Data Shopping and Dropping

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I'm always been fascinated by the idea that Walmart might be able to know – before most healthcare providers in an area that a flu or common cold outbreak is on the way based on their fine detail of the data produced in their shops and through their supply chain. And it does seem, not surprisingly, that they are very, very hot on data acquisition and monitoring. As this piece from the NYT in Hurricane season 2004 makes clear:

The experts mined the data and found that the stores would indeed need certain products – and not just the usual flashlights. "We didn't know in the past that strawberry Pop-Tarts increase in sales, like seven times their normal sales rate, ahead of a hurricane," Ms. Dillman said in a recent interview. "And the pre-hurricane top-selling item was beer."

"Thanks to those insights, trucks filled with toaster pastries and six-packs were soon speeding down Interstate 95 toward Wal-Marts in the path of [Hurricane] Frances."

Of course, more recently the non-profit arm of Google – google.org – came out with Google Flu – which uses search (and hence user intention/need) and IP addresses rather than actual consumer behaviour buying cold remedies to track the emergence, location and spread of flu. 

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So in light on this the following observations or comments are not necessarily very novel but I'm kind of fascinated by the ways in which supermarkets mainly, but also their key suppliers, are reporting interesting trends in the way that shoppers are reacting to the recession in terms of what they are buying, not buying or buying less frequently than previously. 

For example, this recent report in the FT outlines the experience of FMCG company Unilever. Thus spake their marketing man:

"The company was selling less bubble bath and more shower gel as people forgo filling up the tub in favour of brisker, cheaper showers….The consumer goods company, whose products can be found in 99.4 per cent of British homes, said sales of Knorr stock cubes were growing “double-digits” as more people chose to cook from scratch.

Tubs of Flora and Stork margarine and jars of Hellmans mayonnaise are also selling well as people make sandwiches for lunch and bake cakes and bread instead of buying them."

In the cleaning aisles, sales of niche products – such as specialist stainless steel cleaners and soaps for wood floors – are declining as families opt for multi-purpose Cif cleaners. Sales of all-purpose cleaners rose about 2 per cent in 2008, and specialist cleaning products had a 6 per cent drop in sales in value terms.

Unilever also said that, while people with dry skin were still buying moisturisers such as the Vaseline intensive rescue range, sales of everyday lotions – Dove body creams, Impulse moisturiser and others – were on the wane as people either did without or used creams less often.

Mr Close’s comments echo those by Andy Bond of Asda last year when he observed a rise in sales of hair-dye kits and frozen food. The chief executive of the supermarket chain said the severity of the downturn would change behaviour in the long run, and a generation of consumers would emerge who think frivolity “unacceptable” and frugality “cool”.

There's lots in here to unpack. On the one hand, some product choices allow supermarkets and manufacturers to read behaviours rather directly. Swapping premium brands for own labels is obvious enough a shift in behavior. But there's the interpretations they're making too which are revealing: more Stock means people are cooking themselves, more Hellman's means more sandwiches are taken to work. More cake baking means a return to wartime frugality. 

Either way, they have a unique dashboard on consumer behaviour and, at one level removed, sentiment, which no doubt they will continue to use to finesse supply chains, inventory and manufacturing levels. But it also acts a remarkably finely tuned radar on which they can rely to understand where the recession is heading and when the green shoots of recovery might be called. 

In the UK, we often hear of sentiment indexes and so forth, which combined with house price indexes etc are used to provide a window in the soul of the hapless consumers of late capitalism. What though if this data were more publicly aggregated and explored, and shared with Central bankers, policy makers and politicians needing more fine tuned information than ever before into how people are responding, feeling or coping. 

What if RFID had really taken off and it was on every packet that left a supermarket and uploaded data into a cloud outside your local Sainsbury. using Pachube or something whizzzy like that you might be able to map the local realities of shopping habits and understand the micro-realities of recessions in local areas. 

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I imagine Experian is working with Asda on something like this already.