Don't look now, but a quiet revolution is sweeping across the consumer landscape, changing the way merchants stock and sell everything from canned soup to power tools. Consider, for example, the strategy of apparel and outdoor giant VF Corp.

One of the world's top makers of jeans, VF, and companies like it, are reinventing the way national chains and their suppliers stock store shelves. Instead of letting customers settle for the Lees or Wranglers that VF thinks they will want to buy, the company uses sophisticated research data to zero in, with laser-sharp accuracy, on what local customers want.

For its part, home-improvement chain Lowe's is providing suppliers with electronic access to performance data, helping to ensure that merchandise in stores reflects local customers' preferences.

This trend, global in proportions yet relatively unnoticed, is called localization—the fine art of stocking stores based on an area's ethnicity, wealth and lifestyles. Significantly, localization defies the conventional wisdom that once fueled the spectacular growth of companies ranging from McDonald's to Home Depot.

It's been an evolutionary process. Standardization has allowed national chains and big-box behemoths to perfect a model and first grow it nationally, then internationally. But now these same retailers—even the deity of uniformity, Wal-Mart—have come to recognize that regional market share is even more important than national scale if they are to continue growing profitably.

Ironically enough, localization has been a direct outgrowth of the success of standardization. After decades of dealing with cookie-cutter stores, local communities are now rebelling at the same time the consumer base is diversifying. In short, the era of standardization is ending.

Savvy leaders of the localization revolution have quickly learned how to use detailed data (supplied by checkout scanners, loyalty cards, Internet stores and electronic product-tracking tags) to select merchandise based on an area's unique characteristics. For example, VF knows that while many buyers prefer lighter-weight denim, its male Hispanic customers tend to like heavier cloth. The end result: VF has seen its local customization strategy boost sales by as much as 50%, while simultaneously reducing store markdowns and inventories.

For retailers, however, learning how to apply a localization strategy to its stores requires striking a tricky balance. Too much customization drives up costs; too little attention to regional preferences can lead to stagnation. Our firm's analysis of 30 localization leaders revealed that these pioneers use three principal criteria to achieve an optimal balance between these risky extremes: They figure out which elements of a business should be localized, how costly they'll be to customize and finally how much positive impact the customization will have on the store level.

Of course, these numbers don't come from guesswork. Localization's key is advanced data-mining technology that can reveal hidden consumer buying patterns and regional similarities. With its powerful Retail Link program, for instance, Wal-Mart can track a product's sales history over a two-year period-right down to its daily sales volume in every store. That permits customization to a degree never before possible. The retailer now carries 60 brands of canned chili, for example, but sells only three of those brands nationally.

Sometimes even the most sophisticated database can't beat the kind of ground-level information that comes from store employees. Take the Wal-Mart store manager in Berryville, Ark., who red-flagged the unmet demand for kosher foods. Somehow, the data machine had overlooked the Jewish community nearby.

The growing momentum of localization is a counterpoint to the assumption that the world will be soon be packed with indistinguishable chains selling the same products-and that, weather conditions aside, there really isn't much difference between Anchorage and Albuquerque. By focusing on the preferences of local buyers, retailers are better serving their customers-and boosting their bottom lines in the process. And that, locally or nationally, is the kind of trend that should interest everyone.

Darrell K. Rigby and Vijay Vishwanath are partners at the Boston office of Bain & Co. They can be reached at (617) 572-2000 or by e-mail, capabilities@bain.com.