Thinking Inside the Basket

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\"Andrew_Mantis\"Q&A with Andy Mantis, EVP of NPD’s Checkout Tracking℠

Anyone who’s anyone in retail is familiar with NPD’s market research prowess, backed by the firm’s powerful consumer panel and point-of-sale data. But less well known is the firm’s legacy of technology R&D. NPD developed and patented methodology for using a handheld scanner to record purchase data at home for market research, and also developed and patented the first PC meter device, which they subsequently spun off into Media Metrix.

NPD Innovation Group’s newest development, the just-launched Checkout Tracking℠, has the potential to take NPD’s consumer behavior insight expertise to a whole new level, judging by the resources the company is putting behind it. A team of nearly 100 marketing, analytics and operations people are currently working on the business.

We got a chance to catch up with Andy Mantis, EVP of Checkout Tracking℠, to get his thoughts on the new platform and its potential to transform the way retailers do business.

Robin Lewis: How did Checkout Tracking℠ get started, and how does it differ from and/or complement NPD’s other products and services?

Andy Mantis: Most people know of NPD’s two information sources – consumer panels and, more recently, POS, or point-of-sale data from most of the major retailers in the country. Consumer data gives you information about panelists’ purchasing behavior based on recall over time. POS goes down to an item level or SKU, but it’s not tied to an individual or a basket. Checkout Tracking℠ is the best of both worlds. Since it’s based on the receipts associated with individual consumers, we get the blend of data at the item and basket level tied to the individual over time, providing a nice longitudinal view.

RL: What can retailers learn from basket-level buying behavior that can help them better understand and meet consumer wants and needs?

AM: There are many ways in which the information can be an enabler. First, retailers get a picture of the individual consumer plus all his or her purchases across channels – times tens of thousands, even millions. What’s important here is that consumers opt in and their receipts are kept anonymous for privacy protection, so we’re able to show a retailer its competitive metrics. We can be very transparent.

We show retailers what consumers are buying from them and from specific competitors as well. When you apply that to retail strategies, there are several key buckets that this data can really help fill. Retailers can see whether competitors are winning on price or merchandise or even other factors. In these days of slow market growth, it’s a share game. Retailers need to get closer to their consumers, and we’re able to provide information that will help them with customer segmentation, promotions, merchandise analysis and product bundling. For example, when a retailer selling an individual item finds out customers are buying a complementary item from a competitor, it can change its bundling strategies. Bundling smartphones and cases, or shoes with socks, for example.

RL: We know that over 50,000 consumers have opted in to provide receipt-level detail for Checkout Tracking℠. Do you see this number growing over time?

AM: We actually have two different panels. The 50,000 is through the Receipt Pal app, and it has been growing organically very quickly, and we will continue to allow it to grow. The second panel is via Slice, which is owned by Rakuten. They have a panel of over 2 million people whose email inboxes they have permission to scan for receipts. We use that data for a deep dive into e-commerce shopping that is very precise and very granular. For the moment, the panels are separate and distinct, but over time, we will be doing some technical and methodological merging.

RL: How will the information provided by Checkout TrackingSM help retailers?

AM: Although we just had our official launch for retailers in the past few weeks, we actually started to work with some large retailers on their holiday strategies last fall. One retailer wanted to look at online data that was fresh enough to act on during the 10-week long selling season. We developed reports that looked at their online share of spend by category (apparel, technology, grocery, toys, etc.) and to track their share in real time. The e-commerce site of one of their competitors, another large retailer, went down during the holidays and we were actually able to track where their customers went and who gained share from them while the site was down. This retailer asked us to keep track of their customers over the holidays, and we could literally track their customer’s spend over 10 competitive websites every single day. They could see their customers’ behavior based on price or merchandise selection. Another thing we did for them was to track a list of products this retailer thought they should be the low-priced supplier to over the season.

RL: What retailers do you ultimately expect to work with, and in what key categories and markets?

AM: We are in conversations with and plan to work with companies in just about all the major retail categories, whether big box, department stores, specialty stores, or online. We’re also having lots of conversations with manufacturers about their consumer strategies, particularly in online. At the moment we haven’t seen any category of retailer we are capturing everything.

RL: What insights has Checkout Tracking℠ been able to shed on that all-important consumer group, millennials?

AM: For four of the last five quarters, we’ve seen millennials’ online spending increase by at least 8 percent. Last quarter it was up over 11 percent. They represent a whole lifestyle play, not just buying stuff at Amazon, but also ordering food online on Grubhub, transportation on Uber and Lyft, and more. What you start to see is a picture of millennials using technology across channels no matter where the service is actually being fulfilled. It shows the importance of connecting with millennials online, even if it’s a physical service like a car, or food that gets to them via a person. A lot of people are talking about omnichannel as click-and-collect, but we’re seeing it as a whole behavior change demanding new consumer touchpoints that talks to a lifestyle and how you interact with technology no matter where or how you consume your product.

RL: Can you share with us some of the more interesting insights you’ve gained?

AM: We have looked at data on a level that tells how millennials eat a chicken sandwich! They tend to over-index, or spend at an above-average level, on iced and frozen coffee, ethnic foods, and grilled chicken; and they tend to under-index on fried chicken, traditional coffee and carbonated drinks. If they eat burgers, it tends to be in gourmet places like In-N-Out Burger. They love Whole Foods and TJ Maxx, but not Food Lion or Dollar Tree. They want value but also brands that fit the image they are looking for. As we go forward, we will have this level of detail in apparel and other categories.

RL: What has surprised you the most about the launch of Checkout Tracking℠ so far?

AM: Although we’re still at a fairly early stage, what has really surprised us is the ability to use the categories and data in ways we didn’t anticipate. We feel that it’s just the tip of the iceberg, and we think the utility of this data is just going to grow and grow as we learn more and talk to more retailers and brands.

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