Data Analytics in Retail
Data is a formidable asset for the competitive advantage of companies in different industries today. How does data analytics affect the retail sector? This article discusses the implications of data analytics in retail.
The era of digital transformation marked the onset of many radical changes in the operations of brick-and-mortar retailers. Most importantly, ecommerce has been one of the major drivers of the growth of many online retail platforms. The digital transformation of the retail sector presents a strong case for growth in the adoption of data and analytics solutions. Why is data analytics a relevant aspect of the retail sector today? We generate almost 2.5 quintillion bytes of data daily all over the world. Data analytics helps businesses and organizations utilize the data to obtain relevant insights that they can use. As companies worldwide continue experimenting with data analytics, it is reasonable to wonder how the retail sector leverages data.
Retailers have to stay updated with the market trends for achieving an additional edge in the competitive markets. How can a retail company avoid big data when its competitors use it to achieve their business goals efficiently? Retail organizations need to identify the reasons for adopting data analytics alongside the potential use cases of analytics in retail. At the same time, you would also need a clear impression of the potential challenges of adopting big data analytics in the retail sector. Let us shed some light on these factors to develop an in-depth overview of the significance of analytics in retail.
Why Does Retail Need Analytics?
Rather than talking about the specific needs of each company in the retail sector, let us start by finding out why retail needs analytics. As of now, the global market for the retail industry has been estimated to reach almost $29.7 trillion by 2023. While the retail sector has been registering impressive growth in sales, the competition is increasing at unreal rates. Retail organizations have to encounter a wide range of issues such as,
- Fall in sales numbers
- Dynamic changes in consumer behaviour and preferences
- High levels of competition from online-only retail stores
However, some retailers have been capitalizing on business data analytics for surviving and growing in a radically expanding retail ecosystem. Successful retailers track the numbers in their business, such as revenues, expenses, foot traffic, and inventory levels, to measure their retail stores’ performance and status. Numbers can help retail business owners paint a clear picture of their business performance alongside driving efficiency in decision-making procedures. Identify the fundamental implications of data analytics for modern businesses with top data analytics solution providers like Visvero now.
The benefits of big data analytics also result in significant improvements in returns. According to a recent study involving around 300 supermarkets, ecommerce companies and department stores, retail analytics has a direct connection with returns. For example, almost 68% of the respondents suggested around 5% growth in returns through analytics, while around 27% of the respondents claimed a growth of 27% on the returns. Now, you would definitely have some questions about how analytics looks in the retail sector.
What is Data Analytics in the Retail Sector?
The applications of data analytics in retail sector and other sectors have resulted in plausible improvements in inefficiency. At the same time, organizations in the retail sector, particularly the ones in ecommerce, are interested in leveraging the power of data to their advantage. The concept of data analytics in the retail sector is almost the same as that of business analytics, focused on collecting and evaluating data. The only difference in the case of retail analytics is that it focuses on retail data such as pricing, sales, inventory and others. From a basic perspective, retail analytics are the processes, techniques and practices businesses use for discovering, collecting and analyzing retail data.
The definition of retail analytics presents a lot of similarities to that of data analytics. However, retail organizations have to look beyond the benefits of data analytics in healthcare and other sectors for tapping into the true potential of data. With proper implementation, retail analytics can drive healthier performance alongside making the business more competitive. Here are some of the noticeable outcomes of data analytics in retail on the companies.
- Retail owners can come up with effective strategies for sales and marketing
- Companies can understand their customers better and improve customer satisfaction
- Effective decision-making on the basis of insights can help in the optimization of processes and resource allocation
How Can You Implement Data Analytics in Retail?
The different reasons for using big data and analytics in the retail sector alongside the value improvements with retail analytics present a solid case for using analytics in retail. However, the discussion ultimately rounds up doubts about implementing analytics in real use cases in the retail sector. Here are some of the most notable use cases of data analytics in the modern retail sector.
- Price Predictions
Retail companies can use data science and analytics to better grasp pricing. If you look closely, pricing is one of the significant highlights in commerce, and data analytics brings the opportunity to use multiple inputs for tailoring pricing strategies. Data analytics tools can help track the cost of goods and the pricing of competitors. At the same time, advanced analytics can help in gaining insights into real-time customer behavioural data and weather forecasts. The data can help retailers in using analytics for drawing predictions on the ideal sale duration or measuring the price tolerance of customers. Explore the different functionalities required in an ideal retail data analytics solution with Visvero right now.
- Recommendation Engines
Online retailers have been taking note of big data analytics applicationsin healthcare and other industries. Online retailers have successfully tapped into the potential of data analytics for offering personalized product suggestions. The biggest example of using data analytics for driving recommendation engines is Amazon. In addition, new, innovative technologies such as augmented reality are also elevating the way in which retail companies can use recommendation engines. Personalized recommendations have a higher chance of improving customer engagement. For example, a study by Accenture stated that almost 65% of consumers preferred retailers with access to their purchase history.
- Supply Chain Management
Another prominent concern for retail stores is inventory management. However, you can find promising benefits of big data analytics in reducing the operational costs associated with supply chain management operations. According to some reports, retail companies have experienced almost 60% lesser operating margins through the use of analytics in supply chain management. Managers could utilize in-depth data sets and analytical tools for determining relevant stocking decisions. Most important of all, analytics on big data in the retail sector, such as real-time customer flow statistics, can help in the precise anticipation of inventory requirements. Therefore, retail companies can ensure efficient inventory management in the event of unprecedented changes in consumer behaviour.
- Customer Sentiment Analysis
The next biggest use case of data analytics in the retail sector focuses on customer sentiment analysis. Data analytics can serve as a promising tool for learning about the different aspects of customer behaviour when it comes to a specific brand. For example, a data analyst can use data from online service feedback and social networks for conducting brand-customer sentiment analysis. As a result, retail companies can find not only feedback for their products and services but also some vital insights into how customers feel about the brand in general. At the same time, data analytics also helps in identifying behavioural data and underlying patterns. Therefore, retail brands can use brand analytics for understanding their customers on a deeper level. Learn more about leveraging data analytics in customer sentiment analysis in retail with solution providers like Visvero right now.
What Are The Challenges for Data Analytics in Retail?
The value advantages and use cases of big data analytics present favourable implications for the retail sector. However, retail companies have to go through many challenges in the adoption of data analytics. Here are some of the critical challenges which would play an important role in the future of analytics in retail.
- Collection of Accurate Data
Among the many troubles affecting the adoption of data analytics in the retail sector, the problem of collecting accurate data would be a pressing concern. The growing volume of retail data, alongside the complexity and variety in the data, creates many setbacks for retail analytics.
- Trust of Customers
Privacy is one of the most prominent buzzwords in the existing digital landscape. However, you can come across incidents that show how retail companies use consumer data for intrusive advertising. When you are using the customer’s data to drive the growth of a retail business, you must ensure that customers providing the data also receive a fair share of the benefits. The benefits of data analytics in healthcare and other sectors primarily focus on developing a clear impression of the customers or users through their data. Therefore, companies have to earn the trust of customers in retail for obtaining access to their data.
- Compliance and Technology Issues
Companies in the retail sector have to address the compliance requirements with respect to information protection laws. Apart from the legal implications of data analytics, retail business owners must also stay updated with new technological advancements.
The growing demand for data analytics in almost every industry worldwide is a solid reason for adopting analytics in retail. However, many companies have already made a mark in retail with data analytics. Learn how you can adopt data analytics for a retail business in consultation with experts at Visvero right now.