Customer segmentation tools provide a flexible framework for decision-making—and allow retailers to flex and bend while still maintaining consistency across markets. Jeff Milgroom, a VP and retail industry expert at San Diego-based Claritas, which specializes in demographics and market segmentation, spoke with senior editor Katherine Field about tools and trends in retail target marketing.
Chain Store Age: Do retailers have significantly more customer and demographic information at their disposal now than they did even a few years ago?
Jeff Milgroom: Retailers have for years leveraged external information, demographics being a key part of that. There has been some evolution in demographics, as information has matured. But, on the customer-information side, a real revolution has occurred in retail. Today’s retailers are leveraging their own internal information, whereas five years ago they weren’t really at that point. Some of the big retailers were, certainly, but the industry itself hadn’t yet moved into collecting customer information, analyzing that information and marrying the two—customer and demographic—to exploit it in the marketplace.
CSA: What is on the horizon in terms of customer segmentation systems and analytical technology?
Milgroom: Segmentation by gender will be a major focus, certainly as more men shop. Marketing segmentation tools uncover patterns of consumer behavior, allowing retailers to target a specific segment—e.g. male shoppers—and understand what drives that segment. Another focus will be on the Hispanic segment and its subsequent impact on the industry.
In terms of technology, I think you’ll see further expansion and mainstreaming of business intelligence (BI). You’ll see BI interact with the internal information that retailers, both large and small, have. These BI tools will ensure that all the information becomes operationalized, in that current software integrates with existing retailer data in a real-time fashion so that decisions can be made more quickly.
CSA: Will more customer information a