The digital revolution has thrown up seismic challenges and opportunities for companies and organisations across every industry, none more so than retailers, who are grappling with the demands of doing business in a landscape where competition is now global and customers ever-more demanding.
Few merchants would dispute that today’s shopper wants more than a straightforward transaction, whether it’s online or in a traditional bricks-and-mortar setting.
Customers are seeking out stores that deliver new experiences, personal connections and instant gratification.
For retailers, the pressure to perform on all fronts—supply chain management, distribution, merchandising, marketing, pricing and customer service—is relentless and many local chains have failed to rise to the challenge.
Recent years have seen a string of once-proud Aussie brands including Payless Shoes, Dick Smith and David Lawrence fall into administration or reduce their bricks-and-mortar presence. Meanwhile, Australians’ long-time love affair with online shopping shows no sign of abating, with latest reports suggesting one dollar in every $20 is now spent online.
Raising the bar
Research from AlixPartners showed the maximum delivery time the average shopper will accept dropped from 5.5 days in 2012 to 4.5 days in 2018. This is due, in large part, to the responsiveness of market leaders like Amazon, which set the bar high.
Customers not only expect their deliveries to be lightning fast, they also like them to be cheap, if not free. Meanwhile, the notion of waiting for an out-of-stock item to return to the shelf has become quaint in the extreme—today’s consumer will simply take their business elsewhere.
Given these challenges, it’s surprising how few companies have opted to take an aggressively data driven approach. According to Gartner, in 2016 only 19 per cent of retailers were using up-to-date technology to monitor stores’ Key Performance Indicators (KPIs) in real time.
Mobile data analytics are a vital tool that can help omnichannel retailers achieve greater efficiencies and meet and exceed shoppers’ expectations, which they must do in order to survive and thrive in the next decade and beyond.
Using data allows decision makers to have not just a finger on the pulse but comprehensive, up-to-the-minute reporting on the performance of every element of their retail outlet.
Access to real time inventory, sales and customer information enables management to track buying trends and gauge the success of promotions as they occur.
Delivering relevant insights directly to store managers and staff via apps makes it possible for them to respond to issues and rectify problems, such as the absence of promotional signage or a shortage of stock on the floor, in a timely manner.
Retailers globally face a collective bill of $US1.1 trillion for overstocking and out-of-stock costs, according to IHL Group. Businesses that can find a way to reduce their share of this eye-watering tally, by balancing their inventories and keeping their product ranges relevant and fresh, will see a significant boost to their bottom line.
Merchandising solutions that incorporate up to the minute data analytics can help retailers do this, by identifying differences in purchasing preferences and practices, linked to factors such as geography, store size and regional demographics.
Better category management is typically linked to increased customer satisfaction, as well as increased profitability.
Know your customer
Understanding the customer has always been integral to retail success. Data analysis can be employed to build 360-degree profiles of buyers, both collectively and individually, which can then be used to develop smarter sales strategies.
Access to the right data means more tailored promotions, store activities and events that meet the needs of specific clientele, along with the creation of personalised customer experiences at all stages of the buying cycle.
Analysis of loyalty program data can help retailers anticipate the propensity of every unique customer to purchase a product, along with the ideal timing and price point for that purchase.
Research shows more engaged customers spend more—and spend more often—and the effect on the bottom line can be considerable.
Data warehouses for the next decade and beyond
Cloud-based data warehousing technology makes it easier to amass and analyse data and extract the insights that will drive efficiencies and improvements.
A cloud-based data warehouse has the capacity to process the explosion of semi-structured data generated by mobile and social media systems and the burgeoning ‘internet of things’.
The technology separates storage and computing functions, thereby sidestepping the problems of redundant storage space and high costs historically associated with data warehouses and big data platforms.
Retailers that marry this scalable, pay-as-you-go technology with solutions that turn complex data into actionable insights to drive productivity, profitability and service will be well placed to meet the ongoing challenges of keeping shop in the digital age.
Peter O’Connor is vice president of sales Asia Pacific, Snowflake Computing.
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