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Store Closings and Customer Retention

The Company

A large retailer with several hundred stores

The Challenge

When retailers close stores, it is uncertain whether the foregone in-store sales will be captured in the online channel, or if the decreased brick and mortar presence will actually drive declines in online sales for the affected markets. This particular retailer had closed several stores within its network and wanted to understand the impact this had on online sales in markets with store closures.

The Solution

The client first used APT’s Market Basket Analyzer to gain a better understanding of both online and offline transaction size, prior to any store closings. Through the software’s rapid analysis of transactional data, the retailer determined that on average, online shoppers had smaller baskets than in-store shoppers. Next, the retailer used APT Test & Learn® to analyze a natural experiment, examining select store closures and their impact on online sales in the affected market. The retailer was able to quantify online sales retention in the period after a store closure, yielding substantial changes to the economics of future closures.

APT software segmented these results to reveal how retention varied by product category and by various customer attributes. Analysis indicated that customers who were exposed to fewer ads previously and whose closest store location was further away from a competitor were more likely to be retained. Further, categories containing items that customers did not need to experience for themselves in the store had the highest online sales retention rates.

The Results

The retailer was able to strategically decide between similar stores to close and target retention strategies to specific customer groups, with an understanding of the types of customers most likely to be retained after a closing, as well as which categories exhibit the highest lift from sales retention. By prioritizing closures and targeting marketing outreach to customers predicted to respond best, the retailer drove significant sales improvement.
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