Well-known comedian Steven Wright once said – ‘Only one in four jokes work, and I still can’t predict what people will laugh at’. This sounds true for his industry but for many other industries, Predictive Analytics has worked wonders. In this blog, let’s discuss the role of Predictive Analytics in retail business transformation…
Retail has ample customer data circulating all over its stores at different locations. This data is most important to execute a successful business and establish a strong rapport with the customer. With competition increasing and the standards of business changing, it is imperative for retailers to make the most of the data that they have. It is essential that they garner detailed insights into the huge piles of data that they have and find actionable information. This analytical information is the road to scale up business productivity.
Let’s understand the current trends in the Retail Market
Modern shoppers expect a personalized experience. That’s a fact!
- According to Epsilon, 80% of consumers are more likely to buy from companies that offer personalized experiences.
- According to Segment, 71% of consumers feel frustrated when a shopping experience is impersonal.
- According to Accenture, 83% of consumers are willing to share their data to create a more personalized experience.
To meet these trends, brands have to adapt to the changing environment and must have the latest technology to distinguish themselves from the competition. Here, Predictive Analytics plays a key role.
Below listed are key benefits that Predictive Analytics can offer to the retail industry
- Enhances Maintenance and Management of Store and Inventory
Managing and maintaining an equal balance of the inventory is as crucial as sales of the store. How much inventory is needed is always a big challenge. It is difficult to strike a balance between not too much, not too less to avoid dead inventory. Predictive Analytics can help do that, reducing expenses on inventory and converting stock into sales. It can help retailers identify the key products that are in demand, so that the quantities can be decided accordingly. It also assists retailers in being a step ahead of the client’s needs and thereby, reshuffling the supply chain management procedures.
- Effective Marketing
Predictive Analysis can be used to study data collected from the marketing campaigns in the past, making it easier to acquire customers in the future. Retailers can analyze the previous marketing activity to find out more about the types of advertisements or content that typically attracted more users to the store or led to more conversions.
- Helps in Geographical Expansion
In case retailers are planning to expand their business in new locations, the prime matter of concern for them is to understand where to go in for? Which location will have the maximum footfalls? Predictive Analytics helps in offering details about where the maximum customer coverage is and which areas have more utilization of the products that the brand offers. It can give a detailed market survey report along with the existing clients in that area, competitor brands, and prospects brands too.
- Customer Retention
While there’s a lot of focus on gaining new customers, retaining existing customers is one of the main factors for the success of retail businesses. Keeping satisfied customers coming back for more is always the top goal of any retail business, and Predictive Analysis can help achieve this. By learning more about your customers and their preferences from the start, it can make better customer service decisions and provide a customer experience that they will be satisfied with.
Brands Using Predictive Analytics
(PC – Walmart Inc.)
Walmart underwent data mining and Predictive Analytics in its range of stores to perceive the customer’s buying patterns at different times. They gathered certain key observations that helped them to increase their sales and thereby maximize RoI.
Marks & Spencer
(PC – Marks and Spencer Group)
Marks & Spencer is using Predictive Analytics to keep shelves stocked with relevant products during the festive season like Christmas and New Year. They utilized the potential of Predictive Analytics to keep their shelves stocked with only those items that were demanded by customers during a particular season.
On a wrapping note
Giving the customer what they want is one of the great old sayings of business. The trouble is knowing what the customer wants in the first place. As tested and demonstrated using the vast data resources available via digital channels, Predictive Analytics can reveal information about customer behaviour and preference at a granular level which was previously unimaginable.
Many retailers today are collecting customer information from different touchpoints, embedding Predictive Analytics, and integrating it seamlessly with other business solutions.
The retail industry has already enjoyed the benefits of Predictive Analytics and so are other industries doing so. There is much more in the pipeline, let us wait for the magic of data to continue.