Client Challenge
A $7.0 billion retailer developed a Center of Excellence (CoE) structure with promotional planning as one of its pillars. Merchants historically planned their weekly ad individually with little oversight or total store focus.
The goal was to understand what type of customers their ads were appealing to and how they could better plan their weekly offerings to better balance sales, margin and customer traffic / engagement.
Radian’s Impact
Radian’s advanced customer analytics developed two critical elements: (a) an item preference score for each promotional group corresponding to a customer type across a household engagement and price sensitivity framework, and (b) a methodology to predict the net unique households that factors in item stacking and cross-shopping to give the retailer a better view of the traffic expected for a given ad.
Based on rigorous analysis, Radian developed total store, department and category level household count thresholds and item preference score guidelines to optimize the weekly ads.
Finally, Radian developed a new centralized promotional planning tool for the retailer. This tool allows merchants to plan their ads and instantly see both the financial projections as well as the item preference score and net unique households for their specific items(s) in the weekly ad.
The promotional planning CoE team now has visibility to the household and financial metrics for an ad in real time to make fact-based recommendations and adjustments versus an opinion or emotion-based approach.
Results
Front page ad sales increased by +2% over the first 9 months of the new promotional planning process.
Margin improved by +15% driven by focusing on the right items for the right customers, in the right weeks.
Balanced ads…the retailer is developing ads within the item preference score guidelines leading to the most efficient mix of households and types of customers targeted by their weekly ads.