Guess what? Analytics of the future are… already here! Using data-driven insights derived from predictive analytics, retailers are empowering themselves to offer top selling items to the right customers at the right times, at the RIGHT PRICE, at the right locations (in-store and online), and more. Insights derived from the data lead to strategies allowing retailers to predict and prepare for outcomes during the season, maximize inventory, and, in turn, achieve the greatest margin. In other words: Retailers no longer need to get stuck with merchandise that isn't wanted at particular locations or hurry to mark down items before their time.
Two main elements of this phenomenon are focus on the customer and multi-channel / cross-channel performance and fulfillment.
The consumer is ensconced in the driver's seat, where she/he can initiate a shopping journey in one channel, continue in another, and complete it in an altogether different one.
Retailers have begun to understand what customers truly want and need, and ensure the right assortments of products are in stock when and where the customer wants to purchase.
Promotions analytics further watch customer reaction to see what's working and what's not.
The news is that retailers, aware of market trends and in possession of sales data, can now see, study, predict and manage consumer traffic patterns -- to facilitate meeting customer demands faster, reduce working capital tied up in inventory, and effectively avoid markdowns on unsold inventory.
Multichannel retailing provides opportunities to connect up with customers willing to pay full price or at a slight discount, allowing retailers to capture demand that might otherwise have gone to their competition (i.e. When you're out of stock in one location and the customer wants it NOW and is willing to go to the next place they can get it, you want to be sure that the next place they can get it is from you -- on one of your channels).
When it comes to pricing, the main elements at play regarding analytics are, to put it simply, realizing maximum price and maximizing margins. Watch for our upcoming blog posts on "The Retailer's Quest," and "The Holy Grail of Price Analytics."
Rules-based price optimization is an integral part of the strategy for getting the best price and minimizing markdowns. One key caveat is that markdowns must NOT apply to newly-introduced styles, fast movers, and styles that haven't yet reached their lifecycle plateau.
Related retail functions where predictive analytics are becoming "priceless" include buying, supplier management, purchase order acceleration, inventory management, fine-tuning assortment, moving inventory around to the right stores for maximum sales at maximum prices, stock on hand, and, analyses of the cumulative lifecycle of styles.
Bottom line for your bottom line:
Leaving little inventory that is available for markdown is now a reality thanks to data-driven insights that help retailers make timely, pro-active and informed decisions, including identifying fast movers and high margin contributor styles… at particular locations… helping prevent out-of-stocks and distribution voids, sell at the best price, on the best channel, and more.
With predictive analytics, retailers can attend to what they're selling and going to sell, stop rushing to give away their merchandise and their margins, maximize sales, and manage inventory for profit!