In the past five years, huge changes in the retail technology landscape have revolutionized customer behaviors and expectations. Consumers are increasingly moving online to make purchases, and this trend is only going to become more significant. Online sales have increased the past four quarters, reaching $75 billion in the second quarter of 2014. And as pure e-Commerce retailers like Amazon have gained momentum, brick-and-mortar retailers are being forced to re-think and re-design their online channels.
As the number of online and mobile shoppers is increasing, so are customers’ demands. If a consumer can’t find the right product through the sales channel that they choose (be it a physical store, mobile shopping, or online) or even the right size or color, they will go to your competitor before you can even pick up the phone to call a neighboring store to check their inventory.
These trends have caused retailers to step back and think about what would be the most effective and efficient way to allocate inventory between these channels in order to satisfy consumers. And it now seems that many of the top retailers have found the answer in omnichannel retailing.
Advertisement
Omnichannel retailing provides a seamless consumer experience through all available shopping channels. But, in order to provide it, retailers have to know what customers want before they think it: in short, they need to be one step ahead.
Retail Predictive Analytics
So how can a retailer actually do that? In order to stay ahead of the consumer, and to make sure that their products are fulfilled in the most cost efficient manner, retailers need to leverage predictive analytics technology when making fulfillment decisions. This strategy puts the inventory in place in advance to avoid inventory imbalance, delayed delivery and unnecessary markdowns.
Predictive analytics technology will significantly improve demand forecast accuracy and suggest better allocation and replenishment strategies. In fact, retailers that are currently using smart fulfillment tools running on predictive analytics technology are seeing significant benefits. One national jewelry retailer witnessed a 20% increase in sales while decreasing inventory by 40% in the same category. That kind of efficiency can mean millions of dollars in retailers’ pockets.
Omnichannel retailing is the next step in the evolution of retail. Retailers can either choose to stay in a reactive state and wait for consumers to move, or they can change their attitude and stay ahead of the customer. Predictive analytics technology not only helps retailers make sound inventory decisions tied to consumer demand — it keeps the retailer ahead of the competition. The most successful and influential retailers have already started to make the change.
Are you on board for the retail world’s analytics revolution?
Jim Malone is the Vice President of Business Development at Retalon, a provider of predictive analytics for the retail industry. Since 2002 Retalon has optimized pricing, inventory management, merchandising, planning, and marketing operations for retail organizations in a variety of industries. Retalon products range from task-oriented solutions to a common analytic platform, resulting in tangible optimization of the supply chain and significant measurable benefits for the entire organization. For more information, visit www.retalon.com.
