Historical sales and pricing information. Remember when “knowing your customer” was limited to these two metrics? We had no way of knowing just how important data would become in today’s omnichannel retail environment, an environment in which retailers meticulously develop customer engagement, retention and loyalty through everything from transactions and demographics to what consumers express and share through social media.
And while information has always been equated with power, it’s now essential to survival. That’s because Big Data is now “big business.” Hotel chains harness data to create digital engagement with their customers to increase bookings; professional sports teams use data to attract more fans; and retailers use data to drive traffic, increase sales and improve margins.
In fact, according to a McKinsey study, retailers can improve operating margins by up to 60% simply by harnessing product attributes, inventory information, sourcing information, social validation and other data to form the foundation of their digital relationship with consumers. That’s important because today’s omnichannel consumers access an average of 10.4 sources of information prior to making a purchase, according to a Google study.
However, keeping pace with consumers’ fickle buying habits isn’t easy. It starts with combining traditional raw point-of-sale (POS) data with other data now available. Then, analytics transform the data into meaningful intelligence that guides informed action that can boost sales, balance inventory with demand and improve overall bottom-line performance. Retailers and their trading partners need to share data to ensure they have an engaged customer, and then can offer the right products, in the right quantities, in the right outlet at the right time.
In addition to helping power consumer engagement, Big Data delivers unprecedented insight into the effectiveness of marketing efforts. POS analytics can easily compare slightly different approaches to a single campaign, for example, or evaluate a specific store’s product sales related to a specific promotion or end-cap location. This intelligence is invaluable to optimizing future promotions and getting a better handle on inventory for individual store locations.
Analytics also offer valuable insight into individuals’ purchasing behaviors: Who buys what, at what time, how often, and in what quantities? When combined with loyalty programs, this information can reveal cross-promotional opportunities for retailers and their suppliers, such as issuing POS bar-coded coupons when competitive or complementary products are purchased. The success of these coupons can be tracked, as well.
The location service capability of most mobile phones provides yet another opportunity for retailers to engage today’s shoppers through pop-up promotional messages that are highly relevant to a specific time and location. Imagine a shopper standing in front of a display of blue jeans receiving a text message offering a discount on a certain brand or promoting a BOGO on a display of sweaters nearby. When linked to events, the possibilities for location-based promotion are even more compelling.
Big Benefits For Business
There is one more beneficiary of Big Data in omnichannel retail: All of the supply chain trading partners that must stay ahead of changing consumer tastes and preferences that drive demand and move inventory.
When retailers, suppliers and other trading partners share their data and insight, an actionable, detailed view of item sell-through, inventory and order fulfillment emerges. Sharing such intelligence across a business network strengthens collaborative relationships for improving delivery of products when and where they’re needed, boosting profitability for all parties involved.
Additionally, retailers can quickly source new suppliers that offer desired products and services, and can meet specific item, fulfillment and other requirements. In addition, suppliers that have real-time visibility into product performance can spot and respond to new opportunities and sales trends, while more quickly and accurately refining forecasting, identifying needs and adjusting inventory to avoid stock-outs or oversupply.
What’s more, the use of data analytics to track vendor performance, such as order fill rates and on-time metrics, makes suppliers and trading partners more accountable. Quality improves throughout the supply chain, to the benefit of retailers, suppliers and consumers.
What is the data ah-ha from all of this? It’s simple: Big Data is essential for building digital engagement with shoppers that results in in-store and digital sales, and for optimizing sales performance in omnichannel retail. Are you embracing the big opportunities that it can provide?
Peter Zaballos is Vice President of Marketing and Product at SPS Commerce, which perfects the power of trading partner relationships with the industry’s most broadly adopted, retail cloud services platform. Share your omnichannel insights with him on Twitter by using his handle @peterzaballos.