Karma on a Hanger

Disease, war, inflation -- all matters of real concern and debate for our society. But if the "Letters to the Editor" section of The New York Times is any indication, one of the biggest outrages being perpetrated these days is the planned elimination of petite women's clothing departments by three large and influential retailers -- Bloomingdale's, Neiman Marcus and Saks Fifth Avenue. An article about this strategy that appeared in The Times earlier this month inspired an amazing number of passionate and angry letters from women (and a few sympathetic men), all sounding variations on this theme: Don't I -- and my money -- matter?

The retailers have determined that valuable floor space should be devoted to more-profitable sizes and clothing lines (that is, for young and affluent consumers). These are rational decisions based on objective evidence (i.e., declining sales of petite brands). But the responses illustrate how the most-detailed analysis sometimes misses critical information.

"Since it is more likely that I will shrink, not grow, I face a dilemma," according to one correspondent who described herself as "a 46-year-old, 5-foot-tall woman." She added, "I fail to understand a business model that drives out women who buy not only for themselves but also for their husbands, children and parents."

That statement explains why this drama is relevant to banking. After years of rhetoric and failed efforts, the industry finally is having some measurable success deploying customer analytics and market segmentation techniques. The ability to identify more (and less) profitable and valuable customers, markets and channels has never been better, and banks looking to deploy resources more effectively and improve financial performance are embracing this type of analysis.

But as institutions focus on high-value customers, the lesser-value customers still need banking services. Eventually, there will be tech-savvy competitors (Wal-Mart?) that will identify cost-effective ways to serve -- and profit from -- these customers. Whether or not established banks will notice remains to be seen.

So, as a five-foot-10-inch, size-11-shoe-wearing female, I say to my 5-4-and-under sisters: Keep the faith. It might not happen overnight, but sooner or later someone will do some research, identify an opportunity and fill the gap. You can bank on it.

Katherine Burger is Editorial Director of Bank Systems & Technology and Insurance & Technology, members of UBM TechWeb's InformationWeek Financial Services. She assumed leadership of Bank Systems & Technology in 2003 and of Insurance & Technology in 1991. In addition to ... View Full Bio