It’s by no means a ‘hot take’ to hail data as one of the keys of business success today. By many estimations it has surpassed oil as the world’s most valuable commodity. Businesses in all industries seek to access it to create operational efficiencies, enhance customer experiences and boost revenue.
However, smaller businesses are often the forgotten part of the story. The journey from recognising data’s importance, to actually harnessing its power is a path that many smaller retailers are yet to travel. Embarking on that journey in 2024 is essential.
Businesses that embrace data analytics enjoy, on average, a 15% increase in sales compared to their peers who don’t analyse their data. That figure alone should serve as a compelling motivation for small business owners to delve into the world of data analytics and use the technology available to them.
With tight business budgets and softened consumer spending – which retailers contended with for much of 2023, according to Australian Bureau of Statistics data – expected to persist, unlocking that 15% could be the difference between good retailers and great retailers in 2024.
What is data analytics? And how can retailers improve their access?
In straightforward terms, data analytics is the process through which businesses gather, visually analyse and extract valuable insight from data. Often, small retailers are less likely to tap into data than their larger competitors because their data is scattered across multiple data sources, the quality of their data is poor and when they do have it, they don’t understand it.
Small retailers often use various applications to manage their online and in-store operations like marketing, finance, sales, CRM, loyalty programs and more. Collecting data from these disparate sources and consolidating it into a single data warehouse provides a comprehensive view of a retail business, and a stronger foundation on which to begin.
Having data is one thing, having good data is another thing entirely. Poor quality data can impede both decision-making and revenue. Small retailers often only have sufficient resources to run their core operations, and manual data preparation is tedious and complex – which can be a deterrent. With an analytics platform, retailers can clean and prepare their data; ensuring accurate results and high-quality data that improves decision-making.
For smaller retailers focusing on creating products, building customer relationships and running their day-to-day operations, crunching data is often seen as impossible. Visualising data through real-time charts and widgets makes it easy to understand for anyone, even if they’re not fluent in data analysis.
How can analytics help retailers unlock that 15%?
Just as every retailer is different, so too is their potential use of data. One of the most common ways retailers can leverage data is to understand their products: what is in demand vs what is harder to shift, what has the healthiest margins vs those that barely break even on, and even what the optimum price is to encourage more purchases.
Then there’s marketing, a key foundation for any retailer – big and small. Analytics helps retailers identify unnecessary marketing expenses, underperforming campaigns, and areas where marketing spend can yield better conversion rates. For example, it can help retailers identify their most and least effective marketing channels, so they know where to invest and where they can afford to cut back.
Customer retention is commonly cited as being five to eight times more cost-effective than customer acquisition. Businesses can enhance customer satisfaction and, therefore, loyalty by analysing customer pain points and updating products or services to meet their needs. For example, analytics can inform a retailer where visitors leave their site, so they know how to optimise their website. Or, if cart abandonment is high, it’s a sign that the check-out process could be streamlined.
Analytics can also help small retailers identify potential revenue streams and untapped markets for expansion. That can be in terms of new geographies or demographics based on customer data, or even new products to add to their inventory. Knowing where to start can be daunting, but through platforms like Zoho Analytics, smaller retailers can collect, analyse and create insights-driven strategies from their data, enabling them to tap into the rewards and growth it can offer.
Retail data analytics is not just a buzzword; it’s a real and tangible way retailers can unlock more from their business. Embracing analytics in 2024 can provide Australia’s vibrant small retail business community with the tools they need to uncover hidden opportunities for growth, optimise operations, and drive revenue – whatever the new year throws at them.
Vijay Sundaram is chief strategy officer at Zoho.