Retailers Report Disappointing Numbers Poor sales performance prior to holiday season challenges companies to take another look at

Retailers Report Disappointing Numbers
Poor sales performance prior to holiday season challenges companies to take another look at their CRM initiatives.
by David Myron

Despite the upcoming holiday season, retailers are wincing at their latest disappointing sales figures for the month of September, requiring many to take a closer look at their CRM initiatives, analysts say.

As the volatile stock market, the unemployment rate, and the threat of war with Iraq add to customer jitters, retailers are scrambling to get customers to release their cash.

Wal-Mart Stores Inc. announced Thursday same-store sales for the company were up 3.3 percent, however, it still falls below the consensus from Thomson First Call, which expected a 3.5 percent increase. Total sales for the month were up 10.4 percent.

Kohl's Corp. reported same-store sales decreased 3.2 percent, which falls below Wall Street analyst expectations of a 3.2 percent gain. Total sales were up 8.5 percent.

Target Corp. admitted same-store sales were down 0.8 percent, below company forecasts, but slightly better than the 1.1 percent decline that Wall Street expected. Total sales were up 7.1 percent.

According to Christopher Fletcher, a vice president and research director at Aberdeen Group, based in Boston, with the exception of a few companies such as Wal-Mart that have a large Web presence, technologies used to target specific customers such as campaign management applications have not become mainstream. "It is important to understand who your customers are and what they might want to buy instead of doing a shotgun blast," Fletcher says. "I'm seeing some companies get into it, but I'm not seeing a broad adoption in the retail space."

Sheryl Kingstone, an analyst specializing in analytics at the Yankee Group, also based in Boston, says even retailers who use CRM solutions are not getting the maximum return on their investments.

"The whole story around this is customer loyalty and retention. If you're reaching out to customers more often you'll be more successful in grabbing their attention.

However, she says customer loyalty programs have failed primarily because of two reasons: customer data is still separated into silos within the same organizations and the customer data is often old and inaccurate.
"The 360-degree view of customer is not there yet, because organizations are still suffering from garbage in garbage out," she adds.

Regarding targeted selling in the retail sector, Kingstone says "no company is doing it that great lately. Some segments are doing it fairly well, such as discount and catalog houses, because they've been doing direct mail campaigns for years and have a lot of customer data, but the retail industry, as a whole, is struggling to collect customer data."

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