Analysis of Shopper Behavior Highlights Importance of Best Shoppers

LISLE, Ill.--(BUSINESS WIRE)--An analysis of over 2 million grocery shoppers by Concept Shopping, Inc. shows that the top ten percent of store’s customers visit the store more than twice a week, spend over $39 per visit and represent nearly 40 percent of the store’s total sales.

“As these charts indicate, retailers should spend the lion’s share of their time, effort and promotional dollars on their top-spending, loyal customers”

The study also found that these most valuable shoppers tend to remain very loyal to the store, with 95 percent continuing to shop there throughout the year. Conversely, only 34 percent of the store’s worst shoppers, those who visit the store less than once a month and spend only $9 per visit, remain customers.

“Shopper churn is a fact of life for every marketer,” said William Young, vice president of sales and marketing for Concept Shopping. “Shopper loyalty continuously ebbs and flows through retail banners and store types, but sorting shoppers by their value helps identify which ones should be courted and which ones can be ignored.”

Figure A divides the 2 million shoppers into ten equal deciles based on their spending levels during a 12 week period. The chart not only details the dollars spent and number of trips but also the percent of dollars spent on products which were on sale (markdown dollars). Only 11 percent of the dollars spent by the best shoppers (Decile 10) were on markdowns, making these heaviest shoppers the most profitable as well. In contrast, over 35 percent of the worst shoppers (Decile 1) were on sales items, making them unprofitable assuming a 33 percent profit margin.

SHOPPER DECILE SCORECARD													Figure A
RECENCY - FREQUENCY- VALUE
12 WEEKS ENDING 30 JUNE 2009					RECENCY	FREQUENCY	VALUE
Decile	Shoppers	$ Sales	Sales %	Cume Sales %	Days Since Last Trip	Trips per Week	Avg Trans Size	Spend per Week	Spend per Year	Markdown Dollars	Markdown Dollars % of Spend	Gross Profit Margin	Profit less Markdown
10	203,491	209,224,718	38.9%	38.9%	1.9	2.41	39.96	96.30	6,260	23,014,719	11.0%	33%	22.0%
9	203,491	117,553,825	21.9%	60.8%	3.1	1.82	29.73	54.11	3,517	16,339,982	13.9%	33%	19.1%
8	203,491	69,154,114	12.9%	73.7%	4.1	1.24	25.67	31.83	2,069	10,788,042	15.6%	33%	17.4%
7	203,491	48,316,502	9.0%	82.7%	7.6	0.95	23.41	22.24	1,446	9,566,667	19.8%	33%	13.2%
6	203,491	34,710,452	6.5%	89.2%	11.2	0.72	22.19	15.98	1,038	7,358,616	21.2%	33%	11.8%
5	203,491	22,736,206	4.2%	93.4%	13.4	0.51	20.52	10.47	680	5,865,941	25.8%	33%	7.2%
4	203,491	17,450,818	3.2%	96.6%	17.6	0.43	18.68	8.03	522	4,764,073	27.3%	33%	5.7%
3	203,491	9,308,957	1.7%	98.4%	20.1	0.32	13.39	4.28	279	2,783,378	29.9%	33%	3.1%
2	203,491	5,141,782	1.0%	99.3%	25.7	0.21	11.27	2.37	154	1,614,520	31.4%	33%	1.6%
1	203,491	3,578,196	0.7%	100.0%	30.2	0.18	9.15	1.65	107	1,273,838	35.6%	33%	-2.6%
TOTAL	2,034,912	$537,175,572	100.0%	AVERAGE	13.5	0.9	$21.40	$24.73	$1,607	$83,369,776

Figure B tracks shoppers as they move across spending levels from year to year and shows overall shopper retention and defection rates. The far right-hand columns indicate that this retailer retained 70 percent of its customers in total, while 30 percent defected to other retailers, with only 5 percent of the highest spending group leaving. Over half (57 percent) of the top spenders from the previous year remained in the top decile with 21 percent declining to the second decile.

SHOPPER MIGRATION REPORT												Figure B
12 WEEKS ENDING 30 JUNE 2009 vs YEAR-AGO
Spend per Week Threshold	$75.21	$42.97	$27.04	$19.11	$13.22	$9.25	$6.16	$3.35	$2.01	$0.01
Decile	10	9	8	7	6	5	4	3	2	1	Defections	Retention
10	57.0%	22.4%	11.2%	1.7%	1.1%	0.9%	0.4%	0.1%			5%	95%
9	21.0%	44.7%	15.0%	5.8%	3.4%	1.9%	0.9%	0.4%	0.3%		7%	93%
8	9.6%	12.3%	37.9%	13.7%	6.1%	4.9%	2.2%	1.2%	1.1%	0.8%	10%	90%
7	3.1%	7.5%	11.0%	28.8%	10.6%	6.2%	5.6%	1.4%	1.5%	1.2%	23%	77%
6	1.9%	4.3%	8.8%	11.0%	21.3%	8.9%	6.9%	4.9%	2.2%	1.9%	28%	72%
5	1.1%	1.2%	2.4%	8.7%	12.3%	18.2%	10.1%	8.1%	4.5%	2.7%	31%	69%
4	0.9%	0.5%	1.4%	5.9%	9.7%	10.0%	15.8%	11.3%	6.5%	4.5%	34%	67%
3	0.1%	0.4%	1.1%	0.6%	5.9%	7.8%	13.4%	11.4%	9.0%	6.9%	43%	57%
2	0.1%	0.1%	0.8%	0.3%	1.1%	5.7%	7.0%	9.9%	9.6%	8.0%	57%	43%
1				0.1%	0.4%	4.0%	4.2%	8.5%	8.7%	8.0%	66%	34%
TOTAL	95%	93%	90%	77%	72%	69%	67%	57%	43%	34%	30%	70%

“As these charts indicate, retailers should spend the lion’s share of their time, effort and promotional dollars on their top-spending, loyal customers,” added Young. “Moreover, other studies have shown that it costs about five times as much to win a new customer as to keep a current one.”

About Concept Shopping

Concept Shopping, Inc. is a Lisle, Ill. marketing firm that improves sales for retailers and marketers through the execution of personal marketing programs based on the purchase history of individual shoppers. The firm’s Automatic Marketing program, which has been used by over 100 brands, includes shopper purchase data analysis, offer selection and delivery. For more information, visit www.conceptshopping.com.