The retail industry has faced significant challenges recently, experiencing a greater impact on all fronts. In response to evolving customer demands, product offerings have adapted accordingly.
Even before the pandemic, changes in consumer behaviour were already reshaping the retail business’ landscape, altering the mix of channels, and fundamentally transforming the nature of the industry.
According to a study by Accenture, 91% of consumers are more likely to shop with brands that recognize, remember, and provide relevant offers and recommendations.
The pandemic has only acted as a catalyst, further expediting these retail industry trends.
Many retailers have expedited their front-end transformation efforts to survive in this changing landscape. However, a disruption is no longer a one-time event, and future success requires more than just superficial digital fixes.
The focus must now shift to the back-end aspects of the business: the processes, infrastructure, and the very foundation of the business model. Additionally, attention must be directed across the entire value chain, spanning from the supply stage to the final delivery at the customer’s doorstep.
This type of transformation necessitates access to data and the ability to leverage data analytics for retail swiftly and effectively to create value.
So, grab a cup of coffee and join us as we discuss all you need to know about harnessing the power of data to reshape the retail landscape.
But, first, let’s understand what data means for retailers.
Data is a Valuable Asset for Retailers
For retailers, data represents a treasure trove of valuable information that holds the potential to transform their business operations, strategies, and retail customer experiences.
A survey conducted by Harvard Business Review Analytic Services reveals that 73% of respondents believe that leveraging data across channels is important for achieving a seamless omnichannel customer experience.
Data offers valuable insights into customers, market dynamics, and operations. By leveraging data effectively, retailers can enhance retail customer experiences, optimize operations, and gain a competitive edge in the ever-evolving retail landscape.
Here’s what data means for retailers:
Customer Insights
Data provides retailers with a deep understanding of their customers, including their preferences, purchasing behaviour, demographics, and browsing patterns. This enables retailers to personalize retail marketing efforts, curate product offerings, and deliver tailored experiences that resonate with individual customers.
Retail Market Trends and Competitor Analysis
By analyzing market data, retailers can identify emerging retail industry trends, market gaps, and consumer demands. They can also gain insights into competitor strategies, pricing, and positioning, allowing them to make informed decisions to stay competitive and capture market opportunities.
Operational Efficiency
Data-driven insights enable retailers to optimize their operational processes, inventory management, and supply chain logistics. By analyzing data on sales, stock levels, and demand patterns, retailers can reduce inefficiencies, minimize stockouts, improve forecasting accuracy, and streamline their overall operations.
Pricing and Promotion Optimization
Data analytics for retail allows retailers to determine optimal pricing strategies based on market demand, competitor pricing, and customer willingness to pay. It also helps retailers identify the most effective promotional tactics and measure their impact on sales, enabling them to refine their pricing and promotion strategies for better profitability.
Enhanced Retail Customer Experience
Data empowers retailers to create personalized and seamless customer experiences across various touchpoints. By leveraging customer data, retailers can provide targeted recommendations, customized offers, and personalized communication, fostering customer loyalty and satisfaction.
Data-Driven Decision Making
Retailers can make informed, data-driven decisions across all aspects of their business, such as product assortment, inventory management, retail marketing campaigns, and expansion plans. Data-driven decision-making minimizes risks, improves strategic planning, and increases the likelihood of successful outcomes.
How Retailers Can Utilize Data
In the retail industry, gathering data is not a challenge; it is the effective utilization of that data that poses a problem.
Retailers often face issues with data quality, accessibility, and overwhelming volume. With disparate sources and systems throughout the value chain, data becomes siloed, making sharing and interpretation difficult and time-consuming.
This lack of a unified data platform hinders the ability to address customer needs and resolve supply chain issues promptly. In the fast-paced consumer landscape, this fragmented approach is inadequate.
Merely adopting technology is not sufficient to unlock the full value of data. Retailers must consider how they will handle and utilize data effectively, determining the specific problems it will solve and involving the right stakeholders in the process.
By 2025, the global retail analytics market is projected to reach $24.4 billion, growing at a CAGR of 19.8% from 2020 to 2025. (Source: MarketsandMarkets)
By bridging the gap between data gathering and meaningful application, retailers can leverage data to improve customer experiences, address supply chain challenges, and stay competitive in a rapidly evolving market.
Integrating Data Throughout Retail Value Chain
The strategic value of data in retail is significant, offering insights for process improvement, sales growth, seasonal trend predictions, and efficient collaboration with logistics partners.
To fully harness this potential, businesses must adopt a decentralized data model that promotes seamless data sharing, access, and governance across the entire value chain.
The foundation of this data-driven retail business lies in a cloud-based enterprise data platform, which serves as the backbone for connecting various areas of the organization.
By embracing this decentralized model, retailers can unlock the transformative power of data and optimize their operations while minimizing reputational risks.
Implementing large-scale data transformation in a cost-effective and manageable way requires a strategic approach that focuses on business outcomes rather than just technology.
Cloud-based data platforms offer an ideal foundation, eliminating the need for upfront hardware investment and enabling pay-per-use models.
In this approach, data ownership shifts to the line of business that utilizes it, emphasizing self-service principles.
By leveraging existing data and systems, businesses can create a shared data repository, or a data lake, where data can be cleaned, standardized, and enriched. This consolidated data can then be easily interpreted using business intelligence solutions, empowering users across the organization to explore and utilize the data independently.
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Reinventing Retail For The Future Marketplace
Regional digital insurgents like Flipkart in India, Rakuten in Japan, and Zalando in Germany are challenging global retail leaders, leading to intense competition in terms of pricing, customer experiences, and services.
The future of the retail industry is poised to be complex and interconnected. While e-commerce is expected to continue its rapid growth, the future of retail extends beyond a single channel.
Customers are increasingly seeking cohesive shopping experiences that seamlessly integrate physical stores, websites, and mobile apps. In addition to speedy delivery, customer expectations will evolve to include operational transparency, particularly regarding sustainability practices.
Building and maintaining trust with customers will be crucial, even as automation plays a larger role in retail processes. These retail industry trends will play a major role in reinventing retail:
Meeting Retail Customer Expectations
With the emergence of new customer channels like online shopping and mobile apps, retailers need to go beyond just meeting expectations and strive to exceed them.
This means creating responsive and proactive experiences in real-time. For example, offering personalized recommendations based on a customer’s browsing history or sending notifications about special deals or promotions.
Collaborating With Competitors
Instead of viewing other businesses in the same industry as competitors, retailers are now finding value in collaborating with suppliers, vendors, and partners. By working together, they can create mutually beneficial relationships that enhance the overall experience for both businesses and customers.
For instance, a retailer may team up with a local supplier to offer exclusive products or collaborate with a logistics company to improve delivery speed and efficiency.
Sustainability
Retailers are increasingly focused on reducing their negative impact on the environment. This involves improving transparency throughout the supply chain to ensure ethical and sustainable practices. By being open and transparent about their sourcing, manufacturing, and environmental initiatives, retailers can build trust with customers who are becoming more conscious of sustainability issues.
For example, providing information about eco-friendly materials used in products or sharing details about recycling programs.
Harnessing Data For The Future of Retail
Making the most of your cloud data platform for retail sets the stage for transforming your business for the future. By having this platform in place, you have all the necessary elements to start reinventing your retail business. You can tap into the wealth of data analytics for retail, tools, and capabilities available to create innovative business models, explore new ways to engage with customers, and develop new applications.
These initiatives will enable your business to anticipate, take action, and adapt to changing market dynamics. With the foundation of your cloud data platform, you have the power to drive positive change and embrace new opportunities for growth and success.
