BACKGROUND
Iper is a €2.5 billion Italian supermarket chain founded in 1974. It has 200 supermarkets and 27 hypermarkets that span 7 regions in Italy. With more than 9500 employees, its aim is to provide fresh and local Italian produce to its nationwide customer base. Iper’s company values are centered around quality, traceability and sustainability.
CHALLENGE
Iper hypermarkets are best known for their wide selection of products, including fresh, local produce, electronics, and homeware – all at competitive prices. However, expanding ranges and pricing were becoming progressively more challenging in an increasingly competitive industry. Compounding this, in Italy, competition in the grocery market is fierce, especially given a stagnating economy which has seen negative inflation and falling food prices over recent years.
SOLUTION
By using Symphony RetailAI’s customer and sales insights software, Iper discovered three core segmentations to help identify consumer trends and better understand shopper behavior. Customers are either:
- High spenders who buy from many different categories across a store
- Those that flit between competitors and are not particularly loyal, or
- Its least engaged group, only visiting every few months (comprising about one third of its base)
The process of looking more closely at the different types of customers – and the service and products they typically require – encouraged Iper to launch a loyalty card to retain existing customers and acquire new ones.
Since the introduction of the loyalty card in 1998, Iper has approximately 1.9 million active cardholders, driving around 80 percent of sales. On top of their standard loyalty card, Carta Vantaggi, Iper also recently launched a second card, Carta Vantaggi Piu’, targeted at their most loyal and frequent customers. To be eligible for this card, a customer must spend at least 250 euros during a 5-day period, over a minimum of five transactions
This exclusive card is now used by more than 550,000 of its most loyal customers, offering them extra discounts on all their favorite items for a period of one year.
The retailer has also explored price sensitivity and how price changes on certain products impact sales. For instance, Iper identified its most price-sensitive customers, those most likely to be swayed by a discount.
By examining the data, Iper could appeal to the needs of those customers that prefer brands, or those that are drawn towards cheaper, own-label products.
It could distinguish between those that prefer convenience, and those more driven by quality than price. Combined with category management software, it can also determine which products should be moved to a different part of the store to suit shopping patterns of specific types of customers.
The process of looking more closely at the different types of customers – and the service and products they typically require – encouraged Iper to launch a loyalty card to retain existing customers and acquire new ones.
“Technology must simplify the customer experience, or at least make it more enjoyable. Increased competition – especially from online retailers like Amazon – is driving up expectations, even if they’re not directly competing with us”
Massimo Baggi, Marketing Director, Iper
BENEFITS
Using in-depth customer data, Iper easily defines product assortments and store layouts much more effectively. For example, working closely with the Italian coffee brand Lavazza, it realized that it needed to completely redesign aisles displays, especially when they identified that coffee capsules tend to appeal to a completely distinct type of shopper.
So, after separating capsules from shelves stacked with granules and ground coffee, they saw a sales uplift of 25 percent.
Getting to know the customer better has helped improve relations with suppliers by using best-in-class collaboration processes to improve category management.
Iper can also now analyze the effectiveness of campaigns and price reductions on specific products, as well as set rules on pricing key value items.
Iper’s detailed analysis unearthed demand for more organic, locally sourced and fresh produce. So Iper introduced more ‘retail theater’ into its stores; butchers cutting fresh meat, the preparation of fresh mozzarella on the premises, and bars for wine and craft beer tasting. The company has even put more restaurants in its stores, with the knowledge that people will be cooking less and less in future.
Iper is investing in technology to help give more personalized levels of service, including the personalized home shopping page, launched last year, which shows not only the most relevant offers for each customer, but also a selection of cherry-picked coupons, encouraging shoppers in-store redemption. Customers can also create a shopping list much more easily, from the comfort of their home, by simply scanning products with their phone.
Key Benefits
- More effective product assortment and store layout design
- Increased sales uplift
- Improved customer and supplier relations
- Better campaign and pricing analytics
- More customer-centric technology, helping aid personalization