In the previous post, we talked about big data in retail. This is your starting point. However, in order to achieve the maximization of profits, you need something more. In many instances, the answer is retail business intelligence. In this post, we will take a closer look at this aspect of running a retail company and see what you can do to maximize your profits through this solution.
Today, retail companies have tens of various types of data at their disposal. Thanks to enhanced analytics available in online marketing, and cameras and sensors in the brick-and-mortar stores, large retail chains know a lot about their customers. And, as we explained previously, this knowledge can be used to improve your offer and introduce personalization. All to maximize your profits. However, if you truly want to maximize profits and grow sales, you need a more advanced and comprehensive tool even in the tough pandemic time. We believe that business intelligence is precisely what you need. Why? Let us explain.
The significance of retail business intelligence
In general, business intelligence combines and analyzes big data. Therefore, it helps your company turn it into useful knowledge. We could say that business intelligence is a common expression to describe all strategies and technologies used by companies for data analysis of business information they process.
Now, what kind of information do retail companies have at their disposal? Typically, retail chains have data regarding:
- Customers’ activity in stores
- Historical data about their purchases
- Online purchases (if a given company also has an online store)
- The popularity of offered products
- Customer spending
- Seasonality and temporary trends
And the list goes on and on. It’s a massive repository of data, and each one of the data pieces within this repository can be used to maximize profits and sales. This is where retail business intelligence comes into play. The key role of retail business intelligence is to take all that information, process, analyze, and visualize it. As a result, you get easily understandable insights that can be used for your company’s good.
With this introduction done, we can think about the ways companies use retail business intelligence.
Retail business intelligence in practice
For the largest retail companies and chains, retail business intelligence is a standard solution, commonly used in everyday work. Retail companies use this tool to:
One of the most straightforward ways to maximize your profits is to ensure consistency and high-quality standards. It can get tricky when your company operates in many countries (sometimes on different continents!) and has tens or hundreds of stores worldwide.
Consider Walmart, one of the largest retail chains in the world. According to their website, Walmart owns approximately 11,500 stores in 26 countries. Additionally, they run several e-commerce websites. On top of that, they hire over 2 million people. It can be tricky to manage all of these stores and the workforce! And it’s not just the management issue!
The challenge goes further and is associated with setting and maintaining high standards, managing various types of stores and brands (Walmart has over 50 different brands), and keeping constant communication between stores and countries. No wonder they use retail business intelligence commonly and extensively.
According to their website, they utilize BI tools in order to manage and improve:
- Pricing and planning
- Online operations
- HR and EB
- Customer insights
It’s another vital aspect of retail business intelligence. With BI, you can easily uncover significant patterns in sales, procedures, inventory, and margins in each country/store. With this knowledge, you can track progress and optimize your processes across all of your stores. As a result, you can optimize the way your stores work, get priceless insight into why some of your stores are not performing well while others do just fine, or why customers are not buying specific products in your offer.
MONITOR CUSTOMER TRENDS
The market is a living and constantly evolving thing. If you want to win your target audience, you have to monitor trends and respond to them. Especially in the COVID-19 times, this approach is critical. For instance, due to the global lockdown that happened in early 2020, the e-commerce sector has experienced massive growth. Because people couldn’t buy in brick-and-mortar stores, they turned to e-commerce companies and started buying more products online (even basic necessities).
Companies that did not spot this trend on time lost a lot of money. And who knows what will be the next substantial trend? If you run a retail chain, you have to spot them and react to them as quickly as possible. Retail business intelligence, thanks to deepened data analytics, facilitates this task for you.
MANAGE SUPPLY CHAINS
Supply chains can, indeed, cause a headache. For starters, they are at the very core of your business. Without an efficient supply chain, you will never be able to grow and offer standardized services. Every part of the supply chain has to play its role flawlessly. Sometimes, however, something opposite happens. Retail companies face delays, delivery mix-ups, insufficient stock levels, and other complex problems. Retail business intelligence helps you manage the supply chain, especially by analyzing every stage of it and finding aspects that could be improved. As a result, you can deliver products on time, in compliance with orders, and without mix-ups.
