5 Ways Data-Driven Intelligence Can Transform Your Retail Strategy
A crisis forces a change like no other. If retail enterprise debates centered around IT budget in pre-pandemic times, now it’s unequivocally for swift digitalization from customer point of sales (POS) to supply chain. The retail sector has learned some hard lessons from today’s uncertain business climate. However, some enterprises are ahead in their game by building their business models around digital transformation for ultimate customer experience.
Data has played a key role here. Implementing data gathering and management platforms, enabling self-service and automation, bringing in artificial intelligence (AI), and leveraging analytics for dynamic operations management is the way forward for retail.
Here are five ways in which a data-oriented strategy can help transform retail selling for your business:
To be on top of the sourcing game, it's essential to re-visualize the company’s data sourcing strategy from a reactive to a strategic one. Strategic sourcing requires in-depth knowledge and competence, where the category manager is proactively analyzing sales, promotion and customer-oriented diversifications. For retailers, this means instituting systems that gather data about POS, inventory, retail space, and marketing promotions, and display interconnections to inform the next steps of the category management process, while focusing on a sourcing strategy from current and/or new supplier bases to optimize revenue. Organizations need to implement data management and analytics platforms to unlock the power of informed decision making by their skilled workforce.
One of the biggest drivers of data analytics is the ability to enable strategic decisions in conventional, randomly decided areas such as vendor profiling and selection. A data-driven approach can quantify vendors based on their cost drivers, margins, collaboration proactiveness, and propose action plans for vendor management. Using the right data analysis, it’s possible to create vendor profiles, build performance dashboards, and generate scorecards based on critical metrics of vendor performance. With such objective analysis, it's easier to separate the right vendors that align with your business goals and can be contributors in a long-term partnership strategy.
The need for assortment localization is increasingly becoming an imperative for customer-centricity, as retailers expand into geo-spatial territories that demonstrate their own unique consumer characteristics. It has now gone beyond simplified categorization of “hot items” vs. “slow-moving items,” and gives quantitative data into underlying motives such as the uniqueness of a product or the customer needs satisfied by an item in a category. Using data-driven intelligence can employ strategies such as systematic delisting of slow-moving products or strategic listing of locale-specific product portfolios. With data analysis and management crossing over from technical departments to business teams, who need to make informed decisions for sales and profitability, the possibilities of in-depth data becoming business drivers are immense.
Inventory diagnostics has the power to impact key performance indicators beyond just restocking or monthly reconciliation of inventory. If a business is looking at sales growth due to factors like improved merchandise availability, reduced inventory stocking costs, improved customer experience, and overall supply chain strategy, it needs to integrate its inventory planning software with an enterprise resource planning (ERP) system or an accounting system. With such integrations, a business can leverage the full breadth of inventory diagnostics to optimize inventory mix, levels and locations, while minimizing excess and obsolete inventory. Competitive inventory management comes along with robust reporting dashboards, which allow views by overall inventory performance, product category, regions of use, and root causes for overstocks or stockouts.
Supply Chain Diagnostics
Maintaining a sustainable supply chain in the face of rapid growth or changing business environment can be challenging. A retail organization’s strength lies in its visibility into every node of the supply chain — category, product, vendor, inventory, warehouse, or logistics — to provide maximum value to the end customer even during high demand seasons. The aim of supply chain diagnostics would be to evaluate key challenges to cost optimization, asset efficacy, and enhanced customer experience by mapping the end-to-end supply chain, identifying customer requirements, and calibrating them against business goals. Supply chain diagnostics can enable a future road map for quick wins and longer-term transformative initiatives by studying the impact of market dynamics on a company’s operational framework and quantifying potential costs, risks and savings.
Data-driven intelligence drives productive, focused and insightful conversations that benefit the entire business ecosystem in the retail space. Today’s best-in-class data management systems can make an organization’s data speak to make a difference. With a robust data management system, it's also possible to track and consolidate data from numerous sources, simultaneously distribute information across multiple channels, platforms and devices, while facilitating faster go-to-market and personalizing customer experiences — which are always ultimate aims for successful retailers.
Shashin Shah is CEO of Pimcore Global Services, an open-source platform for product information management (PIM/MDM), digital asset management (DAM), content management system (CMS), and e-commerce.
Related story: Why Product Content Excellence is a Priority Across Industries in This Digital Era
Shashin Shah is CEO of Pimcore Global Services – A Happiest Minds Company. Pimcore is an open-source platform for product information management (PIM/MDM), digital asset management (DAM), content management system (CMS), and eCommerce. In his over 20 years of experience, both globally and in the US, he has managed large enterprise clients through strategizing, operating, consulting, and carrying out implementations worth USD 100M+ via global delivery models across several industries.