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Data mining in the grocery industry

I have seen many uses for data mining in financial services, telecom, and pharmaceutical industries but have seldom...

seen many for the grocery industry. I know market basket analysis is one use, but in meeting with many vendors, examples are very hard to come by and presentations are never geared toward this industry. Are there any reasons for this and what are some of the benefits a grocery retailer could realize through data mining?

With industries like financial services and telecommunications, the interactions between a company and its customers happen in a very identifiable way. The data that a company collects can be tied directly to the customer and thus any data mining results can be tied directly back to the customer. With grocery industry, the connections between the customer and the store have been, historically, anonymous and limited with regards to data collection. This has started to change recently, with the widespread rollout of "preferred shopper" cards and the increased use of credit cards in grocery stores. Now that the data is starting to be collected, the grocery industry has to figure out what to do with it. Simple promotions are already common (e.g., if you buy one brand of diapers, you might receive a coupon for a different brand upon checkout). But unlike the well-established direct marketing industry, the grocery marketing organizations are relatively new at using data to drive customer activity. This is surely going to change (the volumes of data now being collected are enormous) and my expectation is that analytic marketing practices are going to be common with retail grocers in the next couple years.

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