MIS Case study
The grocery stores and supermarket shopping industries have combined annual revenues in the hundreds of billions of dollars. Industry guru Phil Lembert, estimated that by 2015, $706 billion dollars will be spent on groceries annually. Grocery shopping was a highly commoditized industry with over 85,000 stores in the United States. With little variation in available item selection and less money being spent on groceries in the down economy, competition for customer loyalty was at an all-time high in 2012. By using business analytics to help process buying habits of its customers, Stop & Shop, a Quincy, Massachusetts-based grocer, tried to get a better grasp on the hard-to- understand concept of customer loyalty in grocery shopping.
In 2009, Stop & Shop introduced Scan It!, a portable electronic device for customers shopping in their stores. The device allowed customers to "scan and bag" products, expediting check out times at the end of their shopping trip. Additionally, the device offered deals based on the location of the scanner (and therefore the customer) in the store. Location-specific discounts in real time became increasingly popular to customers, as usage of Scan It! grew by 10% in both the first and second quarters of 2009. The most beneficial aspect of the Scan It!, however, came with the powerful analytics software built into the device by Modiv Media, in which Stop & Shop owns a minority interest. The software kept track of each customer's purchasing habits both past and present, to individualize coupons in real time for the customer.
The scanner resulted in three positive trends for Shop & Stop. Customer loyalty grew, which allowed Stop & Shop to secure a greater customer base than area demographics would predict. Additionally, each shopper's basket size increased as individually tailored coupons enticed customers to buy more. Lastly, Stop & Shop saw its customer base grow, as word of mouth marketing brought in more customers to try the state of the art device.
Stop & Shop saw customer adoption plateau, however, as a couple of years passed, and the age of mobile apps increased ease of use. In October 2011, the grocer created the Scan It! app for the iPhone and Android. By eliminating the need to sign in and retrieve a scanner at the store, customer adoption continued its upward climb. Additionally, as customers became increasingly concerned about saving money while shopping, Stop & Shop built in budgeting software to allow customers to track their spending more effectively. Ads for the new app proclaimed, "New Mobile App Allows Customers to Shop, Bag, and Tally Their Grocery Order with Their Personal iPhone1 and AndroidTM Devices". Scan It! was heralded as "a first of its kind grocery app that allows customers to use their personal mobile device to scan, tally, and bag their groceries while they shop."
Stop & Shop bundled an app that not only rewarded customers who shopped at their stores by helping them save money, but it provided additional functionality to the customers and tracked information on sales, which Stop & Shop loaded into its data warehouse and used to understand its customers. Analytics then helped Stop & Shop put the right items on its shelves to maximize sales and create customer loyalty.
Discussion Questions
1. What is the benefit of the Scan It! data to Stop & Shop? What are some of the questions can they now answer about their customers?
2. How would you assess the level of maturity of Stop & Shop's use of analytics? What might they do differently with the data to gain more value?
3. What concerns might shoppers have about the irprivacy? How would you advise Stop & Shop management to respond to these concerns?