When you walk into a supermarket or a convenience store, it is very likely that confectionery will be placed next to the cashiers’ wing. This is no coincidence, there’s business logic in that.
In my numerous interactions with the older generation, one issue always comes up whenever shopping is the topic under discussion, that parents dread taking their children with them to supermarkets.
One parent once told me that she vowed to never take her five-year-old son with her for shopping again after he once ruined her budget.
Narrating the incident, she recalled that she had shopped for essential household items like sugar, tissue paper, tea leaves and toothpaste but as she was doing that, her son was nowhere to be seen.
But when it was time to pay up and head home, her son was standing next to the cashier clutching on candy packaged in an egg like casing wearing a very innocent smile, the parent did not mind because it was just candy.
What she did know that that was not just normal candy, it was Kinder Joy!
As she was shopping for the items she had calculated how much the items would cost her, she was due for Ksh100 change if she paid for the items with the Ksh1,000 she had on deck.
But that was the problem, Kinder Joy costs Ksh150. She tried to forcefully ask her son to return the candy so that they could quickly go home but he would have none of it and was ready to cause a scene. The mother was left with no other option but to call a friend for help.
The parent’s experience with her child was a result of Business Analytics, a data mining technique in business used to establish patterns.
Sometimes back, American retail store Walmart decided to combine the data from its loyalty card system with that from its point of sale systems.
The card system provided Walmart with demographic data about its customers, while the point of sale systems told it where, when and what those customers bought.
Once combined, the data was mined extensively and many correlations appeared.
There were interesting inferences drawn from the exercise like customers who buy gin also buy lemons, but there was one that stood out, on Fridays, customers who buy diapers also bought beer.
It was an observation that needed to be studied more closely.
After doing its own research, the retailer found out that new fathers who can no longer join the ‘boys’ during nights out are often called by their wives to also buy diapers as they shop for alcoholic drinks.
The retailer used that information to its advantage and began placing diapers next to the liquor section, a move that quickly proved to be a masterstroke.
Speaking during a technology forum organised by CIO East Africa at a Nairobi Hotel one week ago, Pathways International Kenya (a Business Intelligence solutions firm) CEO Joel Onditi said that most Kenyan retailers are warming up to the idea of adopting layouts based on Business Intelligence.
“This is a solution which has worked seamlessly in the retail sector but we have also seen other sector starting to embrace Business Intelligence to boost their businesses,” Onditi said.