Retail analytics - the power of data

7 min read

As a retail business, you’re no doubt well aware of just how competitive the industry is. Because customers have so many choices available to them, both offline and online, it can feel like a constant uphill battle as you try to stand out from your competitors. Yes, you might have the best products or the most appealing deals, but what’s the best way to ensure your customers know that?

The simple answer is data. With comprehensive analytics, you can find the answer to almost every question related to the performance of your retail business. This allows you to make data-informed decisions so you don’t have to rely on hope, guessing or intuition. Only when you use data can you be confident that you’ll lead your business to future success.

But, there’s a heck of a lot to cover when it comes to retail analytics. From the type of data you collect to how it’s used to increase sales. So, below, we’ll explore just how powerful data can be and why it’s one of the most valuable resources your business can hold.

What is retail analytics?

Retail analytics is the collection, organisation and analysis of data by businesses in the industry with the intention of gaining actionable insights into various aspects of retail operations. This allows businesses to understand customer behaviours, trends and patterns, effectively manage stock, optimise pricing, and improve marketing efforts. Together, this allows retailers to improve efficiency, lessen costs, take fewer risks and improve business performance.

Several key areas sit in retail analytics, these are:

• Customer analytics - allows you to understand behaviours, patterns, preferences and more related to your customers.
• Merchandising analytics - allows you to understand offers and discounts, pricing strategies, product availability and more.
• Inventory analytics - ensures you efficiently manage stock levels.
• Store operations analytics - store-specific data, such as foot traffic, conversion rates, customer service and more.
• Marketing analytics - provides you with comprehensive data related to the performance of your marketing efforts.
• Supply chain analytics - data related to the supply chain, including suppliers, logistics, timelines and costs.

Each area contributes towards making data-led decisions that provide a stronger customer experience, ensure you reach the right customers at the right time, and ultimately drive sales.

What data does retail analytics collect?

To be most effective, retail analytics requires comprehensive data. This allows you to have a clear understanding of your business so you can make informed decisions to improve performance in the future.

This includes data related to:

• Sales
• Marketing
• Customers
• Inventory
• Foot traffic
• Supply chain
• Operations
• Competitors

How is this data unique?

These areas allow you to dig deeper into the retail industry to get a full understanding of not only your own business but the industry as a whole. This gives you a wider perspective to provide clear and actionable insights.

The data often includes granular details, which might relate to specific transactions, interactions or stock. This gives you the ability to get incredibly specific, so you can make even the tiniest of tweaks to your operations. It also captures temporal dynamics and ensures you can use time-related data such as seasonality and trends.

Because your customers may interact with your business through various channels, such as in-store, via your website and on social media, retail data can give you a full picture of how customers interact with your brand so you can refine the customer experience. This means your business can focus on being customer-centric to increase loyalty and satisfaction.

These insights can be collated and analysed in real-time, especially if your business uses software such as Apteco Orbit, which streamlines lengthy data processes so you can make data-led decisions quickly.

How can retailers use retail analytics?

Once your business has collated and analysed data, there are countless ways it can be used to improve business performance and operations. We’ll outline just a few key uses below.

Finding your best customers

Finding customers looking for the products you sell is always a challenge, but finding the best customers that suit your business and will become loyal brand ambassadors can be even more difficult. However, retail analytics makes it possible to not only identify your most valuable customers but also ensure you’re in the best position to find them and personalise communication with the aim of converting.

To do this, data can be used for:

• Customer segmentation
• Recency, frequency, monetary (RFM) analysis
• Customer lifetime value (CLV)
• Predictive analytics
• Behavioural analytics
• Customer feedback
• Cross/upselling opportunities
• Retention and re-engagement strategies

Personalising the user experience

Customers don’t want to be treated like a number. They want to feel valued and like your business cares about them as individuals. You can do this by using customer data to personalise the customer journey so they see more of what they want and less of what they don’t want. When you do this, customers are more likely to become loyal and continue spending money with you.

