Over the past year, retailers have introduced new capabilities at a record pace. To maintain past successes and realize new opportunities, most are now leaning into data-driven practices.
In this post, we will look at the benefits of data-driven retail and the moves that will position retailers to maximize these benefits.
What are the Benefits of Data-Driven Retail?
Many new FieldStack clients know that data-driven strategies will improve the customer experience, increase sales, and reduce costs. When combined with advanced analytics and automation, the opportunities are endless. I typically break the benefits down into three categories, which always surface immediate opportunities:
1. Data-driven retail allows your chain to optimize and automate inventory.
Inventory optimization is a well-recognized benefit of using data. By tracking and responding to what sells in each store and online — in any given week or based on seasonality — retailers ensure that in-demand items are in stock. At the same time, stores continuously optimize their assortment to reduce the costs of holding products that don’t move.
Inventory automation means using technology to make efficient and effective inventory decisions. Algorithms extract insights from broad sets of data and automatically translate those insights into optimized ordering. Through predictive analytics, this approach allows for a depth, breadth, and agility of inventory management that was beyond reach for many retailers until recently.
With real-time customer and supply chain data, distributed order management is now becoming a reality. This enables the intelligent routing of orders from multiple sales channels through the optimal fulfillment process, ultimately meeting customer expectations at the lowest possible cost to the retailer.
2. Data-driven retail enhances personalization.
Personalization has emerged as a difference-maker for retail. When customers feel understood and have positive shopping experiences, they often spend more and return. In the evolving world of hyper-personalization and carefully curated customer experiences, data is king.
Data-driven retail allows for a deeply personalized experience. It goes beyond purchase recommendations to include gestures like remembering the shopper’s store and transaction preferences and providing a retail loyalty program that the customer values.
According to Gartner, 49% of all retail customers that use “buy online, pick up in store” services make additional purchases when they pick up their items—brands can use that knowledge to drive the use of BOPIS. Brands can also boost spending by offering tiered loyalty programs and providing information about in-store availability using customer location data.
3. Data-driven retail helps optimize operations.
Data-driven retailers understand and optimize the time and costs of staff activities. As brick-and-mortar stores evolve to become omnichannel fulfillment centers, retailers can efficiently manage staff to balance back-room activities with more impactful on-the-floor activities.
Using data and AI to automate processes such as inventory management allows retailers to focus talented staff on human-to-human customer-facing activities.
How Can My Retail Chain Adopt Data-Driven Retail Techniques?
Retail as a category is comparatively well-positioned for data-driven strategy, with petabytes of transactional data available. However, simply having data isn’t enough — the difference lies in what we do with data.
The brands best positioned to thrive with data-driven retail strategies are those who do the following:
- Develop data-driven strategies and ensure the required data is collected.
- Unify data from disparate channels to get complete visibility across the operation.
- Actively analyze the data and increasingly leverage AI and automation.
- Practice an agile, continuous process of experimentation and improvement.
It’s clear to us at FieldStack that the necessary velocity of analysis and decision-making for actual data-driven retail is only possible through technology. That’s why we created a retail management platform that provides extensive data capture, real-time analytics, AI, and automation, resulting in omnichannel capabilities that are on par with the world’s leading retail brands.