Customer Segmentation

Client Description

A brick and mortar retailer which serves almost one million customers and has multiple stores . The retailer has been able to gain and maintain large market share by offering products at prices lower than others

Business Problem

Growth in the sales has been low and retailer is losing its market share to other retailers and small neighborhood stores. Same store sales and sales per square foot has declined and turnover is mainly boosted by opening of new stores.

Our Approach

Different customer behavior is shown by different generation of customers. Millennials are more interested in experiential shopping as compared to baby boomers who look for deals and discounts.Thus to improve the sales of retailer it’s important to understand the spend behavior of its customer base.

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We combined the point of sale and customer demographics data and segmented the customers using advanced analytics.Then we profiled these customers and studied their spend behavior in various departments across years.

Outcome

We identified 5 customer segments.Out of which one was high value customer segments and two were high value potential segments.

Recommendations

  1. Reward the customer base of  high value segment.
  2. Change assortment to acquire the customers in potential segment.
  3. Set up an e-commerce platform
  4. Promotion through social media channel where the presence of potential customers are high.