The retail industry has undergone a lot of changes in the last few decades. Although the industry has evolved during this time, it is still an industry driven by questions. Customers ask which store they should shop in whereas retailers want to know which product will sell more next month. And retailers who know their customer preferences have a competitive advantage in the market.
In order to keep pace with the changing business environment, retailers these days are gearing up to venture into business analytics to know their customers better. Now the question is how analytics solutions play a crucial role in understanding the customers.
Understanding the customer
CRM analytics helps retailers in understanding their most valued customers, what do they buy, their transactional and other behavioral patterns. Additionally, it helps retailers to:
- Identify consumer segments based on demographic, psychographic and purchase behavior. This helps in designing customized product offerings and marketing strategies for each of these segments.
- Monitor and maintain constant touch-point with your most profitable & loyal consumers.
- Formulate cross-selling and up-selling strategies by analyzing product affinities & associations. This helps in increasing revenue contribution from the same customer base.
Predictive modeling techniques enable retailers evaluate cost, assortment, manage margin targets and promotions. It helps in:
- Evaluating price elasticity for their products and deciding the optimal price points.
- Identifying price gaps to decide the optimal price points and associated discounts for different brands while maximizing sales.
- Determining base, promotion, markdown and discount prices.
Vendor and inventory management
Monitoring vendors and supply chain is necessary to maintaining smooth functioning of the overall operations process. Intelligence tools focusing on stock planning, supply chain analytics, product flow optimization help retailers avoid delivery failures, reduce potential business disruptions, enable multi-sourcing, and improve operational efficiencies.
Fraud detection and prevention
Fraud is one of the most common challenges faced by the retail industry. The industry has witnessed different types of frauds by consumers, employees, or external sources. Predictive modeling helps retailers in identifying unusual purchase patterns and product movements that can help detect fraud. It also helps narrow down the product categories and specific sale seasons vulnerable to fraudulent behavior.
Online social media tools allow retailers to measure customer sentiment and gain a better understanding of their customers. Business analytics enables retailers to take advantage of transactions and customer interactions which in turn help them capture and analyze all their shopper data. This allows them in developing personalized marketing campaigns and offers to individual customers with a solution that is cost effective and has witnessed timely turnaround.
All these analytical insights help retailers adjust and thrive amidst the competitive shopper landscape. Business analytics offers them tool and intelligence to communicate with customers, sell smartly, improve operational efficiency and significantly boost profitability. Many retailers globally have witnessed a marked increase in their sales and revenues through business analytics. It has been a boon for retailers and it seems like the industry has found its way to maintain a competitive advantage in the market.
– Research Optimus