By Katarina Hansson, Director Retail Industry, Teradata International.
As a retailer, the clock is ticking if you are yet to adopt advanced analytics – and it's not a case of 'if' but 'when' in terms of doing so.
Retailers are becoming increasingly more digital and data-driven, and those that fail to adopt analytics face difficult times ahead simply because they won't be in a position to capitalise on the predictive insight that can be gained from running analytics.
Companies who are able to easily extract intelligence from analytics ahead of the competition are bringing new products to market faster and delivering greater customer experience. They keep on gaining an increasingly bigger share of the pie whereas laggards put their business at risk by not leveraging the benefit of 360-view of their customers enabled by advanced analytics.
Amongst these successful retailers, we are seeing five key steps commonly taken in becoming analytics-driven. In this article, we look not only at these key steps, but also the business value companies are realising from following them:
1. Empowering data and analytics to enable targeted marketing
Data in many forms, for example, online and sensor data, already exists in masses for retailers to use. Successful retail IT departments are collecting and effectively organising data now to make it accessible to the analysts, data scientists, marketers and other business focused roles involved in producing customer insights in real-time.
Many retailers have produced a 360-degree customer view real-time analytical environment, which is giving them a new level of insight used to drive analytics-informed targeting and marketing, resulting in improved revenue.
2. Understanding that analytic capabilities empower growth
Assessing analytics capability is key to beginning any analytics programme. Technical gap analysis is also crucial, but technology alone will not make an analytics programme successful: the most forward thinking retailers know that it's also essential to consider whether your operational and governance capabilities are adequate and whether your analytics strategy is completely aligned with your business goals.
When it comes to innovating quickly, these organisations are continually assessing and adapting analytic capabilities to meet evolving requirements, while carrying on to build more efficient and scalable solutions to remain competitive. Retailers who have been able to strike this balance are finding themselves with scalable analytics programmes that are able to adapt as their business objectives evolve and organisations grow, delivering increased results and profitability over time.
3. Recognising and reacting to the ever changing customer needs
Advanced analytics are helping retailers to understand changing customer profiles more clearly, especially those surrounding online buying behaviour around key retail events such as Black Friday and Cyber Monday. What they are learning is that developing a personalised online shopping experience is key to driving sales: 'recommended products' by Amazon is a good example of a data-driven customer targeting strategy.
Analytics insight is also showing how the face of customer buying behaviour has evolved, resulting in a shift from in-store purchasing to shopping online, at home, or even on the road via different devices. For example, a Shop.org survey, retail executives were asked where most of their 2017 technology investments would be: 39% chose mobile, while just 6% selected in-store.
By gathering an increasing amount of visibility into device usage via analytics, retailers can identify different customers in terms of shopping behaviour, such as customers who only react to offers. With these valuable insights, retailers can tailor personalised targeting built into their websites in real-time so that, for example, sales and offers are only pushed to the bargain hunters of their customer base, thus helping to drive conversion rate and revenue.
4. Understanding customer journeys to boost results
Analytics solutions are helping retailers of all types and sizes to better understand customer journeys as well as predicting buyer behaviour patterns by capturing and analysing valuable data each time a user visits a website.
For example, by understanding whether customers have arrived via a pay-per-click ad, an email campaign or a specific search query and whether they go on to buy specific products affiliated with their first purchase, online retailers can build up informative user profiles in terms of buying behaviours. This gives retailers a far more granular view of the customer journey and experience and has the potential to redefine marketing programmes to drive ROI.
Beyond shopping online at home, in the near future smart appliances will be able to use analytics to predict consumer needs and efficiently accommodate them. For example, connected fridges can already tell users what to include on their shopping lists when items are running low, and even automatically order these groceries to the front door without permission having to be granted. This is a prime example of fast-evolving retail analytics in use to cater to the latest developments in customer journeys.
5. Breaking down silos for better results
Successful retailers realise that departmental silos are hindering retail organisations not only from becoming data-driven but also from delivering value from customer analytics.
These companies are getting departments to work much closer together – not just initially in terms of conversations around technology involved, but to develop a long-term analytics strategy. How management drives this change is key to success.
What are they doing differently? They are getting different stakeholders on board at early stages to ensure seamless dataflow between IT, analytics and business decision makers, which is removing the bottlenecks caused by silos.
Analytics is the future
In the UK, amongst the collapse of major brands such as Woolworths and BHS, we're living amongst proof that retailers must be able to transform in order to survive. However, we're also witness to some of the best product innovation and some of the most successful supermarket, department store and clothing brands in the world, and as the five steps explained in this article have demonstrated, the opportunities presented by analytics will only continue to grow in scope and business value.
Retailers must act now in terms of achieving analytics-driven success. In an increasingly digitalised landscape, laggards will simply be unable to leverage the predictive insight that advanced analytics can yield, critical to driving business benefits and competitive advantage. These steps include empowering analytics to enable target marketing, recognising and reacting to ever changing customer needs, and realising that analytics is essential to survival in the retail industry.