How Retailers Can Unlock the Power of Data Analytics
Data analytics plays a large role in any digital transformation strategy. Data-driven insights empower retailers to drive greater efficiencies, deliver a superior customer experience, optimize investments and identify new revenue streams.
In particular, analytics are a necessary and important tool for inventory tracking and forecasting, which can help retailers ensure their shelves are stocked with the right products, in the right amounts.
In some cases, inventory forecasting is relatively straightforward: Snowstorms help managers predict an uptick in shovel sales, or a football team’s winning season drives demand for branded apparel. But other trends are subtler and, often, will be discovered only through the sophisticated use of data analytics programs.
For short-term analytics projects, the public cloud gives organizations a way to quickly scale up resources for temporary use.
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How Analytics Aids Retail Inventory Management
Predictive analytics for inventory management can have a significant impact that extends well past saving the occasional lost sale. Often, ineffective inventory management practices lead to a cycle that skews retailers’ concepts of supply and demand for their products.
For example, if a retailer fails to keep an item in stock, shoppers will begin going to a competitor for that product. That leads the retailer to believe that demand for the product has shrunk, when actually customers are simply fulfilling that demand elsewhere.
Studies show that predictive analytics for inventory management can lower inventory costs by 25 to 40 percent, increase sales by 11 to 20 percent and boost turnover by up to 3.5 times.
Analytics Can Deliver Insights on Customers
Most retailers already have much of the data they need to improve inventory forecasting. Rarely, however, is this data unified and visible across the organization. Instead, it is likely confined to complicated spreadsheets owned by one specific channel within the organization.
When information is disconnected, it is difficult to use data meaningfully, and retailers are left to make educated guesses about inventory demand. By consolidating in-store and online data into a single analytics system, retailers can uncover the hidden context around transaction trends and arrive at actionable insights.
Unstructured data from social media interactions and customer service call logs can also deliver insights. The best predictive analytics programs don’t remove human actors from the decision-making process but rather give people the information they need to make better assessments.
Retailers Must Takes Steps to Protect Customer Data
In addition to assisting with inventory management, Big Data solutions can help retailers devise new ways to find customers, retain customers, make more money per transaction and make operations more efficient. As Internet of Things technologies become more pervasive, Big Data will play an increasingly important role in retailers’ bottom lines.
However, as retailers embrace IoT solutions, connected devices and data analytics solutions, it is essential that they enact adequate security controls to safeguard sensitive data. As with all industries, retailers must take steps to protect proprietary business information.
But retailers are particularly vulnerable to hacks on the payment information of their customers, which can result in substantial financial losses to companies — not to mention a huge hit to reputation. According to the Ponemon Institute’s 2017 “Cost of Data Breach” study, the global average cost of a data breach is $3.62 million, with the average cost for each lost or stolen record containing sensitive and confidential information sitting at $141.
To protect their environments, retailers should implement and refine layered security strategies that protect data at all points of potential vulnerability. They should also conduct regular risk assessments and perform simulations that put their security systems to the test. These help to ensure that cybersecurity efforts are keeping pace with the ever-evolving threat environment.
Find out how retailers can embrace digital transformation strategies to drive productivity, efficiency and a better customer experience.