New market intelligence helps the bedding industry increase its share of consumer spending by amassing data at retail
BY LANCE ELKO
To learn more
In addition, during the Winter Las Vegas Market, the International Sleep Products Association will host an information session about the new ISPA Consumer Analytics Program. Mark your calendar for 2 to 3 p.m. on Monday, Jan. 29, in the World Forum on the 16th floor of Building B in the World Market Center. You don’t want to miss the latest on ICAP.
Further details are available at SleepProducts.org and click on Resources.
New statistics tool
A new year brings new ideas. This month, the International Sleep Products Association is introducing a new tool the industry can use to improve market intelligence and boost bedding sales. ISPA’s Consumer Analytics Program is a highly sophisticated data analytics vehicle. ISPA President Ryan Trainer says ICAP is “an ideal fit for one of ISPA’s strategic goals: to strengthen both the retail and manufacturing industries in a fast-moving business and technology environment.” ICAP will amass data at the retail level on aggregate mattress sales that Trainer says will complement the manufacturer wholesale data ISPA currently publishes quarterly and annually as a member benefit. He adds that the data output will be formatted to deliver easy-to-use information that manufacturers can assess to gain insights into the retail mattress market.
To develop ICAP, ISPA is working with Michael Knight, president of Customer Analytics LLC, a spinoff of the University of Wisconsin-Madison. Based in Madison, Knight has 25 years of experience in applied economic, demographic and forecasting analytics across industries ranging from health care to retail. The company, which started with a small staff that today has grown to 400 employees, provides complete support for all client and internal operations, from application development to network security. Customer Analytics has extensive experience as a trusted third party in aggregating proprietary information and delivering confidential analysis and support to individual clients.
ICAP’s purpose is to gather retail mattress sales, product and customer-demographic data from as many brick-and-mortar, online and other retailers that sell mattresses as possible. ICAP will then apply an extensive array of demographic and other analytic techniques to provide participating retailers with actionable insights that will help them be more efficient, profitable and sustainable. The program is open to interested subscribers.
The manufacturer-retailer connection
Knight affirms that “for manufacturers, retailers are the gateway to the consumer,” adding that while ICAP is valuable to the entire industry, it offers critical analysis and insight for retailers. “Manufacturers will be better informed when they learn how consumers behave at retail,” he says. ICAP provides the data linkage between the manufacturer and the retailer so the manufacturer can adjust its products and features, production forecasts, and raw materials needs to be more effective in designing, making and delivering products that consumers want.
Forecasts are only as good as the raw data and the intelligence of the analytics imposed on that data. “In this digital age, information abounds,” Knight says. “Or, perhaps more accurately, it inundates us.” And that’s where ICAP’s deep-dive analytics applied to a vast matrix of data yield extraordinary value in understanding customer behavior and accurately predicting demographic models and trends at all levels: national, regional, state, county, city and even the neighborhood.
Knight cites the particular value of ICAP’s “spatial analytics”—revealing where a retailer’s customers are within their trade area and providing details about the population in that locale. Beyond discovering basic demographic information—age, gender, race, educational level and average income—ICAP creates an accurate profile that shows how local retail customers, both actual and potential, spend their money on items such as food, housing, vehicles and bedding. And Knight points out that by applying smart algorithms to the analytic tools, ICAP can get the smallest of details, even how far customers travel to get to a particular retailer’s store.
Knight says ICAP can deliver snapshots that offer valuable insight at the macro level, as well. For example, what are the hot SKUs, the cold SKUs, how has market share shifted, what price points have moved and what kinds of product mixes are effective? ICAP also can break down data and create comparisons with national, regional and local aggregates—an opportunity for retailers to see how their store’s performance measures on different scales.
Context is key
Publicly available demographic data provides an enormous matrix of numbers, but, as Knight notes, that matrix is meaningless without context. And context is constantly shifting in response to evolving consumer behavior, social change and increasingly sophisticated analytic tools. For the analytics to stay relevant, the matrix also gets updated with new data arriving regularly. Trainer points out that ICAP can show, for example, how a traditionally blue-collar neighborhood with family homes is becoming a young, urban professional scene, where residences are moving toward smaller homes and more apartments and condos. It’s this kind of information that can help retailers tailor their product mix and messaging to appeal to this new customer profile—in this case, shifting their marketing, advertising and the specific mattresses they offer to best address their customers’ needs, shopping preferences and income levels.
To access the detailed analytics, participating retailers pay an annual subscription fee. The amount depends on their choice of service level, each one tied to the level of analytic detail desired by the user. The more detailed data a subscriber submits, the more granular the tools and analytics become.
Knight says once retailers join, “we connect with their IT people to process and analyze their retail data. The subscriber gets a link to a proprietary cloud address and a user-friendly dashboard with multiple entry points to screens.” He calls the dashboard “a living thing. The more data we receive, the more complex the matrix becomes. It’s much like an ecosystem. In this vast array of data, there are not-so-obvious interrelated factors that we can work with to reveal patterns and predict outcomes in very fine detail.”
The dashboard data, Knight points out, can be a valuable resource when making critical decisions about the best location for a new store or a closure, as well as the mix of products that match the trending demographic in the store’s geographic footprint. The data also can be isolated by dates. For example, retailers can learn exactly what happened at their location on a specific date or set of dates, thus reflecting the impact on, say, holiday sales or promotions.
And they can gain answers relevant to questions such as: Am I getting repeat customers? Is my geographic footprint showing an increase in younger residents moving into smaller residential units? Is the Hispanic population in my neighborhood growing? Are more retirees arriving? What’s being built in my zip code?
ICAP also can have a direct impact on a retailer’s future plans. For example, if data shows that 60% of a store’s customers are age 60 and older, and that younger customers are not buying in the retailer’s geographic area, the retailer has a long-term problem. Perhaps it needs to offer and promote beds with added options and greater comfort, change its marketing message and make sure its sales staff is trained to communicate well with younger consumers.