The Future of Retail is Here: Shoppers with money.

Wednesday, October 6th, 2010

A couple of unrelated articles in today’s WSJournal today indicate to me how retailers are sharpening, necessarily, their focus on who really are the good customers. The one size fits all where every mall in every city looks like every other mall in every other city is rapidly falling out of fashion. Local is a movement. Local means knowing who comes into the store or, if Amazon, has its way, who visits on-line. The accelerator for this movement is the distribution of discretionary income or the nearly unimaginable debt load across the aspiring classes, meaning those pinned in the middle aspiring for the upper end. This article in the Journal describes the financial plight of this middle class.

1. Middle Class Spending In this category spending is down 3.5{915b2618a7c304f461205894c34b2284541042d3c677679407e2f30838792dcd} from 2008 and 3.1{915b2618a7c304f461205894c34b2284541042d3c677679407e2f30838792dcd} from 2007. The associated drop is the largest since such began to be collected in 1984.

2. Amazon Several dozen retailers agreed to support ShopRunner, an on-line collective, in order to compete for the “highest spending on-line customers.”

Throughout this year in a wide range of customer discussions, all are concerned about retention. In the case of retailers, the target is the high value customer as the near term economic outlook offers little hope that many in the middle will rise to the high end (call this ‘organic growth).

shop runner

Step one is to reliably identify who is the high value customer and how to effectively communicate with that customer (call this ‘retention). It’s more than up-sell or sentiment analysis. How performance and accuracy improvements in large scale analytics can help to uncover this critical segment within each customer set would be a compelling lead-in for vendors of related data analytics technologies.