Retail Customer Profiles 101: What Community Leaders Need to Know

Retail Customer Profiles 101: What Community Leaders Need to Know

By Bill R. Shelton, CEcD

What is a customer profile and why does it matter to a community?

The location and operations of retail stores or centers are challenging and dynamic because retailers are constantly attempting to meet and supply the ever-changing needs of the consumer. Often these needs are based on changing demographics, and to be fully understood the demographics should be modeled.

Customer profiling is one of the modeling techniques long used by retailers to better understand their customers and how to market and serve them.

Profiling of customers or groups of customers normally includes the use of both demographics and psychographic characteristics as well as buying habits such as frequency of purchases.

For the retailer, a customer profile provides a snapshot of the persons or businesses that it serves and is used to set marketing programs, merchandise selection, customer service and sales processes. Many retail customer profiles are designed to resemble a person by adding nuances to numbers and bringing personality to data – transforming abstract data into a model that can be visualized and connected to by the retail business.

For the community, consumer profiling is a more difficult task because the transaction data available to the retailer does not exist for the community. Instead, communities can either conduct primary research, such as consumer surveys or interviews, or use census demographics combined with psychographics from a data vendor. Basic definitions for these two data sets are as follows:

Demographics are data sets related to age, gender, place of residence, race or ethnic composition of household. The data is sourced from the Census Bureau and other secondary sources that track consumer information.

Psychographics are segments or identifiable groups of consumers based upon buying habits, lifestyles, income, attitudes and opinions. The data is sourced from data vendors.

A community’s consumer profiles tend to identify clusters or groups of consumers by characteristics such as income, ethnicity or race, or age.

By profiling the core customers in a community’s retail trade area, civic leaders can better identify and recruit retailers that cater to those distinct market segments.

For example, if one or more of the core customer segments that make up your day-time and night-time population are heavily comprised of members of a certain ethnic group, then the commonalities and differences within the group should be a part of the consumer profile.

To get the maximum value from your consumer profile, here are some suggestions:

  • Consumer profiles are not a “One and Done Deal” but should updated every two or three years as changing conditions warrant.
  • The consumer profile should be included in your retail trade area analysis.
  • Be sure that all local retailers, restaurants and service providers get a copy of the consumer profile report. Consumer profiles contain critical information that developers and businesses need to make location and merchandising decisions.
  • Include current consumer profiles in all promotional materials and correspondence with prospective businesses, developers and commercial real estate firms.