If you want to succeed in the retail industry, you need to have a great understanding of your customers, their needs, behaviors, and pain points. When you know all of these essential customer data, you will be able to make data-driven decisions.
When adopting a business intelligence solution, you’ll slowly start achieving your retail goals. Business intelligence can help you improve many aspects of your business, including the business automation process, which you can read more about in this article.
If you want to learn everything about business intelligence solutions for the retail industry, keep reading.
How business intelligence solutions benefit the retail infrastructure
When we look at a typical retail IT infrastructure, we can see two fundamental categories:
- transactional/operational systems
- analytic/business intelligence systems
In the first category, we have very basic systems such as merchandise management, POS, and enterprise resource planning. All of them organize large amounts of transactions and operational data. They can give retailers insight into their customers and their business’ history.
This means that they help retailers understand what happened in the previous week, month, or year. While that is useful information, a retailer needs to understand what will happen more than what has already happened.
The real value comes from a system that can offer more than regular operation software. Retailers need a system that can create predictive insights and data on:
- What kind of demand a certain assortment of products will have
- How an incremental price change can influence demand
- Which customers will respond to certain offers
To achieve this, BI solutions combine data management with predictive analytics to give retailers a better understating of their products, customers, and suppliers. All of this is done so retailers can work smarter – not harder. That way, they can achieve great results and run a profitable business.
Retailers who learn how to utilize BI solutions can have great returns on their investments and see many different benefits. Let’s take a look at some of them.
Keeping up with new consumer trends
If you want to have good design and product development, you need to track retail consumer trends and be prepared for their changes. Customers nowadays have high expectations and retailers need to work hard to meet them.
Today’s customers expect the following from their retail stores:
- A large variety of socially responsible products that are high-quality and low-priced
- The ability to communicate with retailers quickly and constantly through multiple channels
- Keeping up with trends set by the fashion industry and social media websites
With a business intelligence solution, you will be able to:
- Analyze big data and locate patterns that appear in your customer’s purchasing behavior
- Monitor and assess your promotional activities to see if they were successful or not
- Get insights into how customers react to your promotions and marketing incentives
- Gather data from social media websites and analyze engagement levels
Once you have all of these real-time insights, you will be able to predict your customers’ preferences and shorten your supply cycles to meet them. You will also be able to predict seasonal demands with great accuracy.
Keeping tabs on their competitors
Getting into the retail business can be a very profitable venture, but there is one aspect that discourages some hopeful retailers. There are over 1 million retail establishments in the US alone, so the industry is very competitive and if you want to succeed in it, you need to keep tabs on your competitors.
At all times, you need to know if your prices are competitive and what kind of sales and promotions other retail stores are running that could negatively impact your business. To know where you stand, you need to take advantage of a business intelligence solution.
A good BI solution offers non-stop real-time monitoring of all of your competitors and it keeps track of their profiling and business model analysis. When you have access to this information, you can identify all opportunities for improvement.
With these advanced reports, you can also see how your products measure up to those of your competitors and conduct predictive analysis. Fine-tune your prices and run sales when necessary and optimize costs to maximize profitability.
Merchandising issues can significantly hinder the functionality of a retail operation. Whether it’s dealing with products that are in high-demand but out-of-stock or keeping inventory that doesn’t perform well, both of these situations are nightmares for retailers.
With BI, you can analyze your products’ past performance and combine it with the forecasts of customer behavior to optimize merchandising so you have minimal losses.
The different types of merchandise optimization include:
- Assortment and size optimization. By taking customer demand patterns into account, you can predict all the correct assortments and sizes of products you need to acquire.
- Daily price, promotion, and markdown optimization. By calculating all important metrics and taking competitors into account, you will be able to calculate the best market price for each product and maximize your profits.
- Space automation and optimization. Maximize the profit per square foot for your retail store and make sure there is space for the merchandise you order both in storage and on the shelves.
- Optimized fulfillment. Determine how you will distribute or restock your products based on demand. The BI solution can also analyze how to maximize the use of manpower for manual tasks such as packing and shipping.
Creating the best marketing strategy
The biggest issue retail marketers have is converting leads into customers. Even though they put in a lot of money in ads, they usually don’t see a lot of ROI.
The average conversion rate for a retail lead is only 3%, so if you don’t learn how to create a good marketing strategy, you won’t find success.
The trick to creating a good marketing strategy is to know the customer persona that you are trying to sell your products to. As we already established, a business intelligence solution helps you understand your customers better.
By profiling and segmenting leads and customers, you can create digital marketing campaigns that resonate with your target audience. When you create better-defined targeting campaigns, you increase response rates while reducing expenses, all of which leads to a higher response rate and increased revenue.
Opening multiple retail stores
Even if you currently own and manage only one retail store, after you optimize a large number of processes with your business intelligence solution, you will have the chance to open multiple locations.
The additional profit you earn can allow you to launch more stores and have the opportunity to reach a larger number of customers while still using your BI solution to run all of them smoothly. When you optimize important processes in all of your stores, you can start working toward becoming a leader in your industry.
Even though the retail industry has more competitors than almost any other industry, it also offers great opportunities to those who venture into it. While it can be easy to be discouraged due to high competition, as long as you use a business intelligence solution, there is nothing to worry about.
The ability to forecast trends and determine the best prices will give you a big advantage over your competitors, and as time goes by, you will be able to turn your business into a retail giant.