How Analytics Is Reinvigorating Retail
Since the mid 1990s when Jeff Bezos founded Amazon.com to sell books online, and Pierre Omidyar created eBay — enabling everyone to sell everything — new business models have threatened to destroy the traditional retail economy. To remain successful, brick-and-mortar retailers must offer personalized and deeper online and in-store customer buying experiences. How? By harnessing the insights delivered by advanced analytics.
For retailers, each step of the consumer buying journey spins off a considerable amount of data unique to that shopper, the product or service, and the distribution system. From social media ads to emails, through in-store or online purchases to post-sale feedback and services, the modern consumer offers retailers a wealth of information.
Through the use of advanced analytics, retailers can gain insights into consumer purchase patterns, preferences, what they put in the cart and then abandon, what services and products they value and how these should be delivered, among other things. Specifically, when mined and analyzed, data can create a better experience for consumers and enable companies to build more personalized, deeper relationships.
In fact, in today’s retail industry, the data itself — and the humanized insights that come from it — may just be the most valuable part of the inventory. Merchandising and inventory management decisions are moving from intuition driven to insights based; predictive analytics capabilities are enabling real-time price optimization and improving customer targeting and conversions; the integration of the Internet of Things (IoT) is enhancing the customer value chain to deliver more connected experiences; and by using data technologies in combination with artificial intelligence (AI) and machine learning, retailers aren’t just personalizing each transaction, they're creating more engaging experiences across every touchpoint. That's why retail enterprises that are truly intelligent, agile, automated and in the cloud can do much more than merely counter the internet’s disruptive forces.
How Brick-and-Mortar is Accelerating Retail’s Digital Transformation
The evolution of e-commerce and the convenience of mobile shopping may seem like a threat to brick-and-mortar retail, but leaders are using these channels to create truly unique in-store experiences that complement the simplicity and convenience of shopping online. By using technology to reimagine the retail space, companies have been able to stand out as true innovators.
The new Nike flagship store in New York City is a perfect example. The six-story building offers unique tech-driven customer experiences on each floor — experiences that are customizable to an individual’s own preferences. The smart store uses local data to stock and re-stock its shelves based solely on the information aggregated from those local consumers. The store also looks to optimize checkout with a simple scan-and-go checkout process (a method that many retailers are beginning to adopt, as frictionless, contactless payment technology becomes increasingly popular). What’s interesting though is that these innovations are supported by the same technology that people may think is hurting in-store foot traffic — a mobile app.
Similarly, Tesla has evolved its brick-and-mortar locations to be purely showroom floors, where customers can use IoT devices and other smart technologies to create the virtual car of their dreams (and then purchase said car if they wish).
Data and Analytics Offer Competitive Advantage; Data Protection is Key
Retailers recognize that business wars will be won on the battleground of customer experiences, whether they be in-store or online. Data and analytics, coupled with the latest digital technologies such as IoT and AI, are empowering retailers to create a seamless transition between the two.
Of course, the data retailers collect is only as valuable as the insights it yields. These insights become incredibly useful when they enable the business to respond with agility and capitalize on new discoveries about their shoppers. That's why protecting this data is so crucial.
For the companies involved, the data has enormous proprietary and strategic value, and they're well-served to be transparent about their collection and protection processes. When consumers are confident that they too benefit from the collection of this information — and they experience the conveniences it provides in their day-to-day lives — they will be more open to sharing information. And then, through the power of analytics combined with the most innovative digital technologies to offer new services that redefine the shopping experience, retailers will win big in the digital economy.
Dina Kholkar is vice president and global head, analytics and insights at TCS, an IT services, consulting and business solutions organization.