Retailers Discover Value In Tech-Driven Analytics
In the early 1990s Walmart did something cutting edge that, at the time, helped propel the company to become one of the largest and most efficient retailers in the world.
The company embraced technology — specifically barcode scanning. It became a way for Walmart to track inventory, decide which products to stock in its stores, determine how much of the product was needed and how much staff was required in stores during which hours.
Today, retail experts say there could be an equally dramatic “paradigm shift” in the industry today, and some Central Massachusetts retailers are noticing.
Stores are collecting more data about consumers. Beyond the barcode, some stores collect names, addresses and email addresses. With this information, they can target marketing campaigns to certain types of consumers, down to the individual level. This “data dump” of information has allowed retailers to use continually-advancing analytical and intelligence software to help drive more business.
“Retail analytics is at the heart of so much activity retailers are undertaking right now,” said Robert Hetu, a retail merchandising analyst for Gartner, the nationwide research firm. “It’s an integral piece for retailers to support everything from pricing to assortment, to inventory, promotions and individualized marketing campaigns based on consumer shopping habits."
All In The Numbers
Hetu describes this technology-driven shift as the “consumerization of retail.”
A decreasing number of customers is shopping in the traditional way of going to a store and buying a product. Increasingly, customers are doing research online before they buy, finding where the best place to buy that item is, then going to the store to buy the product. Retailers need to provide each of these services to customers before they even walk into the store. In doing so, retailers have an opportunity to collect data on the consumer at each step.
So how are retailers appealing to these technically-savvy consumers?
While many businesses don’t want to divulge the inner workings of how business intelligence drives their companies for fear of tipping off competitors, some chains are making obvious moves toward giving consumers a more complete shopping experience.
Staples, for example, the Framingham-based office retailer, has a mobile application for its store and website that allows customers to browse products, search inventory, and find the closest store.
Other companies are using the vast amounts of data they collect to help influence decisions about their store layouts and the features they offer.
Cumberland Farms, also based in Framingham, recently opened a new store on Grafton Street in Worcester that marketing manager Kate Ngo said incorporates features customers want based on market research and analytics.
It includes a drive-through window for customers to pick up a gallon of milk without leaving their cars, for example. The redesigned interior has self-serve kiosks for customers to order a sandwich on the go and a mobile application that allows customers to pay for purchases with their phones.
The move is part of a remodeling effort the company has undertaken with about 50 of its nearly 600 stores in the Northeast and Florida.
“The big question we ask ourselves is: How do people shop? What are their needs today and what is their mindset when they are at our stores?” Ngo said. “We answer that question using a variety of observations at the store level, through sales data and looking at trends in the industry.”
Kurt Solomon, managing director of Kurt Solomon, an international retail consultancy based in Atlanta with offices in Boston, said retail analytics is still overwhelming for many businesses, even the big brands.
“It’s a growing area for retailers,” he said. “They’re adopting more and more analytics into their decisions, but it’s still in the learning phase of how to use all of this data.”
Firm’s like his, for example, provide software and analysis tools to help retailers comb through all this data.
And what about the smaller retailers that may not have the resources of a national corporate brand?
Hetu, the Gartner analyst, said the little guys might actually have an advantage in this entire process.
The end game for retailers is to create a relationship with the consumer and give the customer a personalized experienced and marketing campaign that increases the chances he or she will buy a product from their store. Think about how Amazon.com, for example, will recommend products to returning customers based on their prior shopping history and site browsing. Hetu believes that type of experience, while digital now, will be played out in stores in the future.
Many small businesses already have that connection with consumers; they know who their customers are and what they need. It’s an advantage many bigger businesses struggle with, Hetu said.
Plus, Hetu noted that there are a variety of measures small retailers can take to get involved. One of the easiest: Start a social networking campaign. Even in a world of high technology, the fundamentals of retail are the same: Get connected with consumers, find out what they want and use data to drive your decisions. The biggest difference is there are so many more ways to collect that data about the customer today.
WBJ Web Partners
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