The explosion of data has created a world of opportunity for the retail industry to provide their consumers with the ideal shopping experience. In fact, it has never been more critical for retailers to leverage data as a strategic asset to create the convenience and personalization that consumers crave, or risk losing out on major sales opportunities.
Recently, a study from Segment found that nearly 40 percent of consumers surveyed said that they have purchased something more expensive than they originally planned because their experience was personalized.
Predictive analytics has the potential to help retailers create this coveted outstanding consumer experience. In the year ahead, retailers and brand owners will take steps toward more personalization through predictive analytics in three ways—1) build a model for influencing consumer buying behavior, 2) share that data with their key trading partners, and 3) adapt more agile supply chains to align inventory with consumer demand.
Build a model for influencing consumer buying behavior
Predictive analytics essentially allows the retail sector to see the future. Companies can identify patterns in both consumer-generated data and transactional behavior data, leading to innovative and personalized customer engagement strategies. By applying statistical modeling and data mining, predictive analytics allow for more sophisticated and accurate inventory forecasting.
Typically, retailers have done well in predicting seasonality—order more jackets during back-to-school time, or more evening wear during prom season. Predictive analytics dig deeper into available data to provide confidence that one type of item can sell better in particular geographic locations and among specific demographics. Retailers can also make more personalized suggestions for loyalty program consumers or someone who has otherwise opted in to receive alerts. This ultimately makes the consumer feel like retailers and brands know them, are working with them and are being helpful, not just selling to them.
Share data with key trading partners
As data insights become more crucial to securing sales and building customer loyalty, both suppliers and retailers have a vested interest in the quality, format and frequency in which they receive data from each other. Retailers struggle to receive complete product data from suppliers, and suppliers often do not have updated insights from retailers about which items sold and where. Without more defined collaboration, the processes of replenishment and future planning are slowed down significantly, and can lead to data inconsistencies and out-of-stocks, which will frustrate the customer.
By leveraging the common language of GS1 Standards, which enable system interoperability, these trading partners can reduce costs (by automating data sharing for critical metrics) and collaborate to optimize inventories. In a standards-based framework, where products are globally and uniquely identified and data is shared in a uniform way, retail companies can eliminate time-consuming individual company requirements for data sharing formats and information exchange. Retail trading partners can effectively share a single, standardized product data set—minimizing costs and optimizing operations efficiencies for all parties.
Adapt more agile supply chains to align inventory with consumer demand
Adopting a more agile retail supply chain—one that is able to withstand and anticipate constant readjustments dictated by consumer data—is a necessity in today’s competitive retail landscape. Many retailers have found that implementing an item level radio frequency identification (RFID) program leads to precisely the kind of inventory visibility needed to know what’s available, before leveraging predictive analytics.
Improving on the capabilities of the U.P.C. barcode, RFID allows for up to 99 percent SKU-level inventory accuracy and more frequent, less manual readings to accommodate a seamless shopping experience. RFID helps the retailer understand “what do I have?” and “where is it located?” Want to move old inventory? RFID’s pinpoint accuracy enables a retailer sell every item in their inventory, down to the last unit, at higher margins regardless of channel.
Having accurate inventory visibility, coupled with the context gained from predictive analytics, will ultimately advance the retail industry’s pursuit of a personalized consumer experience in the year ahead. Through more industry-wide collaboration to develop best practices for sharing consumer data, suppliers, retailers and brands can move forward to close the gap between consumer expectations and what the retail industry is capable of delivering.
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