fashion retailer

Background

A major New Zealand retailer was launching its new season stock in a specific category. Several versions of their catalogues were going to be produced and the company wanted to know the optimum areas to deliver these catalogues to, to ensure the highest possible return on investment.

Situation

Using the stores’ transactions and Westpac Business Insight data from Datamine for this analysis, scaling this to reflect only the category interest as opposed to spend across the entire store. A key finding here was that 80% of the households that catalogues are delivered to, generate 93% of the spend in this category. By ranking catalogue spend at Reachmedia ‘delivery section’ we were able to target those customers specifically more likely to spend and therefore increase ROI.

Spend with this retailer was mapped and matched to catalogue delivery walks so that a ranked system could be produced. ‘Hot spots’ and ‘Not spots’ were identified, related to spend, for targeting. The ‘Hot spots’ had a high average of spend with this retailer in the category of interest, whereas the ‘Not spots’ had a low average and are likely to be in lower socio economic areas, so hence assumed to have less potential for spending. A new master list for catalogue delivery was created to ensure that those most likely to exhibit high levels of spend at the retailer continued to receive the most frequent catalogues, whereas those with likely low levels of spend, would receive catalogues less.

Result

Datamine’s proposed master list for distribution was rolled out nationwide and the effectiveness of this approach was then tested in terms of driving spend in the key new season launch period. The test results showed that the model used to rank delivery areas for the new season catalogues did a good job; low ranked delivery areas exhibited a low average level of spend during the period, as predicted. Conversely and more importantly, delivery areas with a high average spend were correct targets for the catalogue drop.

The 2009 new season period for this retailer saw a 31% lift in sales from the same period in 2008; a good result considering retail spend was down across the board. The model used can continue to be fine-tuned to provide improved targeting. The ranked catalogue delivery approach will continue to be employed and tested for this retailer, to improve their ROI from this marketing initiative.