Can a greater focus on data be the saviour of retail?

Today’s reality for retailers is that nearly any product or service is now just a mobile phone search away. With the ability to have a vast array of products arrive at our doorstep with a few touches of a button, what hope do retailers have of remaining relevant?

Thankfully, while many people have declared the days of retailing in Australia being numbered, those predictions may be premature. The most successful retailers today are becoming more data-focused through digital transformation programs that provide insights into customer behaviour, purchasing patterns and supply chains.

In the halcyon days of early retail, getting to know customer used to involve thousands of face-to-face interactions, and was an important driver of your success as a retailer. Getting to know customers today is still important, but at the same time more complex because we have instant access to larger segments of shoppers, and we’re no longer confined to just the foot traffic who walks past our front door.

Successful retail businesses now use a variety of algorithms that analyse their own sales data combined with second party and third party data such as demographic and social media data to uncover insights and make future predictions about:

• which customers are the most valuable
• the drivers of their purchases including seasons, time of day, events , etc
• their most likely path through the buying journey, from research to purchase

In the era of e-commerce and on-demand everything, the buying journey is no longer linear. Because of this, retailers can no longer expect to set dates for a sale, do a mailout, and watch customers walk through the door. Customers today get information on products and campaigns through social media, Google searches, and online reviews as well as the traditional marketing channels that haven’t been phased out completely.

The good news is the advent of digital marketing now allows retailers to track engagement with each channel and campaign to nurture their most valuable customer segments through to that all important purchase. They can even target increasingly niche customer segments or individual customers with highly personalised offers based on that particular customer’s buying preferences.

And they’re also using data from in-store layouts and daily traffic to understand how the physical placement of goods as well as customer service staff affects buying behaviour. This goes beyond the macro level of head offices determining peak shopping times and seasons, to putting data in the hands of in-store managers to understand where their key products should be placed and exactly how many staff they should have rostered in a particular area at the precise right time of the day.

Ultimately, a data driven focus removes the need for retailers to take a scatter gun approach to every element of their operation. Rather than organising a huge sale, running some ads, and hoping for the best, they can now use data to drive key decisions each day that will ultimately make them more profitable.

About the author:

As the General Manager of InfoCentric, my team and I provide specialised expertise, advisory and implementation services in digital and data analytics to help our clients convert data assets into business insights for competitive advantage with faster, smarter and more accurate business decisions. If you’d like to discuss how your organisation can leverage your data assets to drive operational efficiencies, attract new business, and minimise risk, please feel free to get in touch with me at Phil.Joel@InfoCentric.com.au.