribute.”
In March, Staples Canada will join grocer Metro Inc. and other retailers in teaming up with Air Miles to tap into the reward program’s customer database of 10 million. The Staples program officially launches on Wednesday, but the company has already combed through industry data to unearth areas of potential growth.
Like The Source, Staples has discovered a gold mine in headphones. Last fall, the office-supply chain started to beef up its high-end brands, including Beats by Dre and Monster, triggering double-digit sales increases in the category during the holiday season, said Rick Atkinson, the company’s vice-president of marketing.
“It helps when you understand where you should change your mix of products,” Mr. Atkinson added. “If we can give shoppers what they want, they’re going to be more loyal.”
Still other retailers are monitoring “unstructured” data from social media and other online sources.
Last November, online shopping mall Shop.ca noticed that shortly after it added a Telstar iPhone mini projector to its lineup, shoppers began sharing information about the $229 item and writing reviews about it.
Shop.ca quickly highlighted the product on its home page, sent e-mails about it to its members and touted the item on Facebook, Twitter and other social media, said Shop.ca president Trevor Newell. Sales of the projector soared 800 per cent, he said.
Shop.ca also tracks what people are searching for on its site, he said. For instance, last summer his team realized that more customers were searching for Nike products, but the site didn’t stock many of them. The company then doubled the number it carried, he said. “We sold more of them because we had them,” he added.