How Predictive Analytics Will Increase Your Profits in 2016
Now that the holidays are over, it’s time to start looking at your shelves — made bare by wave upon wave of aggressive holiday shoppers — and begin executing your plan for the new year. 2016 could be the year that you adopt a comprehensive solution to keep your inventory appropriately stocked with the right assortment levels following promotions like Black Friday and annual events like Christmas.
End-to-end predictive analytics platforms provide a comprehensive approach to supply chain optimization, connecting planning to inventory management, pricing, markdowns and promotions. The intelligent engine builds a superior demand forecast that accounts for critical key performance indicators, including sales and inventory levels in real time, to proactively provide profitable suggestions for important decisions. This smart approach enables retailers to finally connect marketing and merchandising to fulfill 2016 plans at a maximum gross margin — and high level of customer service.
According to IT research company Gartner, Inc., 70 percent of the most profitable companies will manage their business processes using real-time predictive analytics by 2016. The time is now, and it’s easier than you’d think!
Inventory Management in 2016
Traditional methods and software for inventory management have proven to be ineffective, particularly as consumer behavior and technological innovation has forced retailers to adapt more complex omnichannel sales strategies. Keeping track of your sales across mobile marketplaces, within brick-and-mortar stores, over social media, wholesale and other channels becomes very inefficient when treated separately and consolidated manually. The future of retailing involves dynamic, proactive and comprehensive decision making across multiple channels, and a predictive analytics solution can help retailers do just that.
Integrating Marketing and Merchandising With Predictive Analytics
Whether you’d like to generate an uplift for the winter holidays or avoid lost sales due to a surge in demand after a Kardashian is spotted wearing your dress, treating marketing operations such as promotions and markdowns separately from merchandising processes such as assortment planning and replenishment is no longer working for retailers. An integrated, end-to-end predictive analytics platform can ensure that you run profitable promotions by suggesting the best media types and bringing the right products to the right locations proactively. Moreover, it accounts for important factors such as product cannibalization, size curves, seasonality, geo-demographic diversity, loyalty programs and much more.
Why Predictive Analytics is the Future
Predictive analytics has been successfully implemented across many industries, including aerospace, finance, politics, medicine and entertainment. Now with changes in technology, leading to rapid advancements in e-commerce, consumer data collection, analytics and changing customer expectations, retailers have begun realizing the strong benefit of the technology. These platforms easily integrate into any ERP solution a retailer is currently running, whether they have five stores or it's a multibillion dollar, multibanner giant. Retailers using predictive analytics have reported significant reduction in inventory costs, a strong boost in sales and gross margin, and improved customer service through smarter fulfillment options.
To top it all off, what currently appears to be a challenge may actually be an opportunity to strengthen your business. While omnichannel retail might result in a little more work for your team, the increased customer touchpoints can actually lead to stronger relationships with brands and consumers. There’s no better way to turn those challenges into assets than by using a robust predictive analytics solution.
Yan Krupnik is the business development manager at Retalon, a provider of predictive analytics for the retail industry.
Related story: 5 Things Retailers Must Understand About Product Returns
Yan Krupnik is the director of business development at Retalon, an award-winning provider of advanced retail predictive analytics and AI solutions for supply chain, planning, merchandising, inventory management, and pricing optimization, with a transformational approach to the retail industry.