Checkout the facts

Supermarkets are spending millions of pounds on technology to track what's in your trolley. But are they getting value for money? By Ian Grayson

Can you remember what brand of shoe polish you bought during your weekly shopping trip six months ago? Or toothpaste? Or frozen burgers? Probably not. But the chances are your supermarket can remember them all.

The UK's major retailers are investing millions of pounds in technology to track what their customers purchase, where they purchase it and when. Such information is a vital commodity in the fierce battle for market share. Tracking exactly what you put in your trolley each week is big business.

Leading the way are the big three retailers: Safeway, Sainsbury and Tesco. All have implemented data warehousing technology to enable them to collate and analyse details of shopping purchases throughout the country. A data warehouse is a vast store of information which has been specifically designed to allow analysis and extraction of trends.

Information is gathered via loyalty cards - an increasingly common device in the retail sector. Such cards identify the shopper and enable their purchases to be recorded every time they visit. Customers are rewarded for using their cards through points giving discounts and other incentives.

"There will be a record of the card, all the items bought, how you paid, how much change you were given, the time of day, the cashier, and which checkout you used," says John Whitworth, Safeway's systems development project manager. "Basically, every piece of information about your time at the checkout is stored." Over time, information gathered in this way creates a clear picture of customer buying habits.

The amount of information involved is staggering. Safeway installed a data warehouse for its loyalty card scheme, ABC, about 18 months ago. During that time, the company has built a collection of around 7.5 billion records from its six million cardholders. Safeway expects this to grow to between 10 and 12 billion records after two years.

Tesco's Clubcard system, launched in February 1995, has more than five million active members and is building a similar data store for the retailer.

Information collected at Safeway checkouts is stored in computers in each of the company's 400 stores, says Whitworth. Every night, this information is downloaded to the company's headquarters in Hayes, Middlesex, where it is stored in a data warehouse on a dedicated IBM S/390 mainframe computer. Once stored, sophisticated tools are used to analyse the data and extract information on buying habits and trends. Despite the huge amount of information involved, queries can be answered quite quickly.

"For example, to list all the customers who have bought a product on more than one occasion over the past year would take about an hour," says Whitworth. "This would involve checking five to six billion records."

A more common query may involve looking at a four-week period, which would be completed in less than five minutes. Such speeds are possible because the data warehouse's computer is equipped with five processors working in parallel. This means different parts of the data warehouse can be accessed simultaneously, thus saving time.

It is this capability to analyse vast quantities of data which has led to major retailers embracing the technology so enthusiastically. The individual transactions alone are of little interest, but given enough of them, the trends they can show are invaluable.

Product associations are one area which has particularly excited retailers. Finding links between seemingly unrelated items - beer and nappies, for example - might allow a store to increase sales by moving the items closer together or offering discounts when purchased as a pair. This type of correlation would not have been possible without a data warehouse.

"Our store cards tell us the trading patterns and the life cycles of our shoppers," says Mike Fisher, Safeway's database marketing controller. "What we are trying to do is develop a relationship with the customer and build a sense of loyalty."

A better relationship equals better sales and retailers are constantly looking to their data warehouses to suggest new ways this can be achieved. Sales data is often compared with information from other sources, such as market research companies, to better understand what makes shoppers tick. Customers are categorised into life stages - single people, married couples, families and retired people - and their theoretical buying habits are compared with those seen in store.

"If the average shopper for a given life stage buys a total of X products each week and she is only buying Y from us, we can identify what she's not buying and encourage her to buy from us," says Fisher. This is marketing at a micro level.

Using computer technology to keep such close tabs on shoppers' purchasing habits has prompted questions about privacy.

"People ought to be very aware of what information is being stored about them," says Harriet Hall, spokeswoman for the National Consumer Council. "It's easy to say that it doesn't matter because it's only your groceries, but it's like having your till receipt linked to your name and address. If you are concerned about your privacy, this is a way that privacy is being leaked into the outside world."

This view is not shared by the retailers. "I don't believe that's an issue," says Fisher. "The feedback we get from customers is generally positive. The reason we hold data on people is so that we can make the store more applicable to them and give them what they want. It's of benefit to the customer that we understand how they shop."

There's every indication that data warehousing techniques will remain a major tool for the retail sector. "Once you get into it, it's very difficult to get out," Fisher says. "The company will become used to having this level of information about what people do. Having better information about your market and your customers enables you to make better decisions about the future - it will always justify itself."

Despite their obvious benefits, it is difficult to judge whether retailers are getting value for money from their data warehouses. None is willing to confirm how much has been invested, nor whether the sales gains achieved have justified the amount spent.

