Retail organisations now capture an unprecedented volume of data about their products, sales and customers. However, turning this information into actionable insights can often prove a difficult task, and that’s where retail business Intelligence comes in.
The hype surrounding big data has meant that companies, no matter how big or small, now recognize the importance of collecting data surrounding their strategic business activities.
The role of analytics has been transformational for a range of industries, but none more so than the retail industry where there are a plethora of examples of successful retail business intelligence.
You will undoubtedly have heard a lot about the way big players such as Amazon and Walmart use analytics to improve retail performance. However, the benefits of retail business intelligence are not restricted solely to these larger organisations, companies of all sizes can gain real value from implementing it.
In this article we take a look at how retail business intelligence can help companies get the most out of big data.
In retail businesses, sales receipts and transaction history can equate to hundreds, thousands, and even millions of rows of data depending on the size of the business. This volume of data represents a huge opportunity for sales analysis, but volume alone does not guarantee valuable insight.
A successful retail business intelligence solution can help companies extract real benefit from this data by answering many of the key questions users may have. How much are you selling? Of what product? At which store? At what time? And to whom?
The answers to these questions can help to improve the decision making process drastically by signalling key trends in the data, highlighting areas of poor performance and identifying potential opportunities.
But the real value of retail business intelligence is not in its ability to answer these questions on an individual basis. The real value comes with the ability to bring together data from multiple sources and systems, allowing users to gain more context from the information available.
Want to know how sales of ice creams, to children, are affected by rainy days, in May, compared against the last five years? Retail business intelligence can provide you with that level of insight.
Within retail business intelligence, one of the most important questions is ‘Who are our most profitable customers?’
With sales analysis, businesses have the potential to unlock considerable increases in profitability by identifying their most loyal customers, and figuring out how to keep them on board. The costs involved in acquiring a new customer make doing so significantly more expensive than keeping existing customers, so it is in the best interest of a retail business to take note of what the data is telling it in regards to these individuals.
Customer analytics, as part of retail business intelligence, can be used to develop and maintain customer loyalty programmes targeted at keeping these customers happy. These strategic activities not only increase customer retention, but can also lead to additional business through the word of mouth endorsements of satisfied customers.
Inventory analysis is an integral part of retail business intelligence. There is little point in using analytics to forecast sales, if you then lack the inventory to fulfill them.
Inventory analysis can help you identify which products are selling fastest, how much stock to hold, and when to reorder that item.
It can also highlight the worst performing products, allowing you to re-evaluate re-order quantities in order to avoid having capital tied up in this idle stock.
Furthermore, these data trends can be compared over time in order to help the business conduct more accurate demand planning going forward.
Finally, retail business intelligence can enable companies to track the response to strategic marketing activities more effectively.
This often takes the form of analysis over factors such as website traffic, search engine rankings (including Google analytics), email marketing response and social media interaction.
With the rise in the number of online retailers, the importance of marketing analytics has continued to grow. However, even businesses that do not sell their products online can benefit from the ability to analyse how performance changes as a direct – or indirect – result of this marketing activity.
To find out more about implementing Retail Business Intelligence in your organisation, download our free eBook below.