Examining Pareto Law across department store shoppers

Arry Tanusondjaja, Jenni Romaniuk, Magda Nenycz-Thiel, Mototaka Sakashita, and Vijay Viswanathan

Department stores invest in loyalty strategies that largely focus on retaining current high value customers in response to increasing competition in retail shopping.

Introduction

Department stores face competition from online and mobile distribution channels in an omnichannel retailing world (Verhoef et al., 2015). Facing these competitive pressures, it seems reasonable for department stores to focus their attention and limited resources on retaining their valuable customers, specifically those who currently contribute the most to the company's bottom line (also known as 'heavy'customers). 'Heavy' is a term that is often used by marketers to refer to customers who buy more than other customers (Twedt, 1964). In line with Recency, Frequency and Monetary value (RFM) targeting models, heavy customers are more desirable targets for...

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