The rise of retail data and analytics in the global economy
Published on Tue, 20/09/2016, 03:36:29
By Wayne Arthur, Chief Executive Officer, Skyfii
Customer data has an integral role to play in the retail sector, but many shopping centre owners and retailers are only just beginning to understand the potential impact it can have on their businesses.
To date, debates around the evolution of the retail sector have very much focused on the competition between traditional bricks-and-mortar retailers versus online stores. Unfortunately, these discussions are typically over-simplified and fail to recognise the evolution of physical venues behind the scenes. The digital changes occurring in this space are overlooked due to the convenience promised by online shopping.
At surface level, the shopping experience may appear to have remained largely consistent over the last decade. However, forward-thinking retailers have made and continue to make significant investments to reshape their businesses around the expectations of their increasingly digital consumers.
Why? While the price war will always rage, its significance has diminished. Today, customer retention requires more than a discount. The focus needs to be on building contextual experiences that cater to the unique requirements of diverse customers. It’s no longer just about the human interaction between staff and consumers, but the value that is delivered to those customers before they visit a store, while they are there, and after they have left.
So far, retailers have relied largely on loyalty programs to capture customer data. These have provided a starting point to understanding which products customers enjoy, allowing retailers to make informed decisions about stock while offering bonuses and discounts to consumers in return for information and loyalty.
But loyalty programs are limited. Today’s leading shopping venues have turned to network-based data to establish knowledge bases of their visitors, whether they make a purchase or not. Advancements in cloud services, mobile and wireless technologies have transformed smartphones into chatterboxes of information which drive real business insight.
In fact, analyst firm IDC forecasts worldwide revenues for big data and business analytics to reach US$187 billion in 2019—an increase of more than 50 per cent from 2015—with services-related opportunities to account for more than half of that. Retail is expected to follow this trend, representing revenue gain of $10 billion in 2019. Compare that to the leading verticals of discrete manufacturing ($22.8 billion) and banking ($22.1 billion), and the opportunity becomes clear.
By providing in-store Wi-Fi and turning this location-aware channel into a content and data acquisition tool, shopping centre owners and retailers are able to analyse the data supplied by visitors to make informed business decisions that are contextual and personalised over time, rather than assumed. Shopping centres that have already invested in these data analytics capabilities have been able to determine, for example: who their customers are based on behaviour; which parts of the centre are the key attractors; which stores are more popular than others; how long visitors spend in particular zones; how to optimise traffic flows to minimise congestion based on foot traffic; and where to add new facilities, such as restrooms, escalators and cafes.
This data can be integrated with sales figures to understand spend per visitor by profile and time. As a result, the information can be used to renovate and expand existing shopping centres, support a store launch, or inform the structural layout of planned venues which haven’t yet been built. It can also underpin targeted and customised marketing, defined by the behaviour of particular customer segments.
Similarly, the retailers that are using Wi-Fi to analyse customer data are revitalising their stores based on that consumer information. For example, a major retail chain is currently relying on data analytics to help extend its footprint in an increasingly competitive market containing several prominent players. The company was able to determine total visits, average dwell times, peak periods, and common flows of foot traffic throughout the day. It is using this data to deliver unique content to each user who signed up for the service; this includes targeted offers, sale alerts and special discounts to which other shoppers don’t have access. The company continues to analyse the data provided by customers to optimise the shopping experience by relocating items across its floor space.
With continued interest in customer data from retailers, the industry has the opportunity to revitalise public perception of brands, allowing shopping centres and stores to develop relationships with consumers that drive greater revenues for the former and memorable experiences for the latter. Retailers must remember that these digital tools need to put customers first, the conditions underpinning Wi-Fi must be concise so as to protect the integrity and security of those signing up for the services, and the value being delivered to customers must be ongoing—after all, they need to have a reason to provide their data.
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