While outsiders have long tried to put a death sentence on retailers in the brick-and-mortar space, the industry keeps chugging along. Insiders understand there’s still plenty of potential for growth — even as e-commerce continues to scale. But for there to be sustained success, big data must be properly leveraged.
Unlocking the Power of Data and Analytics
Everywhere you turn, there’s data being collected. Your business, whether through a purposeful strategy or carelessness, is recording lots and lots of data. However, unless you put it to use, it lacks any power for progress or change.
Retailers are often unaware that they can leverage data just as much as any e-commerce business or tech company. With the right strategy in place, any retailer can successfully use data to make better business decisions. Here are some ways you can unlock the power of data and analytics and usher in the future of retail.
Inventory Tracking, Forecasting and Management
Advanced analytics tools can be used to assist in inventory tracking, forecasting and management. All of these elements work together to ensure retailers have the right products on the right shelves at the right time.
“In some cases, inventory forecasting is relatively straightforward: snowstorms help managers predict an uptick in shovel sales, or a football team’s winning season drives demand for branded apparel. But other trends are subtler and, often, will be discovered only through the sophisticated use of data analytics programs,” BizTech explains.
Predictive analytics play a rather significant role in inventory management, particularly from a cost perspective. Research shows that predictive analytics for inventory management can lower costs by as much as 25 percent to 40 percent. It’s also been shown to increase sales in the range of 11 percent to 20 percent, while boosting turnover by up to 350 percent.
Relying on intuition and personal experience is no longer an effective means of finding success in the retail world. Instead, you need retail analytics tools to understand what’s happening and provide better in-store experiences for your customers.
With a retail analytics tool, you can study and improve person-to-person interactions, analyze merchandising strategies to see which ones work well, set up real-time notifications of irregularities that may impact shopping and/or sales, and optimize sales strategies to increase average order size. It’s powerful and beneficial both at a micro and macro level.
Data and analytics empower retailers to understand which customers buy what products and — to an extent — why they’re purchasing these items. As a result, they can deliver personalized recommendations to customers to get them in the door.
Target is perhaps the most famous example of this. Based on purchases of items like supplements, nonscented lotion, washcloths, and other similar products, the retailer can actually figure out when a customer is pregnant and deliver recommendations based on the stage they’re in.
It’s not just about in-store personalization. Advanced analytics platforms can supply retailers with information that can then be used to develop high return marketing campaigns and advertising strategies.
The hotelier Red Roof Inn is a great example of this. Recognizing that delayed flights are a way of life, the hotel chain put many of its locations near busy airports.
“During the busiest flight seasons, tens of thousands of passengers can become stranded every day,” digital marketing strategist Neil Patel writes. “By looking at big data correlating weather conditions and flight cancellations, plus the fact that many travelers would be browsing on mobile devices, Red Roof Inn’s marketing team did a promotional campaign targeting those areas most likely to be hit by flight cancellations due to inclement weather. This ended up generating a 10 percent increase in business in those areas.”
The Evolution of Retail
Retail has undergone significant transformation over the last two decades. E-commerce has definitely changed the industry, but it certainly hasn’t doomed it. There’s plenty of demand and ample opportunity for businesses that are willing to evolve with the times.
Data and analytics have a way of leveling the playing field. They give retailers access to information and insights that allow them to improve supply chain efficiency, enhance inventory management, and deliver greater customer experiences to shoppers who crave personalization. Retailers that aren’t afraid to embrace data will benefit from competitive advantages in these areas.
Anna Johansson is a freelance writer with a special passion for entrepreneurial and marketing-related topics.
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