Retail is one of the most diverse industries wherever in the world. Amidst an ever changing environment, retailers have to face the challenge of sustaining profitability in a market where margins are usually small, and in a fickle market where market trends change rapidly. This requires a good balance between effective marketing and efficient operations.
Retailers need to work on a complex mix of right products, finding the right suppliers and shipping options, customer expectations, pricing, inventory and demand, among other things, to deliver the best results. Within the retail organization is wealth of information that can drive operational efficiencies with Business Intelligence.
7 Key Areas in Retail to Best Employ Business Intelligence
- Sales and Profitability Analysis
Product sales analysis enables retailers to continuously monitor point-of-sale data and make sense of growing transactional data. This aids the retailer in uncovering sales trends, track product demand, and plan according to seasonal cycles. This involves Accounts Payable, Accounts Receivable, Advertising Spent, Customer Counts, Gross Profit, Product Cost, Return on Assets (ROA), Sales Revenue, etc.
- Store Operations Analysis
BI enables retailers to monitor store performance, analyze multiple store functions, improve category management, and increase the efficiency of sales management, marketing promotions, operations, and budgeting. BI allows retailers to manage performance and control operations across all stores and locations, maximize the profitability of sales channels, and enable fact-based decision-making. More importantly, it supports the delivery of a consistent shopping experience for the customer. This includes Asset Turnover, Comparable Store Sales, Competitor Stores, Front Store Sales, Inventory Turnover, Margin, Sales per Square Foot, etc.
- Customer Analysis
Understanding customer behavior is vital to retail. BI enable retailers to monitor customer life cycles, track customer interactions, identify trends in consumer behavior, plan strategic marketing campaigns, maximize customer acquisition and retention, and perform customer segmentation. It evaluates profitability by customer segment, demographic region, seasonality and other factors. BI aids in determining attrition risks, customer profiling, list generation, post-campaign analysis, segmentation, share of wallet, target marketing, etc.
- Merchandise Management
Effective merchandising enables retailers to provide the right products to the right stores at the right time, and maximize the profitability of the merchandising process. BI enables retailers to compare product performance and evaluate promotion effectiveness across individual items, categories, geography, and vendors. BI also aids in monitoring all aspects of the merchandising process, including returns, performance analysis, assortment planning, and space allocation, to improve merchandising logistics, reduce out-of-stocks, and streamline inventory. Merchandising analysis covers information on active SKUs, In-Stock percent, Inventory Turns, Seasonal Buying, Weeks of Supply, etc.
- Inventory Management
With the challenge of fluctuating demand, retailers need to maintain appropriate inventory levels and determine which products are fast-selling, where they are needed, when they can be supplied. BI enables retailers to use data to set appropriate stock and inventory levels to meet demand and avoid overstock or shortages. It allows retailers to consider seasonal, regional, and location variations and manage warehouse, shipment and distribution to deliver the right stock to the right place at the right time. Inventory management includes Percent Defects, Percent Delivered on Time, Average Inventory, EOQ, In-Stock Percent, Inventory Carrying Cost, Inventory Turns, etc.
- Marketing Analysis
A market with wide-diversified sales channels challenges retailers to understand customer behavior across these channels so retailers can best target their marketing efforts. BI allow retailers to analyze customers’ transaction histories, stated preferences, and current interactions, thus, identify opportunities for improved promotions, special offers, recommendations, and targeted advertising, and to develop customer intimacy, strengthen loyalty, and ensure maximum ROI. Marketing analysis includes Channel Share, Click-Through Rate, Customer Subscription, Endcap Efficiency, Lead-to-Sale conversion, Market Share, Promotional Lift, etc.
- Finance Management
Retailers today need to incorporate financial reporting in strategic decision making, and turn to financial reports more frequently to monitor the financial health of the organization. BI allows the retailer to establish goals and track progress with integrated financial data from numerous sources. BI is used in Budgetary Analysis, Financial Ratio Analysis, Profitability Analysis, etc.
The Right Product, at the Right Time, for the Right Price with BI
Getting the right product on the store shelves at the right time, for the right price, at the right cost is what retail is all about. It involves a delicate balance of effectively addressing market needs and efficiently managing operations to remain profitable and sustainable. With BI, retailers have the capability to understand buying behavior, demand trends and seasonality, customer requirements, exact price points for products, shipping and inventory timing, to aid in key retail decisions. To the retailer, if the customer cannot find the business, then they cannot consider and buy the products.