June 30, 2006
 
RETAILING: Stores Putting Names, Faces on Consumers
 
By Teresa F. Lindeman
Pittsburgh Post-Gazette
 

Retail firms that operate stores such as Macy's and Penny's, etc., are starting to look at customers in a different way, by giving them names and assigning habits to those names. For example, a "Bob" may be a shopper who only comes to the store once or twice a year, while a "Jane" may come every week to check out the sales. Different shopping habits are associated with each name. (SHNS Photo illustration by Daniel Marsula / Pittsburgh Post-Gazette)

It may be that you are a traditional Katherine or a fashion leader Alex, names Macy's has given customers that fit a certain profile that it hopes to lure and keep coming back.
 
Or maybe you are a Katie or Brandon who likes to buy denim at American Eagle Outfitters -- and pick up some flip-flops on the way to the cash register, too. Wal-Mart appreciates that loyal Karlas visit several times a week, but the retail giant wishes trendier Gracies came by more often.
 
In retail, what's in a name can very much determine what's in the stores.
 
Many of the nation's biggest chains are grouping their best customers according to lifestyles, shopping styles and tastes, giving each category a name and then tailoring their products and services to fit each group. It's their way of trying to personalize the shopping experience by making desired and frequent customers who arguably have the biggest stake in a store's success feel at home.
 
To be sure, it may not feel as personal as the days when a store manager bought dresses with Mrs. Anderson in mind or suits for that nice Thompson. But in an era of point-of-sale data, credit card records, focus groups and psychographics, grouping customers by lifestyle to apply the old-fashioned effect of personal attention across hundreds of stores isn't all that hard to do.
 
"It's trying to replace the individual service you got when the store manager was in charge of everything," said Edward J. Fox, director of the J.C. Penney Center for Retail Excellence at Southern Methodist University. It's quite a change for a generation of retailers that made it big by making really big buildings and serving the masses en masse. Take Best Buy, the Minneapolis-based consumer electronics giant.
 
It helped usher in the electronics retailing age by offering acres of music and computers and refrigerators under one roof, focusing almost solely on the latest products and technology. "We've treated all our customers the same way," said spokeswoman Kelly Groehler.
 
For the past three years, however, Best Buy has been working to change the model by testing a theory called "customer centricity," which targeted groups of customers under such names as Jill, Barry, Ray and Buzz. The company no longer discusses the names, but it is trying to determine whether Jill or Barry shop at certain stores so that it can subtly tailor services to fit its customers.
 
Customers with more affluent lifestyles, for example, may respond to new Magnolia boutique shops. Women who leave the latest technology to their kids may spend more if they get a warm welcome from personal shopping assistants. Best Buy has been so pleased with the results that by the end of this fiscal year, all of its more than 750 U.S. stores will be operating under the customer centric model.
 
Still, not everyone is eager to be seen as a Jill or a Barry. One blogger who read the early coverage of the strategy objected to being labeled, which may be one reason the retailer now discusses lifestyles rather than names. "You can't go too far with this because that's the response you get from consumers," said Cynthia R. Cohen, president of retail consulting firm Strategic Mindshare in Miami.
 
But many chains have had internal names for customers for years, said Cohen. Creating an archetype of someone who, say, plays tennis, drives a sports car and eats out eight times a month helps merchants visualize for whom they are developing and selecting merchandise. Names bring the descriptions to life.
 
Macy's even uses pictures of its prototypes to help staff flesh out the personalities, be it buyers trying to select blouses or sales assistants trying to determine where to steer a customer. "It's much more powerful when our buyers are in the market to say, 'Does this appeal to Katherine?' " said spokesman Jim Sluzewski.
 
Katherine, and her male counterpart, Ken, have been described as conservative and maybe even preppy. She might like Ralph Lauren styles. Meanwhile, Julie, and her partner Jack, are neo-traditionals and like to follow trends in a restrained way. Erin and Eric are more contemporary but Alex and Alex -- yes, same name for both sexes -- push the fashion envelope the most.
 
Macy's still plans to welcome everyone, but research shows those particular consumers present the biggest opportunity for a chain that no longer can rely on the traditional model of department store customers cutting a wide swath through the general populace. "Our core customer shops for the kind of merchandise we sell 78 times a year," said Sluzewski.
 
Macy's parent, Cincinnati-based Federated Department Stores, already has analyzed its established Macy's and is going through the process for stores it acquired from rival May Department Stores, including Kaufmann's, Filene's and Marshall Field's locations. Most will become Macy's stores in September.
 
Wal-Mart, too, wants to change its retail identity. The company has rolled out more trendy clothing and upscale home products that it hopes will appeal to a prototype named Gracie. (The actual names used to describe a customer lifestyle typically are chosen by each company's marketing staff, so they're the ones to blame if you don't like yours).
 
The information that leads to the names comes from internal retailer data and surveys. Market research companies such as Spectra and Claritas, both owned by information and media company VNU, blend demographic and geographic data to create dozens of different customer types.
 
Of course, people change during their lifetimes. An affluent married woman living in the suburbs will change her shopping habits dramatically after having a baby, but she'll probably stick with upscale brands if that's her style, said Steve Kent, senior vice president of retail client services for Spectra Marketing.
 
There are 60 different categories in the Spectra matrix. "The big thing is not to identify people by the way they look, but really by the way they shop," said Kent.
 
American Eagle actually puts 25 different faces on the screen when the Marshall teen retailer is introducing its Katie and Brandon prototypes to analysts. The company wants to get into its customers' heads but avoid the trap of assuming they all look the same.
 
E-mail Teresa F. Lindeman at tlindeman@post-gazette.com.
 
Distributed by Scripps Howard News Service, www.scrippsnews.com.