To retain their customers, retail companies are now interacting with them in new ways that speed up their operations and, ultimately, increase their profits. While businesses have designed their technology and data analytics primarily for use outside the store, they’re also making them work on the inside.
By using this technology, retailers can now process and analyze data both inside the store and online. People are no longer the only subjects of data analytics. The applications that customers use to interact with retail stores also leverage data analytics to better understand the business. As a result, retailers can now seriously reconsider their consumer experience through data analytics—for example, through the use of optimal inventory management and recommendations.
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Retail Data Analytics
Retail analytics utilize software to gather and evaluate data from bricks-and-mortar stores and online platforms to provide retailers with an understanding of customer behaviors and shopping patterns. They can also use analytics to enhance their decision-making regarding pricing, merchandising, inventory, marketing, and store operations. They can achieve all of this by utilizing retail-data analytics that they obtain both from internal sources such as customer-purchase records and from external databases. Ultimately, the use of retail data analytics assists retailers in boosting their sales, cutting costs, and enhancing their profitability.
To gain insights about a company, data analysis requires applying various structured methods to study a massive volume of cumulative data, detect patterns and trends, then use these insights in making decisions. In today’s retail universe, there is an extensive range of data sources, including online ecommerce sites, customer transactions, and social-media interactions. Leveraging this vast amount of data requires the ability to analyze it adequately. Thus, data analytics lets all types of retailers get detailed information about customer behaviors, as well as the things people like.
Enhancing the In-Store Experience Through Data Analytics
Data analytics is making an enormous change in how retailers provide a customer experience that exceeds customers’ expectations. Retailers use instruments such as radio-frequency identification (RFID) tags, beacons, and cameras to help them track customers’ movements within their stores. These systems determine the most popular items and places in the store, as well as what would be the best store layout to lead to the highest number of customer interactions.
Plus, retailers can use data analytics to provide personalized recommendations and promotions that are based on customers’ choices and the products they buy. Looking at past purchases can provide clues about what the next customers might need. Interested shoppers can customize their deals to fit their specific needs and, thus, get better service.
Optimizing Online Experiences Through Data Analytics
With the advent of data analytics, improvements in analytics tools on the customer side have led to better experiences for shoppers in the digital and virtual worlds. Current Web-site analytics tools enable retailers to observe users’ habits, discover what might be speed bumps in their purchasing process, point out the painpoints within online journeys, and fix these issues by using analytics data to optimize usability and conversions.
Approaches to Retail Data Analytics
The data-analytics roadmap for retail remains crucial to business success.
Descriptive Analytics: Revealing Knowledge of the Past
Descriptive analytics supports the groundwork for the analysis of retail data and can quickly reveal past numbers. Using descriptive analytics is like drawing a picture of what has already happened, revealing data in its purest form. You can answer questions such as How many units of this product did we sell last week? or What is the average customer spend? This core understanding provides the basis for reports and dashboards and can represent the retailer’s revenue stream in a general way.
Diagnostic Analytics: Uncovering Insights
Diagnostic analytics provides a more robust analytics system than standard descriptive analytics and goes beyond what is obvious to explain the reasons behind customer behaviors. With the help of data analytics, retailers can also uncover the underlying factors or exposures to improve upon possibilities. Similarly, they can analyze the likelihood of identifying where the sales of a particular product have fallen or why customers leave their carts abruptly. By understanding these concepts, retailers can formulate remedies for issues and customize their business processes to be more productive.
Predictive Analytics: Coming Up with a To-Do List
Predictive analytics provides a vision of the future by using data and number-crunching future trends and scenarios. Leveraging this extensive data translates into retailers smartly optimizing pricing, products, and marketing strategies. Let’s imagine dealing with peak demand for a seasonal product or knowing how to predict customers’ buying-behavior patterns. Having such a plan lets retailers place their orders in advance, then align their strategies for future development in response to trends in customers’ behaviors.
Prescriptive Analytics: Supporting a Plan of Action
Prescriptive analytics, which is at the crown of data analysis in retail, lets a business create particular, concrete recommendations from which a retailer can carefully choose, according to the insights they’ve acquired from data. This advanced approach uses data to enable companies to make informed decisions about optimal product-stocking levels at the most suitable stores and maximize the effectiveness of marketing expenditures. We can be easily improve the retail sector through descriptive analytics, by helping retailers make all operations departments highly efficient, leading to 100 percent performance and strategic success.
Types of Data to Collect for Retail Data Analytics
In retail, data is a precious tool, supplying a vast amount of information that, when we tap it, can be highly useful. Here is an overview of five critical types of data to collect through retail-data analytics.
1. Transaction Data
Each purchase has a story. The data that you can obtain from transactions provides customers’ histories with your business. The data set stores the details of purchased products, including the timing, pricing, and number of purchased products. You can transform this data into a specific, detailed story that can play a critical role in creating optimal management systems and informing decision-making at the purchasing stage.
2. Customer Data
The keys to the success of your advertising campaigns are in the hands of your audience. Knowing their customers is a crucial need for the success of retail businesses. Retailers collect customer demographics information such as age, place, and purchasing trends to personalize both customers’ shopping experience and optimize their marketing efforts for maximum efficiency. By analyzing customer data, retailers can develop and run events or campaigns that relate to and communicate with the desired audience, which, in turn, can create a sound base of customers and encourage their engagement.
3. Product Data
Examining the product landscape is a challenging task. Not all products are the same, and product data makes this clear. Learning product names, descriptions, prices, and stocking numbers for a department can allow retailers to make product-offering decisions, determine pricing strategies, and develop stock-management practices. Through retail analytics, they can obtain their product-performance data, create and refine their product assortment, and ensure that products’ optimal availability matches their customers’ demands.
4. Online-Behavior Data
This data can illuminate your digital path. Understanding customer behaviors in the online age is invaluable. This is an essential type of data that is now available online. Data about online touchpoints such as Web browsing, clicks, and shopping-cart abandonment indicates how customers connect with your brand online. Through such data, retailers can gain a goldmine of information to help them make decisions about tailoring their online-shopping experience, perfecting their Web-site design, and boosting customer engagement.
5. Customer-Feedback Data
When the customer’s voice sounds the alarm, you can get valuable service feedback regarding the levels and preferred services for customers’ interactions. By asking for feedback through surveys, ratings, or social-media comments, retailers can quickly test the waters by getting direct access to their customers’ viewpoints. Thus, they have the opportunity to elaborate on their products’ designs and solve their customers’ painpoints, resulting in greater customer satisfaction, which eventually results in more customers returning to their stores regularly.
Conclusion
Retail analytics assist retailers in gauging customer loyalty, recognizing buying trends, forecasting demand, and enhancing their store designs to boost customers’ average basket size and increase the number of customer visits. When retailers use retail analytics effectively, it is a valuable tool that enables them to gain essential customer insights and a competitive edge.
Bhavesh is a Director at X-Byte Analytics, a data-driven analytics and analysis company whose motto is: turning clients into successful businesses. He believes that their clients’ success is the compan’s success. So he always makes sure that X-Byte helps their clients’ business reach their true potential with the help of his team and the standard development process he has set up for the company. Read More