You can ensure communications are personalised far beyond the greeting. This might be contacting customers using their preferred communication method, sending messages at a time when they’re likely to engage, providing them with specific offers or promotions, or something else.

Here’s how retail analytics can offer users a more tailored experience:

• Customer segmentation
• Recommendation engines
• Email personalisation
• Dynamic website personalisation
• App personalisation
• Loyalty schemes
• Social media personalisation

Identifying your best sellers

Analytics helps you easily identify your best-selling products, so you can make the call on what to stock more of to drive revenue and profitability. This includes specific products, as well as categories, to give you a complete and accurate picture of top-selling products.

However, you may find from the data that your best-sellers aren’t necessarily your most profitable products. You can cross reference your data with products with high profit margins to maximise profitability.

Spotting trends

As a retail business, you’ll be all too familiar with trends. There are seasonal trends, such as Christmas, Mother’s Day and Halloween, but many trends come and go which can make things tricky for business owners.

Using data can ensure you spot trends as they’re emerging which allows you to stock more of what your customers want to buy.

If your business has brick-and-mortar stores, you can also use geographic data to spot trends emerging in one area but not another. Data from social media and competitor analysis can also be useful to identify what might be on the up.

Optimising operations

You may feel that your business’ operations are fairly smooth, but, no matter how efficient you feel you might be, there’s always room for improvement.

Retail analytics can be used to identify ways to improve efficiency, reduce costs and improve customer satisfaction. Ways include:

• Inventory management
• Supply chain optimisation
• Store operations
• Employee management
• Customer service processes
• Proactive maintenance
• Energy management

How can utilising retail analytics drive business success?

Whether you’ve run your retail business for many years or just a few months, diving into retail analytics can absolutely drive you to success. In the past, your intuition may have been enough to ensure profitability and growth, but using data as part of your decision-making process means you take fewer risks and are likely to have bigger and more regular successes.

As the data you can collate and analyse relates to every aspect of your business, you can use it to make positive changes and tweaks to operations across all areas. This enables you and your team to:

• Work more efficiently
• Drive new customers to your business
• Retain customers
• Improve the customer experience
• Save money
• Increase revenue
• Optimise inventory
• Improve planning processes
• Gain a competitive edge
• Improve supplier relationships
• Ensure continuous improvement

How should a retail business get started with data analytics?

If you’re not using data analytics then the best time to start is now. By not using data you risk falling behind your competitors, missing out on trends, having inefficient processes, losing customers, and losing revenue. And when this happens, it puts your business at real risk. So, you should make it a priority to get started with data analytics.

But, it’s also important not to just crack on without making sure you’re fully prepared to do so. Just like every other aspect of your business, it should be approached carefully and thoroughly if you want to make sure it’s as effective as it can be.

Here are the 10 steps you should follow when getting started with retail analytics:

1. Have a clear understanding of the overall goals of your business.
2. Define the objectives you want to achieve using data analytics. This could be reducing costs, improving revenue, improving customer service metrics and more. These objectives should contribute towards the overall goals of your business.
3. Make sure you have the right tools and technology in place to collect, store and analyse data. This might include customer relationship management (CRM) software and point-of-sale systems.
4. Understand where you’ll collect data from and how it will be formatted to provide actionable insights. Software such as Apteco Orbit can make this process fast, simple and highly effective.
5. Collect data and centrally collate it so it’s clean and easily accessible, which you can then analyse. This is another major benefit of software like Apteco Orbit, which provides you with comprehensive but actionable insights.
6. Use your data to make changes that contribute towards your objectives.
7. Monitor performance through continued data collection and analysis.
8. Refine and tweak changes continually.
9. Ensure your business remains agile and can adapt to change quickly and reactively.
10. Evaluate how using data has helped your business towards achieving its goals.

By following these steps you’ll give your business a head start in effectively using data to boost success.

See how Apteco can support retail businesses

At Apteco, our tools can provide retail businesses with everything they need to harness the power of data and use it to boost efficiency and profitability. See how Apteco software can support retail businesses like yours. For more information, schedule a demo today.