DALLAS — Buxton Co., a consumer and retail research and planning firm, has a bigger database than the Library of Congress and is using it to help retailers plan for the future.
Based in Fort Worth, Buxton has more than 1,000 retail clients across North America, including department and specialty stores such as Tootsies, Pier 1 Imports, Casual Male and Pendleton (which is also a wholesaler), as well as restaurant chains, city governments, and health care and transportation agencies. They turn to Buxton to find potential customers so they'll know where to open future stores and how to refine their marketing.
"Retailers come to us wanting to know who their customer is now and who will respond to their offer and how to get closer to those customers. Once we have identified their unique customer base, we can help them fine-tune their focus and grow to the next level," said Tom Buxton, president and chief executive officer of the company he founded 11 years ago. Buxton spent more than 20 years with Tandy Corp., parent of Radio Shack, where he managed the real estate, design and construction of its 6,000-plus stores.
To define consumer spending patterns, Buxton has pioneered the use of psychographics, which takes demographics beyond typical gender, age, race and income profiles to include lifestyle, shopping and behavioral data as well as media habits such as radio, television, Internet and reading preferences.
"Retailers call on us to help find the highest density of potential customers to help them decide where to build stores or refine their marketing and merchandising efforts," Buxton said.
"Historically, researchers have identified markets using demographics for describing population characteristics," he said. "But in today's customer-driven marketplace, evaluating people by only general traits yields inaccurate conclusions and bad answers. So the better approach is to go ‘psycho' on your customers. We've got proprietary consumer and spending data on 118 million households across the U.S., including 25 terabytes of information that allows us to pinpoint the exact value of any product at any location. The Library of Congress has only 14.5 terabytes for all its information. So we're almost one and a half times its size just with consumer-spending data. For our clients, it's all about defining the customer."Buxton, which generates $33 million in revenues, and is growing by double digits each year, purchases consumer information from myriad sources — from credit card and media companies to voter registration rolls. To build its databank, Buxton's in-house team of researchers analyze and interpret the data and then generate customized reports for clients.
"We look beyond and go deeper than just focusing on household data," said Rich Hollander, president of the customer identification division of Buxton. "We can split a household and focus on up to six people at each address, which can yield some amazing and very precise data that's immensely valuable to our clients, including what each household member is likely to purchase or other information on their media or lifestyle patterns.
"We also use a drive-time gravity model to help stores plan new locations or shutter existing ones," Hollander said. "The drive-time model takes into account the number of core customers in close proximity, which is measured by drive time. Households that are closer to a site are obviously more valuable than those farther away. Reaching the target customer is the constant focus that retailers need to succeed in reaching their stores' sales potential. Our reports tell stores what sales they should receive from each household in a store's trade area, which is then rolled up to an appropriate targeting geography such as a ZIP code or sub ZIP code."
Using the company's exhaustive databank and customized reports, Buxton executives projected that they will help retailers build more than 6,000 new stores over the next four years.
"Pier 1 Imports used to say that it needed 100,000 rooftops [households] around its stores to have them succeed. Now, after learning the benefits of psychographic research, it says it doesn't need 100,000 rooftops to be successful — it merely needs 15,000 of its target customers around each store. And it hasn't built one loser since learning, and making, that distinction almost five years ago," Buxton said.
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