Using AI techniques in grocery industry: Identifying the customers most likely to defect

The food retailing market has reached a mature stage where companies need to be competitive if they are to survive. Customers are ever more demanding and retailers need to design and introduce new ways of learning about their customers if they are to retain them (Leeflang & Van Raaij 1995). This article examines the efficiency of the LAMDA classifier (Learning Algorithm Machine for Data Analysis) (Aguado 1998; Aguado et al. 1999) in identifying customer's behaviour; specifically examining which customers are most likely to defect when a new retailer appears on the scene. The study carried out in this project is based on data gathered from a Spanish grocery chain: Supermercats Pujol, SA - 'Plus Fresc', winner of the 1998 Global Electronic Marketing Award, www.plusfresc.es.