Basket analysis vital for retailers
Basket analysis is vital for retailers to better serve consumers and increase their profits.
So said Roland Larson, BI analyst at market research company IRI-Aztec SA, speaking at ITWeb Business Intelligence Summit 2015 in Midrand yesterday.
Basket analysis is the study of shopper information based on the contents of each individual shopping basket processed by a retailer, Larson elaborated.
Whereas common, simplistic retail management assumes all "shopping occasions" (shopping trips) are initiated by the same needs and all shopping baskets carry the same profit, basket analysis helps retailers identify the various shopper needs driving different shopper occasions and which baskets drive the most revenue, Larson explained.
By analysing basket data, retailers can ascertain shopping patterns, such as the time of day, week or year certain products are most popular, which products are most popular at specific branches of their franchise, and which products are commonly bought together.
This knowledge can help retailers identify different shopper types and the needs driving their various shopping trips, and segment their stores according to the needs driving the most profit at each branch, he continued.
The goal is for retailers to be better equipped to meet the needs of their different shopper groups, which will be different for each branch and at each time of day, week, and year, and offer promotions that will satisfy their customers' needs, Larson said.
While basket analysis helps monitor buying patterns, the expanding Internet of things, in particular smart fridges and kitchen appliances, could offer more specific insight into patterns of consumption.
Ongoing data collection and real-time analytics are some of the advantages of gathering data from smart appliances, said Barry Devlin, founder and principal of 9sight Consulting.
However, the implementation of the Protection of Personal Information Act will mean companies cannot legally gather data from subjects unless they give their explicit consent and the use of their data is found to be absolutely necessary, said independent consultant and privacy advisor Russell Opland.
For the moment, basket analysis delivers noticeable results, according to Larson.