Capitalizing on Big Data - A study of how a Norwegian grocery retailer utilizes and benefits from Customer Loyalty Program data
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The purpose of this research is to increase the understanding of how grocery retailers utilize and benefit from Big Data, more precisely data collected from customer loyalty programs. Although retailers have used customer loyalty programs for three decades, the application of the programs as a means for collecting and analyzing large amounts of granular customer data is relatively new, and the research field is unexplored. In order to conduct research on this field, a single case study of the Norwegian grocery retailer Coop Norge has been performed. Moreover, a comprehensive literature review exploring the possibilities deriving from customer loyalty program data was completed. Based on this literature review, two frameworks were developed and utilized to analyze the case study data. The first framework was developed to evaluate the extent to which the customer loyalty program data is utilized through comparing possibilities identified in the literature with the actual utilization of possibilities. The possibilities were divided into five distinctive categories: Customer Loyalty and Retention , Customer Segmentation and Customization , Logistics , Planning and Store Operations , and Strategy Development . The second framework, developed to assess the extent to which benefits are achieved, maps the attained benefits into being either value or cost advantageous, or both. Results from the case study show that the retailer utilizes a large proportion of the possibilities identified in the current literature within the categories of Customer Loyalty and Retention , Customer Segmentation and Customization , and Strategy Development . The identified areas of utilization are promotion planning, pricing, assortment planning, general decision-making, strategy formulation, prioritized inventory, supply chain cooperation, product development, and relevant communication with customers. All of these areas of utilization were found to be useful at a higher organizational level, while the areas of assortment planning and decision-making also were found to be useful on shop level. It was furthermore found that the relationship with a third-party supplier of analytical services facilitates the utilization of the data, as the retailer does not have the required analytical competences in-house. However, identified possibilities within the category of Planning and Store Operations were only utilized moderately, and possibilities within the Logistics category were not utilized whatsoever. Further, the retailer can be said to benefit extensively from the customer loyalty card data from a value advantage point of view. Few cost advantages have, however, been identified, in addition to the fact that several of the utilized possibilities represent a large cost for the retailer. Due to the newness of the field and the fact that this research builds upon a single case study, the empirical generalizability of the results is limited, and further research is required to advance the research field. However, the study provides a first suggestion regarding a possible hypothesis, which can be derived from analytical generalization.