Growing customer demands and emerging shopping trends have led to major paradigm changes in the retail industry. Value propositions are constantly evolving to deliver not just the best products or the lowest prices, but also exceptional omnichannel customer experience. Despite all this, delivering an interconnected shopping experience is easier said than done. Retailers need a nimble, data-driven approach to increase efficiency and boost the supply chains.
With poor inventory management costing $300 million annually, many leading retail giants leverage smart data analytics to resolve their common supply and inventory challenges. Interactive and real-time analytics help them gain valuable insights into their business to make data-based decisions for optimizing their operations, personalizing the customer experience and increasing profitability with a competitive edge. Analytics is being applied across a very wide spectrum of both physical and digital retail businesses.
Data analytics helps retailers gain insights into customer behaviors and preferences, enabling them to assess the popularity of products across multiple channels. They can evaluate and adjust the product movement velocity across locations, seasons, departments and periods to identify the bestsellers as well as slow-moving items. By utilizing this data, decision-makers can improve inventory management, restock items more efficiently and avoid stockouts. Additionally, this data can help make well-informed decisions regarding prices and promotions, adjusting the product range and planning the marketing campaigns more precisely.
Retailers can also analyze customer data—demographics, preferences, shopping behaviors and purchase histories—to identify key trends and create personalized customer engagements. The data gathered from customer profiles helps tailor product recommendations, discounts and loyalty programs to increase engagement with existing buyers and attract new ones.
For instance, Amazon’s “customer obsession” starts with the consumers’ needs and works backward to enhance and personalize experiences by listening, exceeding expectations, innovating and aligning with their interests. Data analytics also provides an opportunity to create targeted promotions and make data-driven decisions to locate the best product categories, stores and channels while planning location-specific promotions.
Demand fulfillment and supply chain analytics can also help retailers manage their inventory levels and optimize the supply chain. By analyzing sales data and forecasting demand, they can identify bottlenecks and inefficiencies in supply chains, improving logistics and reducing substantial costs. Streamlined supply chains and optimized inventory management help boost profitability and enhance customer satisfaction.
Data-driven store operation analytics measures the performance of different stores and employees, analyzes customer buying patterns, monitors foot traffic, assesses shopper loyalty, identifies peak shopping times, optimizes return policies and more. This helps retailers improve store layouts and product placement and adjust staffing levels for better customer service. Advanced analytics can also help optimize store operations to create more efficient processes for order fulfillment, streamline inventory management and reduce inefficiencies, such as long checkout lines or slow restocking times.
Product affinity and placement analysis—another powerful weapon in the analytics arsenal—helps retail businesses identify which products are commonly purchased together or in conjunction. Accordingly, they can adjust product placement to boost cross-selling and upselling. Placing or suggesting complementary products can increase the likelihood that customers will purchase multiple items. This data can also be used for increasing customer engagement and sales by looping it back for creating targeted product recommendations.
Analyzing customer purchase patterns, market trends, competitor prices and cost structures helps adjust prices to maximize sales while ensuring profit margins remain intact. Retailers can strategize pricing plans in real-time, based on changes in market conditions and consumer demands, while developing reward systems to incentivize repeat purchases. Identifying the most price-sensitive products allows companies to determine the right product-pricing strategies to maximize profits and improve bottom lines.
To conclude, in the extremely competitive and data-based retail landscape, retail organizations embracing data analytics are better poised for success than those relying solely on intuition. Apart from the larger companies, analytics can help small mom-and-pop shops integrate digital technologies into their operations to better compete in today’s e-commerce landscape. Modern cloud-based suite of tools and on-demand services like online storefronts, digital payment systems and data analytics can help them to better understand customer preferences and behaviors as well as in customizing offerings to meet their needs effectively. As the retail industry grows by leaps and bounds, retail analytics is fast becoming an indispensable tool to stay competitive and well ahead of the curve.
Kavindra Singh, Director of Engineering, Intellicus Technologies