Page 5: Market research at JD
The location of stores is a critical element of the success of a retailer in any market. Sound competitive locations can provide a source of competitive advantage. To achieve this it is essential to build a clear understanding of the consumer and how they interact with a retailer and its sales channels (i.e. stores, internet or kiosks).
So, how does JD build up information about its consumers and develop a clear location strategy? One method employed by the company is its check-out survey. This is a simple but highly effective survey that is carried out with customers at the till. By collecting the customer’s home postcode, gender and age and matching this data to the products purchased, JD can build up detailed consumer profiles.
JD also asks purchasers a further question: has the item been purchased for yourself or for another person? This helps JD to understand the difference between customers (the purchaser) and its consumers (the end user). For example, some purchases are made by parents buying clothes or shoes for their children. This additional question helps prevent the survey results from being misinterpreted.
The survey is carried out annually over a two-week period and involves over 350,000 customers. This provides a robust sample from which to extract invaluable insights into consumer buying behaviour. In-depth analysis of the survey results helps the company:
- understand how far customers travel to stores – this enables JD to define real catchment areas for each store and understand the overlap with other existing stores
- build consumer profiles by gender, age, brand and lifestyle
- identify and quantify new store location opportunities
- influence product ranges to meet the buying habits of customers in different locations
- assist with marketing strategies to target the consumer more effectively.
This type of information is collected regularly by large retailers such as supermarkets through the data collected on their store loyalty cards. However, loyalty card schemes can be very expensive to run. Till surveys, although only providing a snapshot of the consumer, offer a cost effective means of gathering data. JD is relatively unique on the high street in using this type of survey to capture additional customer information. More recently this survey has been replicated across JD stores in France and Spain.
It is important that research is properly managed to ensure that the data collected is valid and reliable. It is also useful, where practical, to use a variety of methods to validate research findings. At JD the findings from the exit surveys (smaller sample sizes) are validated by the check-out survey (larger sample size). Put together, this information helps JD to anticipate the level of demand customers may have for its products. Sales expectations can be accurately forecast to ensure profitable stores are opened.
JD has also embraced the internet as a means to support business strategies. The data collected through the online ordering process is ‘live’ information and it provides a valuable insight into consumer demand. It can influence store ranges and support decisions about its stores network by highlighting ‘hotspots’ with high levels of demand but no physical presence. In an increasingly multi-channel world, capturing, analysing and acting on this information offers a business a key competitive advantage. Again, this information can provide useful insight into potential international opportunities.