In a recent Blog Post titled Where is Business Analytics Going? I describe the compelling reasons for the growing use of advanced analytics – and the challenges that organizations face in realizing value from their efforts. The Retail Industry may be the poster child for business analytics, as they face some very compelling reasons to expand their analytic footprint. Ventana Research believes that the retail industry is going through a transformation, as volumes and sources of data continue to expand. They state that “Retailers are just starting to realize that understanding and influencing customer conversations on the Internet in social media channels is a necessity and that it requires a new type of analytics that can process text and phrases that reveal consumer sentiment and opinions of their brands”.
Studies conducted by Ventana Research in the Retail Industry found slight maturity and inadequate use of analytics to support retail. According to Mark Smith – CEO & EVP Research, “the research specifically discovered that the overuse of spreadsheets and lack of analytic capabilities are holding back organizations from maturing: Only 15 percent of retailers are at the highest Innovative level of maturity according to our Ventana Research Maturity Model”.
According to a Retail Analytics Report from Babson Executive Education, there are many trends driving this increased focus on analytics. The report identifies these areas of focus:
- Assortment Optimization and Shelf Space Allocation
- Customer-Driven Marketing
- Fraud Detection and Prevention
- Integrated Forecasting
- Localization and Clustering
- Marketing Mix Modeling
- Pricing Optimization
- Product Recommendation
- Real Estate Optimization
- Supply Chain Analytics
- Workforce Analytics
- Adoption and Use of Analytics
- Analytical Ecosystems
- Centralizing Analytics
- Store-Level Empowerment
- Analytical Performance Management
- Multi-Channel Analytics and Data Integration
To be successful, Retail organizations must address the challenges identified in my earlier post. Achieving that elusive single view of the customer is a critical first step. As mobile applications take a larger role in the Retail Industry, back-end analytics become even more critical. The end result for Retail organizations is a stronger focus on information management and advanced analytics. Insight from multiple customer interaction channels will fuel customer decision processes and Retailers will interact with customers via their preferred channels. The use of Mobile and RFID technologies will accelerate and underscore the importance of Retail Analytics, as the growth in data explodes. The value delivered through these initiatives will reward a Retailers effort!
3 thoughts on “The Retail Industry Turns to Analytics”
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Frank is right here. It’s really important that retail businesses engage in analytics to stay competitive in the industry.