Analytics in Retail Industry
Retail industry makes up sizeable part of global economy. The change in consumers market preference, behavioral pattern, and expectations are causing huge differentiation in the way the retail industry is shaping up. Adding to this scenario, the international retail market has become increasingly competitive with mass offshore production and global retail conglomerates driving down prices, their ability to optimize supply chain, react quickly to market place opportunities and satisfy customer expectations has never been more important before.
E-commerce and of late emergence of hand held device applications have speed up business transactions, resulting in enhance complexities and data volume has made up good case for application of analytics to get business insights into entire industry value chain.
Data analytics is not new in retail industry. Transaction data captured through electronic sales device including bar code reader has made it possible to capture sales, market, market promotion, and customer-centric data for subsequent analysis to find analytics solutions to understand:
Purchase patterns to inside view of the customer purchase history to help effectively promote future product offerings to choiced customer segments
Demographic information helps to design effective personalized marketing strategy and communication materials
Customer feedback helps to establish successful product design & improve future offerings
Customer spending behavior helps to determine the frequency and type of sales and marketing promotions needed to distinguish impulsive buyers from infrequent need-based shoppers
Benefits from analytics
Understanding customer profile and in-depth knowledge of demographic understanding helps retailer to visualize and predict customer responsiveness and industry trends:
Likelihood of purchase response to new product as well as promotional offering
Identify highly resourceful customers
Identify ‘lost’ and ‘troublesome’ customers (return policies)
Determine the customer segment to initiate specific marketing campaign
Understanding of loyalty factor as measure of safeguard for all type trade turbulence
Develop new product line for store display and storage
Develop highly targeted and successful promotional campaigns based on previous feedback and campaign result
Market Basket Analysis
Yet another important analytics technique that hugely pre-dominant retail industry is the market basket analysis otherwise known as affinity analysis, sources captured customer shopping experiences to aim at uncovering the association between store objects. In market basket analysis, the retailers look to see if there exist any combinations of products that frequently co-occur in customer transaction. A retailer or publisher uses the result of analytics based on wide range of algorithms to determine and design the store layout and marketing strategy.