TECHNOLOGY Q&A

Consumer Buying Behaviour

How Stock Keeping Unit classification helps Retailers understand consumers buying patterns?

SKU classification based on frequency of buys and product relationships is based on two key metrics:

  • The frequency of buys - this measures true popularity of an item based on how often customers buy this product. For measuring popularity, it is better metric than volume as it is not skewed by one-time large volume purchases by a few customers.
  • Correlation - This measures how strongly this item is connected or related with other items that is sold. If an item is always purchased with another item (like bagels and cream-cheese), it is very important to know the "often bought with" items, and ensure that they are stocked together and in the right proportions. Not having one item from a basket of high affinity products will result in loss of the customer.