Knowing the customer has always been important for retailers, but now a combination of new technologies is making that knowledge deeper and much more valuable.
Once customers could only be reached while in a physical store. Now retailers can gain insights through everything from online queries and orders to social networking posts and personal digital devices.
The result is a massive amount of data which, if analysed properly, can provide insights that previously have simply not been possible. The long-held aim of being able to market to customers as individuals has become a reality.
Such insights are particularly valuable at this time of year as millions of people across Greater China celebrate Golden Week. Retailers who can best understand their customers during this busy shopping time stand to drive significant profits.
Such insights are achieved through the use of increasingly powerful analytics software. The software can crunch through vast swathes of data gleaned from multiple sources and spot trends and linkages that humans would miss.
The market for such software is growing rapidly. According to a new report from research firm marketsandmarkets, it is estimated that the retail analytics market will grow from $1.88 billion in 2014 to $4.4 billion by 2019.
Examples of the power of such analysis show why retailers around the world are so interested. They recognise better knowledge of customers and their spending preferences and patterns can make a big difference to a business’s bottom line.
Analytics-based marketing has already been part of the retailer’s armoury for some time. Examples include giants like Amazon which suggests items to its customers based on their previous purchases and those of people with a similar personal profile.
Other retailers take things to another level. They add to the mix external data such as weather forecasts, upcoming events, Facebook and Twitter posts, and even global news reports. Pointing analytics tools at this mix can predict changes in customer sentiment and demand for certain products. This in turn allows orders to be placed and shelves filled before the changes in customer demand occur.
There is increasing activity inside stores too. Sophisticated systems now allow retailers to track customers as they move through stores or wander around shopping centres. US retailer Macy’s is rolling out an implementation of beacon technology across its store network after a successful trial in a small number of locations.
Through analysing the data generated by technologies such as shopkick’s shopBeacon or Apple’s iBeacon, retailers can gain insight into which parts of a store customers visit the most. This can be used to refine store designs and layouts to increase foot traffic and boost sales.
The technology can go even further if customers opt in to services such as free Wi-Fi while in a store. As they approach a certain department or stock display, the customer can be sent personalised offers relating to the items nearby. Looking at shoes? How about 20% off if you buy within the next 20 minutes?!
While such opportunities have retailers very excited, it’s also important to ensure the gathered data is stored in a highly accessible and secure location. The insights that analytics software can deliver are only as good as the data fed in.
Keeping customer data in a purpose-built data centre ensures it remains available for analysis at all times. It also ensures that compliance to all relevant privacy policies can be achieved.
The retail sector is undergoing a period of rapid and fundamental change. Thanks to massive data stores and increasingly sophisticated analytics tools, its future has never been more exciting.