It's every retailer's dream to know what is going to sell best, the best, most competitive prices to charge, and how to stock the most productive inventory. Certainly, to know what the consumer wants, forecast future sales and trends, and more. With the intelligent use of technology (including Competitive Pricing and Assortment Solutions), retailers can tap into their own data and make these dreams come true.
How Retailers Can Use Data Analytics For Preparedness, Product Maximization, and Profits:
1. Predict Trends: When retailers track and analyze data in an ongoing way, e.g. re sales, prices, and assortments, you'll not only have live data on which to react in real-time, but you'll also be building a longitudinal record to see the data in a cumulative way to recognize trends, and identify competitors' strategies.
2. Anticipate Coming Demand: Analytics provide info on sales-driving products, so retailers can more accurately predict how an item will sell in the future. For example, data one year indicated that the demand at Christmas would be for fashion apparel, toys, and many consumer electronics products. "These are products that have a gross margin of 50% or more," so missing a sale is extremely expensive," says Marshall Fisher in his book, the Science of Retailing. Your pricing and assortment intelligence solutions and analytics will allow you to identify, plan for and maximize these high times.
3. Identify Home-Run Products: "Home-run products" are products you carry -- or should carry -- that would make great sales if you only knew it. In his book, Marshall Fisher tells about a retailer that didn't carry a certain tire because he THOUGHT his customers would find it cheap. However, when he added it to his inventory after determining it was missing, that tire became one of his best sellers.
4. Determine Which Products To Add (Or Eliminate) From Your Inventory: Big Data analytics let you be more scientific about getting rid of products that are not selling so well and add new products that will sell better. You can drill into your product reality, e.g. look at competitive activity, how priced, and other details. With analytics, you can now actually ask: "How is this shirt selling in the Ohio store in a large size today?" -- and get the details you need.
Inventory decisions, however, are not black and white. For, even if the product in question is not selling very well, it may be the favorite of some of your best customers and that's what brings them to the store. When customers can't find the product they want, they elect to shop elsewhere. If you get rid of it, you not only lose the sales on that product, but you may lose the customer and everything else they might buy. So don't add or subtract randomly. The secret is that you have scientific data on which to base these decisions.
5. Develop Speed And Flexibility In The Supply Chain: The old saying was: Do you want it slow and cheap or fast and expensive? One of the problems has been pursuit of low cost sources from Asian countries, which takes time to order, produce, and provide, but some retailers are finding creative solutions locally, i.e. flexibility in production, e.g. make a dress for you on order. Fisher describes three apparel firms that found ways to get back in stock on short notice -- by having patterns, fabric, and ability to create the item quickly, locally, if there was a demand. As a result, these businesses enjoyed immediate, ongoing sales and tremendous success.
Bottom Line For Your Bottom Line:
Using Competitive Price & Assortment Analytics, retailers can look at things in new, scientific ways and tap the available data for successful planning, inventory management; trend-watching; find out what the customer comes in for (whether a best seller or not); better match supply with demand; make more accurate forecasts; establish a more flexible supply chain; and identify home-run products.