Today's retailers need to invest in tools that allow them to ask questions of their data to get deeper insights.
Consumers today interact with companies digitally more than ever before — across all devices and through all the channels available. Whether it’s visiting e-commerce stores from their laptops, engaging on Instagram, or clicking on mobile ads, digital touchpoints have increased dramatically, particularly in the last year, as every organization was forced to go digital during the pandemic. As a result, retailers are creating and consuming more data than ever before.
Unfortunately, while the volume of data is growing, retailers are struggling to leverage that data to drive business decisions. According to the2021 Retail and Consumer Goods Analytics Study, over 80% of retailers and 70% of consumer goods companies stated their analytics strategy is lagging. That same study found both retailers and consumer goods companies recognize the value in analytics, with over half of them planning to invest in their data visualizations, business intelligence and reporting tools.
Identifying the Best Tools for Driving Retail Insights
To capitalize on the data that’s available to them, retailers need to invest in tools that allow them to ask questions of their data to get deeper insights.
Traditional legacy business intelligence dashboards only provide a fraction of the analytical insights that today’s businesses require; users need to be able to understand the factors behind why data changes — and then use that information to inform future business strategies.
Leveraging Data to Maximize Profitability
With the right tools in place, it will be easier than ever for retailers to leverage the influx of data that’s being collected across the customer journey to optimize experiences, increase operational efficiency and drive profitability. Using AI-powered analytical insights, retailers can:
Create better, more personalized experiences: Automating data analysis across a wide set of customer attributes including store visits, purchase history and reviews can help businesses gain greater insights into customer preferences to create personalized experiences with special offers and product recommendations
Optimize inventory management: Leveraging seasonal data, like holiday sales, can help retailers and CPG companies create more effective inventory management strategies by enabling them to be more prepared for spikes in demand
Building brand loyalty: Brands can use analytics to identify the most loyal, high-impact customers—i.e., customers who regularly shop—to ensure their needs are prioritized, leading to increased lifetime value
Retailers that Have Mastered Data Analytics
Despite the learning curve that many businesses faced at the beginning of the pandemic, there were some retailers that successfully pivoted to digital channels and leveraged the new data at their disposal.
Nordstrom, for example, used the data generated from its rewards program to enhance its product recommendations for customers, while Rite Aid leveraged analytics to personalize product offerings and optimize experiences through medication notifications for its customers.
Digital channels are growing at an exponential rate, leading to vast amounts and types of data that brands have access to. In order to maintain competitive advantage and brand awareness in an increasingly noisy market, it is crucial that retailers evolve their data analytics strategies.
To be successful, retailers should identify tools that give users the ability to glean insights quickly, understand the “why” behind anomalies and make better data-driven decisions. With the right tools and strategies in place, retailers will be able to leverage data to foster stronger customer relationships, drive profitability and reduce operational inefficiencies.
Chris Walker is head of product marketing at Tellius.
The idea of frictionless retail may have become synonymous with giants such as Amazon Go, making it seem nearly impossible for other retailers to compete with this technology on a sustainable, cost effective scale. This, however, is a misconception.