How Business Intelligence Benefits The Retail Industry
“Customer is always right” is one of the most widely followed phrases by successful US retail industries. But the larger question is how do you know what your customers want before they buy. It is a well-known fact that customer requirements keep changing over time. This is where business intelligence comes to the rescue of retailers to stay ahead of the demand curve and service customers better.
Business Intelligence as a whole is expected to be a $23 billion industry by 2022 and a significant part of it will be used by the retail industry. Business intelligence helps retail businesses to collect, store and leverage customer-driven data and information to predict futuristic trends and to make better decisions.
Key Benefits of Business intelligence in the Retail industry
Business intelligence will help companies to take advantage of new opportunities, not only to predict current sales but to see future trends, market potential, and understand customers on a deeper level. Let’s look at some of these BI benefits in more detail.
Identifies Emerging Consumer Trends
The retail industry is expected to grow to $300 billion in 2024 with a stunning annual growth rate of 17% per annum. It is estimated that the efficient use of AI and BI, will enable retailers to save $340 billion each year.
Tracking changing retail consumer trends is very important in order to be successful at marketing, design, product development, and every other initiative that affects your customers.
Tools like Microsoft Power BI offer superior predictive analytics using artificial intelligence and Big Data. BI Tools will help the retailers to :–
- With the right real-time insights – you can shorten your supply cycles to meet changing customer preferences.
- Improve forecast accuracy and efficiently drive seasonal customer demands.
- Analyze and visualize every minor element of your customer data and rework your strategies, in order to attract more customers and maximize your margins.
Track Customer Spending Patterns And Behaviors
BI tools gather large chunks of information of customers over time including their purchase patterns and behaviors across locations. BI tools can convert these huge chunks of data into actionable insights that can reveal how and when a customer is likely to make a purchase. This helps businesses to offer a customized shopping experience to customers.
In retail, insights gathered can help to improve customer experience by identifying buying patterns, which help to anticipate the specific needs of a customer and deliver a better, tailored service or offers and deals to improve customer experience and help to retain the customer.
Helps To Optimize Store Floor Plans
One of the most important reasons why retailers should opt for BI is to design a floor plan that can tempt consumers to shop for longer. Businesses should choose a floor plan that allows customers to shop hassle-free.
By using BI tools, retailers can check whether the selected store layout (picked according to the store size and products offered for sale) is effective and, if needed, they can adjust it accordingly to improve sales.
After examining various data sets (visit duration, number of sections visited, number of stops, dwell time, etc.), retailers can adjust the floor plan in such a way that a customer can easily find what they want and, at the same time, encourage cross-selling and up-selling.
Helps Optimize Inventory Management
BI tools help businesses to track live inventory status and automatically raise alerts for potential shortcomings in the near future. BI can predict out-of-stock warnings that can aid businesses to manage inventory better than ever. Since all aspects of inventory data is collected and stored, a business can use it to find out the individual profitability of each stock.
Drive Profitability Through Customer Retention
One of the key marketing strategies in the retail business is rewards programs. The retailer can better track and offer a more tailor-made shopping experience to customers if they join their loyalty reward programs.
According to a research report, repeat customers are 52% more likely to join a loyalty program if it is offered to them. Most of the customers who join a well-curated reward program are likely to spend 18% extra than normal customers.
This is how BI helps retail businesses to retain existing customers and service them better and keep them happy. A 5% increase in customer retention can lead to a 25% profit growth, this is based on a research report by Hubspot.
Improves Business Operations
CEOs of businesses try multiple business strategies to achieve consistent success. The universal fact is that no business strategy is perfect, but it is critical to identify and eliminate those strategies that underperform.
BI tools help companies continuously monitor how their business operates and provide live feedback on how to improve efficiency. Once the flaws in the operations are identified early, they can be eliminated and thus help companies to operate efficiently.
Target Marketing campaigns And Measure Their Effectiveness
Behavioral retargeting is one of the most successful digital marketing strategies used by e-commerce companies in the recent few years. BI tools can track and record the digital behavior of customers online both including what they are searching for and what they have bought in the recent past.
Business intelligence tools allow retailers to identify:
- Buyer demographics
- Find the location of shopping traffic
- What is the best selling products online
- What is the seasonal sales trend for online products
- Online customer transactional histories
This data can then be used to deliver customized ads to those customers in various online platforms. For example, if a customer has booked a flight ticket, then ads like hotel offers, travel insurance, etc can be shown to that particular customer. This will increase the conversion ratio of their marketing spending.
Boosts Efficiency in the Supply Chain
Efficient supply chain and inventory management is key to a retailer’s success. The retail industry benefits a lot from seasonal peaks that can lead to a sudden surge in sales. Such a sudden surge in demand is even more challenging to keep up inventory and supply chain. Retailers face heavy pressure to keep the shelf stocked up all the time during peak season.
BI tools helps retailers to track:-
- Merchandise movement across channels
- Customer issues back to a source
- Which products will be sought after most during what time period and help businesses to keep up inventory.
How can TAFF help you in your BI journey?
Both the retail industry and Business intelligence witnessed extraordinary growth during this post-pandemic period. Navigating the new world of retail BI can be challenging, and it can be difficult to know where to start and how to start. Therefore, an experienced technology partner can be a valuable asset, evaluating your business needs and strategizing a data-driven plan for BI implementation and use.
This is where TAFF comes into the picture, our highly qualified BI professionals dive deep into your business goals and data & come up with the best BI strategies and solution that will provide :-
- Actionable Insights from hidden business data.
- Powerful Analytics – various forms of analysis results.
- Interactive 360° Dashboards with dynamic visualization.
- Reporting – Seasonality & Same-Day Sales or Same-Store Sales.
- Merchandise Planning & Inventory Velocity Analytics.
- End-to-End Forecasting.
With its deep technology expertise, TAFF enables Retailer and CPG manufacturers to transform their huge volumes of data into knowledge, and then into actionable insights, helping them to make better, faster, more profitable decisions. Want to make the best use of your business data? Let us help you devise the right BI strategy & solution. Contact us today.