Data Analytics in Retail Companies
What is Retail Data Analytics?
Retail analytics is the process of using big data to optimize pricing, supply chain movement, and improve customer loyalty. Big data describes a large volume of data that is used to reveal patterns, trends, and associations, especially relating to human behavior and interactions.
Typically, it has been defined by five key factors:
- volume
- velocity
- variety
- veracity
- Value
For the retail industry, big data provides a greater understanding of consumer shopping habits and how to attract new customers. Big data analytics in retail enables companies to create customer recommendations based on their purchase history, resulting in personalized shopping experiences and improved customer service. These super-sized data sets also help with forecasting trends and making strategic decisions based on market analysis.
The Business Value from the Data Analytics in the Retail Industry
-
Provides targeted communication to customers
Personalized marketing is 20% more effective than traditional marketing. This is possible because of data analysis. Retail companies track data at all stages of the buying process. They also capture the past purchases of the customer. This data helps them to target the customer with personalized communication. So, the next time you see an ad of the item you checked a few days ago in an unrelated website, you know what is the reason behind seeing it.
-
Predicts demand and managing inventory
Data analytics helps retail companies to understand the customers’ buying needs and focus on areas that have high demand. Data analytics also helps companies to forecast demand and optimizes their inventory.
-
Optimizes the price
When the price of a product is gradually reduced from the time the demand subsides, the demand increases again. This is contrary to the popular practice of bringing down the price after the buying season ends and the demand is diminishing. The predictive analysis helped a great deal in determining the rise and fall of demand.
Enhances customer experience
Data analytics help retailers in analysing how customers shop and use this data to produce a seamless customer experience. From choosing a product to buying it, data analytics focuses on providing personalized attention to each customer. This experience goes a long way in gaining customer loyalty.
Another way in which data analytics enhances customer experience is by analyzing the products that customers buy together and giving them suggestions to buy a bundle of things at a discounted price.
Predicts Trends in the market
Marketers use the technique called sentiment analysis that helps them to analyze the sentiments of the market. Similarly, sophisticated machine learning algorithms are used to determine the context and the data gathered is then used to predict the top-selling products in a specific category.
Opportunities with high ROI
Data analytics help retail industry to find opportunities that have a high ROI.
Retains customers
A dissatisfied or disinterested customer can give sleepless nights to every retailer. Bringing back a disengaged customer, especially when there are several options at their disposal is a huge challenge. However, it is not an impossible task. Data analysis helps in identifying the customer who is not engaging with your brand, the one who could be a long-term customer, and the one who will be a frequent buyer. This helps the retailer to introduce offers and incentives that can engage and retain customers.
Determines location for new outlets
This is especially advantageous for retailers who wish to open a new outlet in a particular location. Data analytics helps the retailer to find out places where maximum people spend most of their time. Analytics also provides information on demographics, spending power, and market conditions. This helps retailers to select areas, which they think are apt for operating their retail outlet and get maximum customers.
Finds innovative ways to engage with customers
It is a known fact that customers always prefer personalized services and this gives businesses an edge over competition. It is observed that retailers who analyze the data based on the current trends in the market can resonate well with potential and existing customers.
Aids strategic decisions
The retail industry is dependent on data to take strategic decisions. Companies rely on data to make informed business decisions using a single and trusted source of information about products and customers.
FREQUENTLY ASKED QUESTIONS
How retail company uses data analytics?
Retail company use data analytics to optimise their inventory and supply chain management by collecting and analysing data on customer purchasing patterns, store traffic and supplier performance. So, they leverage this data to understand the restocking capacity of when to restock, how much to restock and when to order from the suppliers.
What other ways do they use data analytics?
The retail company uses data analytics to create personalization and target marketing by analysing the previous data and can create customized promotions and targeted ads to offer customers the products that they are more likely to purchase. It improves the customer experience by showing them relevant products and deals rather than targeting them with irrelevant ads
The retail industry faces challenges such as a lack of security and data privacy. Additionally, there is also an issue of a lack of skilled teams to decipher data and the inability of the companies to implement the insights gained from analytics into their business.
How data analytics can help making customers and extract business value?
However, with right skills and correct inference from retailers, data analytics can help in increasing customer loyalty and boosting their brand image by delivering customer satisfaction. With technology taking center stage in the retail industry, it can safely be deduced that data analytics will remain a crucial part of it. They use it to predict customer demand for product and to ensure that they have the right products in stock which not only helps the retail company to keep customers happy and satisfied but at the same time helps retail company to save money on costly overstocks and restocks. Data analytics is a key factor in retail company success.
For further reference, visit our channel and refer the video named Data Analytics in Retail Companies or click the link
For any questions?
Share This :