Every retail chain owner and manager do whatever they can to provide attractive products that customers want to purchase. That’s why companies constantly monitor products in their offer and, when it’s beneficial, they introduce changes in pricing, specification, or other aspects of their inventory. Thanks to this approach, companies manage to maintain an attractive offer in ever-changing market conditions.
Consider Lidl. It’s an international discount supermarket chain. In 2017, they entered the US market. Lidl’s offer is based on various themes and “weeks”. Every once in a while, Lidl has a special offer, frequently based on a specific type of product or cuisine. This way, you have the “French Week”, “Meat-Free January”, and other incentives:
Screenshot source: https://www.lidl.co.uk/food-offers
It’s no secret that the retail industry is highly competitive. There are hundreds of entities operating on this market, trying to win customer attention. That’s why these retail companies constantly focus on effective competition. Again, retail business intelligence comes to the rescue. If you have decent business intelligence software at your service, you can:
- Monitor your competition 24/7
- Analyze your and their offer and pricing
- Forecast trends
- Monitor performance
As you can see, retail business intelligence should be at the very center of your sales and business strategy. It’s business intelligence that helps you optimize costs, maximize profits, act according to the market’s state, and stay one step ahead in this never-ending race. Retail business intelligence can be a massive milestone in your company’s history, allowing you to reach an entirely new development level. However, in order to achieve that, you have to follow some rules. And what are they?
How to maximize profits through retail business intelligence
If you want to really make the most of retail business intelligence, you have to follow specific rules. Bear in mind that BI is not some sort of a magic wand. It has to be used correctly and with a specific goal in mind. That’s why you should:
Maximize profits through retail business intelligence: THINK ABOUT YOUR GOALS
First of all, as in every AI-related field, you have to know what you want to achieve. Retail business intelligence could be used to improve almost any aspect of your business, and you can’t do everything at once. Concentrate on 2-3 major goals and start with them. When you will see the first results, you can start thinking about expanding your BI strategy.
Maximize profits through retail business intelligence: ANALYZE AND GATHER DATA
Retail business intelligence, like any other AI-related tool, operates on data. And it’s your role to find it. Does your store have at least several customer monitoring solutions? Do you have an analytics module implemented in your online store (we recommend Google Analytics, it’s a very effective tool, and, above all, it’s free)? Do you gather and clean every possible type of data? What is your current data infrastructure (do you have data warehouses or other repositories)? These are vital questions that need to be answered before going any further.
Maximize profits through retail business intelligence: CHOOSE THE RIGHT TOOL(S)
The selection is very broad, and it’s easy to get lost in tens of products and offers. Do some research, once again think about what you need it for, analyze what kind of information you already possess, and make sure the product of your choice is safe, intuitive, relatively easy to learn, and, importantly, offers legible data visualization feature. We cannot stress this enough–data visualization is what makes retail business intelligence transparent and readable. With no practical data visualization feature, making well-informed decisions is a much more difficult challenge. To help you choose the right business intelligence tool, we recommend you read one of our previous posts: How to pick the perfect BI product.
Maximize profits through retail business intelligence: FIND A RELIABLE PARTNER
If you don’t have enough in-house resources to deal with retail business intelligence, you ought to think about outsourcing. A trusted BI consulting company will help with everything along the way. Such a company should help you pick the best tool, teach you how to use it (or use it for you), and set everything up. At this point, we have to mention that sometimes there is a need for some changes and adjustments in your IT infrastructure to make the whole thing work effectively. A reliable BI partner will recommend necessary changes and help you implement them.
Addepto is an AI and business intelligence consulting company. If you’re looking for a partner that will guide you through the intricacies of retail business intelligence and data science–you’re in the right place. Drop us a line today, and schedule a conversation with our team. We are keen to show you what we can do together!