Progressive Grocer

JUN 2016

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J ust a couple of years ago, users who shared Netfix accounts bafed the streaming service's recommendation algorithm, the tool that's supposed to learn your preferences and suggest movies and TV shows you'd like to watch from the company's extensive catalog. But while you're binging on "Breaking Bad," your kids might be streaming Disney movies, leading Netfix to suggest content that might not appeal to everyone in your household. If you happen to use Netfix as it was originally in- tended — that is, one account, one user and one data set for making predictions — it works fantastically. Te trouble is, virtually nobody uses it that way. Te answer to this problem was simple: user profles. Tese would allow the company's millions of subscribers to create several profles on any one ac- count, and recommendations would be more aligned with each individual's interests. Tis strategy seems to be working, since research suggests that 75 percent to 80 percent of what people watch using the stream- ing service comes from what Netfix recommends, instead of what people search for. It comes as no surprise, then, that retailers are scrambling to apply this same logic to the grocery world. Segmentation in the Age of Big Data Today's grocery businesses are leveraging the data and technology at their fngertips to segment customers based on historical purchases, browsing patterns, and more, allowing them to create targeted ofers for shoppers as part of an omnichannel experi- ence. Technology-savvy consumers have come to expect — and even demand — this level of personal- ization, with many considering it the new norm. By grouping consumers by age, geography, gender, income and family status, marketers have been able to draw conclusions about each group's shared interests and consumption behaviors, but the assumptions we've grown to accept from traditional demographic segments are becoming less reliable. A frequently cited example of this would be Ozzy Osbourne and Prince Charles: Both were born in The Individual Versus the Household These groups' often conflicting interests create challenges in personalization. Digital Dialogue By Sylvain Perrier Sylvain Perrier is president and CEO of Mercatus Technologies, a Toronto-based enterprise-grade software company specializing in digital solutions for North American grocery. Responsibility for groceries is becoming more evenly dispersed throughout the household, and the role of the primary shopper is being replaced with multiple shoppers who divide and share responsibilities. 1948, grew up in the United Kingdom, married twice, have two children, are wealthy and like dogs. In the age of Big Data, it's easy to dismiss segmentation as an outmoded methodology, but the segmentation of old is quite diferent from the advanced tactics used today. Rather than grouping customers based on their demographic traits, mod- ern techniques use value and behavioral dimensions to create a multitude of microsegments that defne themselves organically through data analysis. Balancing Needs In its most rudimentary form, a household is best described as a group of people with the same last name, living at the same address. But the tradi- tional concept of the household is changing: Tere are more multigenerational households, and many families are delaying — or even abandoning — marriage. Beyond just recognizing that these shifts are taking place, it's important for marketers to consider how such changes will infuence consum- er culture and shape product demand. Responsibility for groceries is becoming more evenly dispersed throughout the household, and the role of the primary shopper is being replaced with multiple shoppers who divide and share responsi- bilities. On the one hand, this raises questions about how well each shopper represents the needs of the household they shop for. On the other, it means that marketers have more opportunities to appeal to individual customers. When it comes to balancing the needs of the in- dividual or the household, the truth is that both must be taken into consideration. After all, in the age of the consumer, it's all about delivering truly contextu- alized and highly relevant experiences — but what's relevant to Ozzy Osbourne will likely difer from what's relevant to the Prince of Wales. PG 182 | Progressive Grocer | Ahead of What's Next | June 2016

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