Click here for a printer friendly version
Marketing Optimization
Increase purchase behavior by matching the right product to the right customer
The Client
Major home improvement retailer
The Challenge
As the world’s largest home improvement retailer, our Fortune 100 client has more than 1,200 stores in 49 US States. Each store stocks approximately 40,000 to 50,000 different kinds of building materials, home improvement supplies and lawn and garden products. Recently, our client launched the Neighborhood Store Initiative in order to:
- Find the best possible product mix by store.
- Identify associations between items within customer purchases.
- Prevent the likelihood of eliminating a SKU necessary to sell an essential item.
The Breakthrough
SIGMA conducted a Market Basket analysis in order to identify product mix recommendations for the Kitchen and Bath Department and the faucets class of the Plumbing department. The Market Basket Analysis identified associations between items within customer purchases. Capturing these product associations ensured that the right mix of products was available to the consumer to encourage continued purchasing.
In addition to the market basket analysis, SIGMA analyzed customer demographic and store firmagraphic data to create 5 to 7 store classifications. Sales and margins for Kitchen and Bath and faucet products in each store were then indexed against the national average sales and margins for those products. SIGMA assigned a “Yes” or “No” to each product by store type indicating whether or not to stock the product at that location.
The Win
As a result of the Market Basket Analysis and subsequent product indexing, our client was able to identify the best product mix in these departments for each of their stores based on customer purchase patterns and the associated sales and margins. Our client was also able to ensure that the top products were then available to stores based on the profitability of stocking that item in that store.