Thomas DePasquale, vice-president of data warehousing specialist Platinum Technology, remains sceptical. "I would challenge whether retailers are getting a payback from their loyalty card schemes," he says. "I think there tends to be a herd mentality in that if one installs such a scheme then the others feel as though they have to follow." He said data warehousing technology only worked when the company using it had a clear idea of what it was trying to achieve from the outset.

But one thing remains clear. The ability to probe into the shopping trolleys of customers and analyse their purchases will remain an attractive ability for major retailers. The data warehouse is here to stay

PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Sport
Ojo Onaolapo celebrates winning the bronze medal
commonwealth games
Arts and Entertainment
Rock band Led Zeppelin in the early 1970s
musicLed Zeppelin to release alternative Stairway To Heaven after 43 years
News
i100
News
Prince Harry is clearing enjoying the Commonwealth Games judging by this photo
people(a real one this time)
Extras
indybest
News
Richard Norris in GQ
mediaGQ features photo shoot with man who underwent full face transplant
Sport
Lionel Messi looks on at the end of the final
football
News
Gardai wait for the naked man, who had gone for a skinny dip in Belfast Lough
newsTwo skinny dippers threatened with inclusion on sex offenders’ register as naturists criminalised
News
Your picture is everything in the shallow world of online dating
i100
News
The Swiss Re tower or 'Gherkin' was at one time the UK’s most expensive office when German bank IVG and private equity firm Evans Randall bought it
news
Life and Style
Attractive women on the Internet: not a myth
techOkCupid boasts about Facebook-style experiments on users
Sport
Van Gaal said that his challenge in taking over Bobby Robson's Barcelona team in 1993 has been easier than the task of resurrecting the current United side
football
Independent
Travel Shop
the manor
Up to 70% off luxury travel
on city breaks Find out more
santorini
Up to 70% off luxury travel
on chic beach resorts Find out more
sardina foodie
Up to 70% off luxury travel
on country retreats Find out more
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Media

Account Manager, Spanish, London Bridge

£30,000 + 20K Commssion: Charter Selection: This rapidly expanding organisatio...

Account Manager, Spanish, London Bridge

£30,000 + 20K Commssion: Charter Selection: This rapidly expanding organisatio...

Account Manager, London Bridge

£30,000 + 20K Commssion: Charter Selection: This rapidly expanding organisatio...

Content Manager - Central London

£35000 - £40000 per annum + Benefits: Ashdown Group: Content Manager - Central...

Day In a Page

The children were playing in the street with toy guns. The air strikes were tragically real

The air strikes were tragically real

The children were playing in the street with toy guns
Boozy, ignorant, intolerant, but very polite – The British, as others see us

Britain as others see us

Boozy, ignorant, intolerant, but very polite
Countries that don’t survey their tigers risk losing them altogether

Countries that don’t survey their tigers risk losing them

Jonathon Porritt sounds the alarm
How did our legends really begin?

How did our legends really begin?

Applying the theory of evolution to the world's many mythologies
Watch out: Lambrusco is back on the menu

Lambrusco is back on the menu

Naff Seventies corner-shop staple is this year's Aperol Spritz
A new Russian revolution: Cracks start to appear in Putin’s Kremlin power bloc

A new Russian revolution

Cracks start to appear in Putin’s Kremlin power bloc
Eugene de Kock: Apartheid’s sadistic killer that his country cannot forgive

Apartheid’s sadistic killer that his country cannot forgive

The debate rages in South Africa over whether Eugene de Kock should ever be released from jail
Standing my ground: If sitting is bad for your health, what happens when you stay on your feet for a whole month?

Standing my ground

If sitting is bad for your health, what happens when you stay on your feet for a whole month?
Commonwealth Games 2014: Dai Greene prays for chance to rebuild after injury agony

Greene prays for chance to rebuild after injury agony

Welsh hurdler was World, European and Commonwealth champion, but then the injuries crept in
Israel-Gaza conflict: Secret report helps Israelis to hide facts

Patrick Cockburn: Secret report helps Israel to hide facts

The slickness of Israel's spokesmen is rooted in directions set down by pollster Frank Luntz
The man who dared to go on holiday

The man who dared to go on holiday

New York's mayor has taken a vacation - in a nation that has still to enforce paid leave, it caused quite a stir, reports Rupert Cornwell
Best comedians: How the professionals go about their funny business, from Sarah Millican to Marcus Brigstocke

Best comedians: How the professionals go about their funny business

For all those wanting to know how stand-ups keep standing, here are some of the best moments
The Guest List 2014: Forget the Man Booker longlist, Literary Editor Katy Guest offers her alternative picks

The Guest List 2014

Forget the Man Booker longlist, Literary Editor Katy Guest offers her alternative picks
Jokes on Hollywood: 'With comedy film audiences shrinking, it’s time to move on'

Jokes on Hollywood

With comedy film audiences shrinking, it’s time to move on