Investigation : The large distribution invests billions in systems analysing the data contained on supermarket tickets.
Objective: to closer encircle the profile of the consumer.
Your sales-receipt is worth gold! Because each information registered on this fine piece of paper is a decisive competing advantage for the giants of the distribution. To know, in detail, the contents of the Shopping carts of the French families: this is the strategic goal of the large chains of supermarkets. During the last five years, the majority of the large French actors converted themselves with information technologies. And all the economy of the sector is upside down. For Philippe Lemoine, chairman of Lafayette Services, "the essential margin of the distributors is now less characterised by the selling price and purchase price that to the commercial profits carried out because of the optimization of the information systems".
The cash register is in the heart of this new strategy of the hypermarkets because it is in fact the only point of contact between the store and its customers. Today, these cash registers are actually computers connected to a network on which the data circulates between the warehouses, the marketing services, the suppliers and more generally all the attached links of the chain of distribution.
In France, the creation of these data networks already represent "several billion francs of investments", according to Pierre Violo, Chairman of the European subsidiary company of data-processing company BEA. A jealously kept secret surrounds these strategic projects. The great groups of distribution hide their paperwork, but look all at the same model: American Wal-Mart, n° 1 globaly uncontested with a sales turnover of 131 billion dollars (118 billion euros). Till lately, the group was established only in the United States. Recently, it took place in Europe with the repurchase of Wertkauf et Interspar in Germany, as well as Asda, in Great Britain. It blows like a wind of panic on the large french distribution since the intrusion of the American giant.
Neither promotion, nor special operation
The force of Wal-Mart, is its single system of collection and of treatment of information built carefully during the last fifteen years "They are the first to have used information technologies as an important handle of distinction", estimates Pierre Wemel, in charge of management systems of the client relationship at IBM-France. The contents of each shopping cart passed via the cashiers are stored in a database lasting at least a year. This information is analyzed by a software of data-mining, term indicating the inspection of this mine of data, being the most important information a distributor ever registered about it's customers. The database of Wal-Mart is doubled with a system allowing the distributor's computers to communicate with those of it's suppliers like Procter & Gamble or Coca-Cola. It can ensure a continuous flow of provisioning by guaranteeing a constant purchase price and a level of inventory reduced to the minimum. The American group went very far in its reorganization making it possible for the suppliers to create their own information processing system to take all information they need to supervise their assortments without passing by the central merchandising. The result is spectacular: at Wal-Mart, we find neither promotional or special actions. The trademark is committed posting prices 10 % lower than its rivals throughout the year.
The warehouse turned obsolete
"the competition of the groups of distribution is measured from now on with the size of their databases", ensures Hani Roumieh, Marketing Director of the French subsidiary company of EMC, specialist in databases. The warehouse of information of Wal-Mart includes 40 terabytes of data (40,000 billion bytes). In comparison, the warehouse of Carrefour, considered as most important in the Hexagon, counts eight times less.
Obviously, the French distributors are late on this point. Casino which was the first to invest in new technologies in France, strongly took the model of Wal-Mart as a starting point. Since 1991, Taha Husseini took in hand the data processing departments of the chain. This director of the transverse management of the Group Casino explains the turn taken by the world of the distribution: before the technological revolution, "Department stores were independent PME carrying out their own business. They ceded their place to a dense network of stores which releases several billion francs turnover ". Because of its structure, Casino already had developed a system, which was enough improved and unified. Its data base measures approximately 1.3 terabyte. As Taha Husseini affirms it, "one of our forces, is our system of automatic restocking, called Sycomore, set up in less than three years". The group installed a system of remote control per satellite which makes it possible to change the destination of the delivery trucks , according to the needs of the stores. Since 1996, 90 % of the frozen foods are delivered in limited flow, which makes it possible to limit the losses for this type of product, having a limited time of consumption.
At Auchan, the warehouse became obsolete "the majority of the restocking is now pulled by the sales", explains Claude Palmieri, General Manager in charge of the futurology and the information systems. This type of restocking makes it possible to ensure a non stop inventory, thanks to the data of the sales receipt. Each package of detergent bought is counted, and a new order is immediately transmitted.
Update of the French GMS
The observers of the sector estimate that the French groups of distribution completed the installation of the data networks with their suppliers. Today, an important unknown factor remains: the consumer. With the question: « Who are your customers? », a distributor gives this strange answer: "Le Métro" (the subway). In other words: an uninterrupted flow of anonymous individuals. And it is precisely thanks to a better knowledge of its customers that Wal-Mart marked its difference and imposed its power.
At Auchan, the analyses of the sales receipts become systematic. Each day, the northern distributor manages 2 billion of printed lines coming from cashiers. With this element, the distributor can have a precise idea of the linear in which the customer did not buy anything - "zones of shade" - as compared to those where a better sales turnover is carried out. The collected data is analyzed through various indicators, often crossed: the frequency of his visits can be compared with the average basket of the customer, the analysis by products can result in studying the sales turnover carried out by linears... This much information makes it possible to reduce the costs while making good forecasts on the sales. After a few months, the sales of the new products are taken into consideration and are eliminated in case of non success. The result of a promotional action can be even known during the evening.
