How to transform your retail operations with business intelligence
Understanding customer behavior is incredibly beneficial in the retail industry. The ability to quickly and easily gain insights into customer behavior through business intelligence enables retailers to better understand how to influence customers’ decisions.
With retail business intelligence, a company can streamline operations to overcome challenges with layout, inventory management, customer satisfaction, and general operations. This allows a retail business to compete in today’s online space, boosting sales for a brick-and-mortar store just as much as an eCommerce platform.
As more malls worldwide are closing, adjusting to this new technology is critical for many brands that would otherwise face failure or bankruptcy.
What is retail business intelligence?
Retail business intelligence (BI) is the use of advanced analytic techniques to better understand your business operations, customers, and strategies. Retailers are increasingly utilizing retail business intelligence tools to collect and manage data. This data is then used to generate reports that help businesses identify key areas for improvement across the organization.
The ability to leverage this type of big data analytics in real-time gives retailers a competitive advantage in their industry.
With increased insights into consumer shopping patterns, inventory management can be optimized, which reduces the total cost of goods sold (COGS).
This may also lead to improved customer satisfaction as inventory levels become more predictable due to these improved analytical capabilities being applied at scale throughout each store location.
In addition, marketing effectiveness can be measured more accurately by analyzing all touchpoints, including social media, advertising campaigns, and email blasts, giving marketers an accurate picture of how well their efforts perform against other channels.
What kinds of benefits does retail BI offer?
The barriers to entry for the retail industry have fallen. This makes every niche highly competitive and fast-paced, requiring new and powerful tools for a brand to adapt to market trends and customer needs. Retail business intelligence solves this problem by helping with the following:
Streamline daily operations
With customized retail BI tools, a business owner gets a more comprehensive view of what is working and where to improve. This creates a more agile business that can respond to trends whenever they arise, a key factor in running a successful retail operation.
For example, if a sudden shift in consumer behavior points towards more social justice topics, a retailer with BI software can discover this and invest in products that reflect that philosophy.
Improve customer interactions
As a retailer, you know that customer experience is key to a successful business. Retail BI allows retailers to gain deeper insights into their customers and their behaviors, allowing them to provide better service and improve brand loyalty.
Instead of only knowing how many customers visited your store or what products they bought, retail BI provides data on where those customers are coming from, what devices they’re using while shopping, and even what content they interact with while browsing or buying products.
Eliminate inventory errors
Retailers must ensure that their inventory is in the right place at the right time. Business intelligence helps optimize inventory management by analyzing sales data so retailers can ensure products are in stock when customers want them most.
This is especially helpful when an industry is experiencing supply chain issues, similar to what is happening in the current market. A robust retail business intelligence platform reduces inventory costs. It improves order management, so your store runs smoothly based on real-time demand.
Keep up with current trends
Retailers can leverage the immense amounts of data available with predictive analytics. For example, by analyzing past purchases and other information about customers like their gender or zip code, retailers can identify differences in purchasing patterns between genders or even across different regions within a country. This information helps retailers develop targeted marketing campaigns that have a higher chance of success because they are aimed at a specific audience.
Optimize floor plans and flow
If a store has five different departments, with each department being separated by several aisles of merchandise or displays, it’s likely that customers are moving slowly through the space because they have so many options in front of them. They could walk into a store and be overwhelmed by all of their choices or take hours looking for one item if the floor plan is unorganized.
Retail BI helps managers create more logical flows in their store’s floor plan, so consumers are first directed to the best products they’re most likely to buy.
Improve marketing efforts
Marketing is a critical component in the success of any business, but it can be challenging to measure its effectiveness. Unlike in accounting or finance, there isn’t an obvious ROI that marketers can point to when they’re evaluating their efforts.
With retail business intelligence, you’ll be able to identify the marketing channels that are most effective for your business and improve them over time—increasing revenue, improving conversion rates, and boosting overall brand equity with each campaign.
Repair supply chain efficiencies
Using business intelligence, managers can create incredible forecasting models based on the type of retail operation they are leveraging (dropshipping, brick and mortar, niche-specific, B2C, etc.). The data gathered from purchases and interest in shopping allows for better predictions of what a business will need to stay afloat without sacrificing efficiencies.
How is this changing the retail industry?
In the past few years, many retailers have started to use technology and business intelligence to improve their business operations and customer experience. A single customized platform that gathers and visualizes all of the relevant data improves the decision-making of any individual or team.
This is highly valuable when challenges enter the business landscape and changes are needed to adapt. With so much emphasis being placed on consumer demand and needs, a business needs to know where its strengths and weaknesses exist in real-time. Retail business intelligence provides this, usually in a single dashboard with a macro viewpoint.
The effect is that some key areas of the retail industry are shifting, including the following:
Earned media analytics
Earned media is content your customers and prospects create and share with others. Your marketing team has been collecting this data for years, but it can be challenging to understand what it means. When you analyze earned media analytics, you can connect positive sentiment with sales and operational KPIs, which helps improve customer experience.
For example, you might find out that if a customer shares positive content about your brand on social media, they are twice as likely to buy from you as non-sharers. You can use this insight to create a personalized strategy for each user based on their behavior on social media.
Product data and innovation
One of the most important things you can do as a business owner is to measure how well your products are performing. If a product isn’t selling well, it may be time to discontinue it or reevaluate its price point. Product analytics allows you to see how individual products are performing in comparison with one another so that you can make the best decisions about future sales potential.
This also identifies potential adaptations or innovations in product design from the comments and feedback of consumers.
Consumer behavior
This is the process of using data to identify patterns and predict customer behavior. When your company has a good understanding of what its customers want, you can easily identify products they want to buy and content they want to consume.
The simple truth is that if you are not addressing your target audience’s needs and wants, you are not going to be successful.
What is an example of retail business intelligence?
Go to any store you frequent right now, and you will most likely see retail business intelligence in action. Starbucks is an excellent example. Everything from the cup’s design to the mobile app used for making a purchase is designed to leverage consumer behavior.
It all comes down to using data gathered from reliable sources to inform the decision-making of stakeholders.
McDonald’s is another excellent example. One trip through the drive-through and you will see that menu items that sell the most get the best placement, so you are enticed to continue this purchase pattern. There is a reason companies like these are at the top of their game. They are using every piece of data possible to out-compete any new arrivals.
Conclusion
Though the retail industry has been relatively slow to adapt to the digital age, many retailers are starting to see the value of a robust business intelligence system. By making informed decisions backed by data, you can better understand your customers, increase employee efficiency and productivity, optimize inventory management and supply chain processes, and elevate your store’s marketing strategy.
With so much on the line in today’s tumultuous retail environment, retailers have never experienced a better time to invest in business intelligence solutions than now.
