The Coles plan to use Flybuys data for customising stores to meet local demographic needs could mean anything from more private-label goods in lower socio-economic areas to a larger vegan range in hipster suburbs.

In an investor briefing last week before the Wesfarmers demerger, Coles chief executive Steven Cain cited “ethnicity and income” among demographic factors the supermarket will be targeting to better tailor store ranges to local needs.

Leading retail expert Dr Gary Mortimer said the Flybuys loyalty program captures much more information than most people realise.

He said the vast amount of data collected by Coles (and other retailers with loyalty programs similar to Flybuys) means they can know the suburbs where you live and work, whether you have a pet, and where you go on holiday.

“If every summer it sees that your transactions are occurring in the Gold Coast, it can figure out that you’re on a holiday and you might get an offer to buy sunscreen,” Dr Mortimer said.

“They can see from their data that private-label products are purchased more frequently in lower socio-economic areas, whereas in suburbs like Double Bay in NSW, consumers would be buying more premium brands.

“Data is vitally important in enabling a retailer to tailor offers to customers or a customer base, and provide an opportunity for the business to grow.”

This could involve increasing the range of healthcare products in areas with many wealthy elderly consumers, or allocating more shelf space to Asian goods if that suits the majority of consumers in that suburb.

Marketing and retail expert Dr Louise Grimmer said the data also provides insights on buying patterns and, more importantly, changes in behaviour.

“Our shopping data shows if we have a new pet, if we might be expecting a baby, or if we are on a diet,” she said.

“Tailoring their stores, based on shopper data, is a step in a new direction where Coles is moving on from using the data for promotion purposes to actually adapting the product offering and even the look of stores to better match the different types of shoppers from store to store.

“We’ve already seen Woolworths leading in this space with their concept store in Marrickville, Sydney, designed to appeal to the specific target market in that location with a high-end offering and pleasant shopping experience.”

Parent company Wesfarmers may have given Coles the flick, but it has held onto Flybuys, maintaining a 50 per cent stake in the loyalty program.

Wesfarmers told The New Daily the reason for this decision was to “better leverage the combined Coles and Wesfarmers digital and data assets to improve the companies’ respective customer offers”.

“This goes to show how valuable consumer information is in retail,” Dr Mortimer said.

“The millions of transactions made at supermarkets every week enable the retailer to tailor offers specifically to individual customer needs.

“What consumers are buying in supermarkets is so relative to Wesfarmers’ other brands, including Kmart and First Choice Liquor.

“For example, consumers in certain areas will buy more mainstream beers rather than craft beers, and be more likely to shop in Kmart than David Jones.”

But Dr Grimmer said she believes consumers have been all too ready to give up their data to profiting retailers.

“As long as it is secure and used to improve the customer experience, this is a good thing for customers,” she said.

“This type of data is being used increasingly to come up with new products and services such as pet insurance, and these are being developed by retailers based on customer data.

“Customers do need to weigh up if giving up their personal shopping information is worth it in the long run. Are the benefits from programs such as Flybuys actually worth it?”