Data collection has been a crucial part of retail for more than a decade, but far too many in the industry still struggle to glean value from the growing abundance of information. Knowledge is power, but only if those who wield it know how best to derive value from the intelligence.
When exercised properly, sales data can fuel cutting-edge personalization efforts, provide a holistic view of the customer, and help brands take their marketing to the next level. However, the relative ease of data collection coupled with the challenge of analysis leaves many brands without a clear strategy for best leveraging the data they already have while seeking additional sources to fuel their transformation.
By combining a comprehensive collection of data with retail science, retailers enable next-level business thinking, including accurate demand forecasting, customizable marketing, and optimized omnichannel inventory. At the heart of these outcomes is the need for thorough, structured customer data and a platform to help retailers put it to use. Below are three real-life retail business opportunities where using such data can help brands build a more personalized shopping experience and take their offerings to the next level.
Among the essential tools retailers can use to pull the levers of demand is the tried and true storewide or nationwide sale. But compared to the tools available today, a straightforward BOGO or 20% off markdown leaves considerable opportunity–and money–on the table.
Giving every customer the same significant deal can help clear inventory but it hardly maximizes a store’s profits. When retailers first began closely examining their sales strategies, they started by implementing the science of seasonality and price elasticity. For example, a sale might start small and increase in specific locations or during certain times of year according to previous years’ demand.
Now, with the data available today, retailers are taking customer engagement to the next level. They can take willingly given customer data and make specific offers to individuals in any number of forms: price reduction, extra loyalty points, a gift. The heart of these new-age tactics targets the right offers to the right people, those most likely to jump at the chance for a deal. Consumers are hooked on deals; Oracle’s research reveals that 71% think compelling promotions and offers are important to continue shopping at a retailer. Once retailers have a deep understanding of how their customers behave and what they value, it is easier than ever to target buyers with offers that make them more likely to buy – and come back again soon.
With the evolution of modern retail, loyalty programs quickly grew popular to keep track of customer activity and reward buyers for the purchases they made. Since then, loyalty programs have only grown in importance as retailers prize the ability to develop customer profiles with this information. But loyalty now requires a more personal touch.
Over time, customers have grown wise as to which loyalty programs are worth their salt. The days of punch cards and long-term points accumulation are gone. The best loyalty programs are tiered, with casual customers reaping small benefits from regular purchases. At the same time, diehards earn unique rewards, such as wine tasting at a liquor store, for their devotion. Gamifying a loyalty program can also be a boon – customers typically enjoy pursuing different missions and objectives on their way to a free drink, as we see with Starbucks.
In 2021, these programs must go far beyond the purchase point. Among the best ways to do so is by implementing an omnichannel loyalty program that offers returning customers various missions and objectives across different shopping platforms, including non-retail channels. This helps retailers reap the benefits of satisfied customers and better quantify their return on investment.
Shortly before the pandemic, ICSC research showed that opening a new store location increased traffic to a retailer’s website by 37% the following quarter. The physical store’s purpose is changing but that doesn’t mean it can’t still be an essential retail business driver.
In reality, there are multiple ways to optimize in-store sales. In the past, rudimentary seasonal demand forecasting was one way to stay light on inventory throughout the year. Using retail science and machine learning to develop compelling product assortments that drive customers to buy the next product – similar to what the Saudi pharmacy Al Nahdi and Helzberg Diamonds have achieved in recent years – provides an additional level-up.
From there, brick-and-mortar innovation can go even further. Equipping store associates with the right tools to personalize customer experiences on the fly – consistent with the customer’s online experience – is essential to creating long-term community relationships. Tools such as data-powered demand forecasting should lead to optimized inventory management, better margin preservation, and improved store agility as retailers anticipate the customer’s next move.
With everyone rushing to achieve a certain level of data enlightenment, it’s important to note a common misconception: You don’t need a full team of elite data scientists to realize value from cutting-edge retail business services. Forecasting, inventory optimization, customer engagement, loyalty programs, and many of the tasks already discussed can now be accomplished with the right set of tools.
As brands get more comfortable with leveraging these technologies, they’ll become more empowered to make essential strategic decisions while preparing their businesses for the digital future.