Retail analytics in the context of 'Segmentation, Targeting, Optimisation' of the operations of convenience store franchises

Retail analytics is seen as an essential instrument for improving retail business performance under the pressure of increased competition. Segmentation is beneficial, insightful, instructive and inventive but the real zeal is in implementing it. This paper presents a methodology and implementation of segmentation for a convenience store franchise based on the drinks sold at each store. The purpose of the segmentation of stores is the minimisation of time for organising cooler sections for drinks, so that management can keep popular drinks in larger number and less popular will acquire less room. Clustering models are created based on sales variables enriched with small number of selected demographics as opposed to just demographic variables as such models performed better. Results are currently used by retailers in one state of Australia.