‘Data mining’: Marketing tool or invasion of privacy?

Filed under: Retail |

The discount cards cluttering consumer’s key chains play a vital part in getting the coupons and products shoppers want while boosting sales at supermarkets and drugstores.
These loyalty cards are used as research tools for what’s called “data mining,” the same tool used by the National Security Agency in culling through Americans’ telephone records to uncover terrorist plots.
Retailers use the cards to assemble computerized collections of customers’ purchases, along with their names, addresses, income levels and other tidbits, giving businesses clues to people’s buying habits on a giant scale.
When the card is used at the checkout register, details about what is in the customer’s shopping cart are recorded and stored in a computer, giving the retailer a purchase profile of the customer as well as help with inventory control, product placement and other strategic decisions.
In-store credits and favorite coupons based on a percentage of purchases made the previous quarter are some benefits shoppers receive by using the cards.
Retailers offer differing views about the use of the discount cards.
Publix Super Markets discontinued the use of the cards based on privacy concerns. However, a spokesman for Albertsons says customers like the discounts they receive from the company’s “targeted marketing” program.
Some experts say data mining can improve the odds of coupon redemption, for example, helping predict when shoppers might be receptive. Plus, computers have the capacity to pinpoint patterns that human analysts might be unlikely to spot.

Online sales to exceed $200 billion

Computer and auto sales will top this list of online sales this year. Three years ago, online sales passed the $100-billion mark, and this year sales will top $200 billion.
According to The 2006 State of Retailing Online, the ninth annual Shop.org study conducted by Forrester Research Inc. of 174 retailers, 2006 online sales (including travel) are expected to rise 20 percent to $211.4 billion. Sales excluding travel will reach $138 billion.
The largest non-travel categories include computer hardware and software ($16.8 billion), autos and auto parts ($15.9 billion), and apparel, accessories and footwear ($13.8 billion). Pet supplies, cosmetics and fragrances are expected to experience growth rates of more than 30 percent, higher than any other categories.
According to the report, online sales last year rose 25 percent to $176.4 billion. Excluding travel, online retail sales rose 28 percent to $113.6 billion, representing 4.7 percent of total retail sales in 2005.
More than two-thirds of retailers have consistent pricing across channels (79 percent) and almost half (46 percent) allow their customers to buy and redeem gift cards online and in stores.
Additionally, many companies give customers the ability to accrue loyalty program points across channels (33 percent) and offer in-store product information online (26 percent).
Retailers recognize the importance that the Internet plays in overall sales. Retailers reported that 22 percent of offline sales are influenced by the Web. Also, more than one-third (38 percent) of online customers are new to a company’s business.
Retailers understand that some shoppers may be concerned about the safety and the security of their personal information when shopping online. In response, companies continue to increase the security of their Web sites and are beginning to offer a variety of payment methods to online shoppers.
According to the report, 63 percent of retailers surveyed require card verification value (CVV) codes at checkout. For payment, 25 percent of retailers accept private-label cards, 12 percent offer third-party e-mail payment options, 9 percent accept e-checks and 7 percent offer third-party credit accounts.

Bargain shopping made easy

Mobile commerce or “mCommerce” has been exploding during the last few years and with that, camera phones are making bargain shopping a futuristic luxury. Technology companies, such as Scanbuy’s Optical Intelligence software, transform any camera phone into a personal barcode scanner.
This allows shoppers to scan a product they are interested in, then through the phone’s Internet connection, gain access to a complete list of the product’s availability and prices at other retailers. The software also allows companies to play a radio or television ad for the product.
An entire shopping list can be stored, then compared across different stores. Shoppers can then select the supermarket with the best price. And with the touch of a button on your phone, you can buy the item or have it delivered.

Rumbi Island Grill opening June 12

Rumbi Island Grill will open in the Falcon Landing Shopping Center at 7395 N. Academy Blvd. on June 12. The hours of operation will be Sunday through Thursday 10:30 a.m. to 9 p.m., and Friday and Saturday 10:30 a.m. to 10 p.m.
Rumbi Island Grill blends Hawaiian, South Pacific and Caribbean cuisine.
The Springs store is third to open in Colorado, joining locations in Longmont and the Denver Tech Center.
Joan Johnson covers retail for the Colorado Springs Business Journal.