The distribution succeeds with better targeting its mailings
Even Carrefour, precursor in many domains, developed only recently information systems on its customers. The arrival, of Daniel Bernard, (who is more at Carrefour, cause of a continuous conflict with the shareholders of the Group) previously of the German distributor Métro, marked a change of mentality. The distributor gave a big acceleration to his high-tech projects, with the recruitment of the American Bruce Johnson, ex owner of data processing and logistics at Palmolive. The new team trained around this high tech framework jumped into the tracking of data. Carrefourjust made several offers to data-processing companies, whose amount would exceed the billion francs, in order to develop a duplicable tool on the world scale.
Thanks to the information contained in the sales receipts, the distribution succeeds to better target its mailings. But the analysis of this information involves radical changes more and more often. Treated by mysterious algorithms, this massive amount of data reveals tendencies, groups of purchasers, purchase behavior... Carrefour developed a software of datamining based on one of these algorithms, which enables him to redraw a supermarket and to reconstitute the behavior of a customer in the store. This new concept of supermarket, Magali, resulted with the help of this tool.
The race to the consumer loyalty of the customers
Parallel to the development of these software tools, the heads of the distribution launched out in a race concerning the consuming loyalty of their customers. The idea is simple: by mixing sales receipts and discount cards, the professionals are able to determine the profile of the consumer, to even put a name behind each shopping cart "the first objective of the distribution is to satisfy its most loyal customers ", explains Alban Neveux, director of the cabinet Roland Berger & Partners. These consumers, who constitute only 20 % of the customers of the department store, represent on average 70 % of the sales turnover of the trademarks. By unifying this system of cards, Casino can count on a basis of 1.5 million purchasers. Auchan counts almost as much. "Informations collected on the customers makes it possible to channel promotional actions and to bring an adequate offer to the trading areas", affirms Claude Palmieri, in Auchan.
Several stores used some applications from these technologies which brought an immediate result . Self-scanning is used in tests stores (Monoprix, Leclerc and Système U).The method consists for the testing customers to scan the code-bars of each product chosen in the linears. The operation makes it possible for the distributor to reduce the waiting at the cashiers and, especially, to precisely know the cursus of the consumer in the store, then to push him to increase its average basket.
Personalized Reductions at the cashiers
On its side, Casino set up, since 1995, the direct analysis of the note. At the time when the sales ticket is edited, « Ecobon » offers which correspond to the purchases carried out, are proposed to the customer. For example, if he buys jam, a reduction on toasts will be given to him at the cashier. globaly, fifty marks take part in the system Catalina Marketing.
The size of data warehouses and the power of the software of analysis determine from now on the competitiveness of a distributor. The French are late compared to the Americans in the collection of data, but they have assets in the analysis. Certain groups are about to be able to cross their databases with fluctuating elements, like the climate. An increase in temperature will multiply by ten the water or beer consumption and will require an additional order. Leclerc hangs on the ultimate objective: « direct marketing », says Bruno Roudaut, logistic responsible person in charge at the breton (from Bretagne) distributor . At least, the hypers have a quite precise idea in mind: to prepare themselves your list of purchases.
Restocking by the sales
The number of bought products is entered by brand name, and this data is reported to the suppliers. The order doesn't go by the warehouses anymore, which reduces storage and the sold out of products.
Promotional Sales Turnover
By taking in consideration the whole sales receipts, the sales turnover realized on the products in promotion appears quickly. On a promotion which lasts only one day, the result can even be taken into account the same evening.
The contents of the sales receipts are analyzed and make possible to determine the situation of the consumer (single, couple with children, animals...). At Casino, this data is immediately taken into account and reduction coupons, in correlation with the purchases carried out, are edited with the sales receipts.
The testing of new products
10,000 new products are referred each year, but 60% of them show a commercial failure. In a few months, the result of the sales of these products is readable, and in the event of failure, the product can quickly be eliminated from the linears.
The average basket
Each sales receipt taken into account makes it possible to determinate the average amount spent by the customer in each one of his visits to the store. By examining the type of bought products, the sign can try to direct the consumers, with promotions for example, to products related to their needs.
For the large distribution, the processes of development of customer loyalty appear extremely profitable. Not only these consumers constitute a core of regular purchasers, but they leave anonymity. The distributors can adapt their linears to their needs, propose new services to them, and even target their mailing according to their expectations.
The path in the store
The list of the selected products makes it possible for the distributor to recall the path carried out by the customer in his store, even the sales turnover of each linear. A data which enables him to redraw the plan of his store by eliminating the "zones of shade" (the linear which generates only little profit).