What is Retail Analytics? How to Use it for Strategic Decisioning?

The retail industry is no stranger to change, but the pace and scope of recent developments have left many feeling overwhelmed. As we approach 2023, retailers are bracing themselves for another wave of uncertainty. Economic challenges, geopolitical tensions, shifting consumer preferences, supply chain disruptions, and labor issues are just some of the factors that are likely to impact the industry.

However, it is essential to remember the lessons learned during the pandemic. Retailers demonstrated remarkable agility and resilience in the face of unprecedented demand fluctuations. They rapidly adapted their operations, embracing new technologies and establishing more flexible supply chains. And they recognized the importance of leveraging data and analytics to understand their customers better and build stronger relationships. As we look ahead to the next wave of uncertainty, it is vital for retailers to utilize retail analytics to take the decision-making ability for the retail stores to the next leap.

Let’s jump into what retail analytics is and how it helps with strategic decisions for brick-and-mortar stores.

What is Retail Analytics?

Retail analytics uses data analysis techniques to gain insights into retail operations, sales trends, customer behavior, and other critical retail metrics. The goal of retail analytics is to help retailers make data-driven decisions that optimize their performance and sustainably improve their expansion plans.

Different Types of Retail Analytics:

Descriptive Retail Analytics

This analyzing process involves past data to gain insights into customer behavior, sales trends, and inventory management with an overview of their business operations’ performance.

Diagnostic analytics

The diagnostic analysis mainly deals with examining past performance data and providing insights into identifying patterns and correlations between variables and outcomes, shedding light on the “why” specific outcomes occurred and what factors contributed to them.

Predictive Analytics

It involves using past performance data to make predictions about future sales, customer behavior, and inventory management. Moreover, it guides retailers to forecast trends and consumer behavior by utilizing the historical patterns and correlations between various factors that have been identified through diagnostic analytics.

Prescriptive Analytics

It is a type of advanced analytics that uses machine learning and optimization techniques to recommend the best course of action for a specific business scenario and uses data to make recommendations for future actions, such as inventory restocking, marketing campaigns, and store layout changes.

While there are various types of retail analytics, such as descriptive, diagnostic, predictive, and prescriptive analytics, conducting these analyses can be a tedious and time-consuming process. However, there is one common data source that can offer a wealth of valuable insights for retail analytics and help to improve the analysis of brick-and-mortar stores. That data source is location data.

For example, when conducting descriptive analytics, location data can provide insights into the performance of specific store locations, such as sales trends and foot traffic patterns. This information can be used to make data-driven decisions about store operations and marketing strategies.

Why do Retailers Use Retail Analytics?

These are four major results that retailers can drive through retail analytics:

  • To offer a more personalized experience to customers by understanding their needs and preferences
  • Improve the effectiveness of marketing campaigns to ultimately increase sales propensity, in turn, higher revenue
  • Optimizing the supply chain to ensure profitable outcomes
  • Identify trends and patterns in user behavior, sales and profitability trends, and other insights to improve processes and optimize strategies

Augment Retail Analytics with Location Data:

Selecting Store Locations

Optimizing and planning for the expansion of brick-and-mortar stores is a major challenge for retailers, which can be a labor-intensive task when carried out manually. Location-based analytics can help retailers select the most strategic store locations by analyzing factors such as foot traffic, demographics, and competition. By understanding the local market and consumer behavior, retailers can identify the most promising locations for new stores, ultimately improving their chances of success. Retailers can also use location data to optimize store layouts, adjust staffing levels, and develop targeted marketing campaigns that resonate with the local target audience.

Identifying Customer Needs & Improving Customer Experience

Retailers can use location-based analytics to analyze consumer behavior and preferences, helping them understand the needs and preferences of their customers. By utilizing location data and intelligence to segment customers, retailers can strategically target marketing and sales efforts, resulting in increased revenue and growth.

Moreover, customer segmentation through location data analysis enables you to gain a deeper understanding of your customer’s needs and preferences, thereby allowing you to tailor your products or services to meet their expectations better. Further, by monitoring foot traffic and analyzing customer behavior, retailers can optimize store layouts, improve signage, and adjust staffing levels to provide a more seamless and enjoyable shopping experience.

Merch-mix prediction

Retailers often struggle with deciding on the right price, which SKUs(stock-keeping units) to stock, and which brands to carry in a new store. Additionally, they want to maximize sales by predicting the most effective inventory placement in real time. However, retailers may overlook the fact that inventory placement should align with the purchasing behavior of the local catchment area. Despite this, many retailers still rely on outdated methods to predict the ideal merchandise mix.

Utilizing location data and intelligence can be valuable in addressing these challenges. By using location-based analytics, retailers can anticipate changes in consumer behavior and adjust inventory levels accordingly, ensuring they always have the right products in stock at the right time. This can help retailers reduce inventory costs, minimize waste, and improve their overall profitability.

Analyzing Competitor Performance

Location data and intelligence platforms can provide retailers with valuable insights into the performance of their competitors. Retailers can monitor foot traffic and sales trends at nearby stores, analyze competitor pricing strategies, and track changes in consumer behavior to identify areas where they can improve.

Enhancing Marketing Strategies

By analyzing consumer behavior and preferences, retailers can develop targeted marketing campaigns that resonate with their audience, ultimately driving sales and increasing customer engagement. By identifying lookalike areas to the ones where the target audience is densely present, retailers can hyper-locally target their online and offline marketing campaigns to increase ROI and overall effectiveness.

Retailers can also use location data to optimize the placement of in-store displays and promotions, ensuring that they are seen by the right customers at the right time.

Conclusion

The future of retail analytics is exciting, with advancements in technology enabling businesses to analyze vast amounts of data in real time. Machine learning and location data are becoming more prevalent, providing businesses with even greater accuracy in forecasting consumer behavior and market trends. As the retail industry becomes increasingly competitive, businesses must prioritize the implementation of retail analytics in their strategies. By doing so, they can make data-driven decisions that enhance their performance and increase their bottom line.

Visit our site RetialIQ for more information or contact us at hello@geoiq.io

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