Albertsons customer segmentation

Albertsons are the second largest supermarket and drug store chain in the US serving over 27 million customers from their 2500 stores.

The challenge

Albertsons had a desire to understand the behaviour and needs of their customer base and then use the insight gained to achieve customer focussed growth and satisfaction. In particular, they wanted to identify those groups of products, which were naturally bought together by different subsets of customers, such as organic, bulk or BBQ foods, in order to guide promotional activity, store layouts, & marketing plans.

They also wanted to be able to get customer insight at a national level across all store banners in the group whilst keeping the ability to analyse at an individual banner level. The resulting segmentation had to be easy to deploy operationally on a Terradata platform to allow regular rescoring of the customer base and inclusion of new product items.

The solution

CACI initially identified and profiled the different types of purchasing activity recorded at all tills in the Albertson group for the Preferred card (Albertson’s loyalty card) database. EPOS sales data for a 15% sample of households with a valid Preferred card was used and the data was aggregated to card, basket, unique product code (UPC) and promotion level.

An undirected segmentation was then used which let natural clusters form rather than predefining segment types. A hierarchy of different segment levels was provided, allowing drill down to more detail when and where appropriate. Segments were identified based on product preference and were then augmented by appending additional information such as customer location, promotion usage, visit frequency and timing, basket size and store usage.

Nine different high level segment types were identified which included Deli Users, Own Brand, and Organic/Vegetarian. Each of these contained information on:

	The % of the customer base the segment formed
	The items where there was above and below average spend
	The value of the segment
	Frequency of shopping
	Type of promotion use
	Key geographical representations of the segment
	Key banners shopped at from the Albertson Group

CACI also provided a bespoke Management Information tool that showed:

	Products that were key for each segment
	Segments that were price sensitive and to what products
	The products customers were most excited about and could therefore be used as loss leaders at a store level
	The products that could be stocked and promoted locally

The results and benefits

A strong set of shopping behaviours was identified which offered the scope for increasing the performance of some segments. The strong variations in segment embership by region and banner suggested a need for regional, banner-led marketing and promotions. The segmentation has allowed marketing strategy, promotions, product range and store layout to be tailored to satisfy the different types of behaviour identified.

Albertsons have been able to use the segmentation to review product ranges, opening times etc against the segment profile for that store and adjust as appropriate as well as feeding into store refurbishment, extension and consolidation decisions. They have also been able to identify additional ‘value add’ services that could be offered to key segments at minimum cost and effort to increase loyalty and satisfaction.

As an additional benefit CACI also identified suspicious Preferred card activity, which is being investigated.

To find out more about our work with Albertsons, either call 020 7602 6000 or email info@caci.co.uk