Business Intelligence Is A Win-Win Strategy For Retail
One of the most important changes in retail in recent years has been the introduction of online sales and e-commerce options. E-commerce received a huge boost during the Covid pandemic because in regions where non-essential retail was closed during lockdowns it was still possible to order products online.
E-commerce moved from being around 16% of all retail sales to 19% and is now valued globally at almost $27 trillion. Many analysts believe that the pandemic created several years of market growth inside a few months.
This boom in e-commerce has also revealed something important for retail companies — when a customer is shopping online the brand knows a lot more about their customer and can use this knowledge to their advantage.
The reason why is obvious. Think about the last time you visited a clothes store. You walk in, have a look around, see something you like and buy it — maybe after trying it on first. At no point does the retailer know who you are, what you like, and what they could do to help you — by recommending something you like.
Contrast this to visiting the online store of a clothes brand. Almost always you will need to have an account for the site, with your payment and delivery details. This also allows the brand to track what you are looking at, what you spend more time on, and which products you actually purchase.
All this data can become business intelligence if it is analyzed in the right way. There are a number of actions that retailers can take, based on this analysis:
- Discounts and offers: special discounts for individual shoppers can be arranged to encourage them to complete a transaction — for example if a shopper has selected several items, but is browsing for longer than normal then the site could offer a 5% discount only available for the next 30 minutes.
- Recommendations: when you understand what each individual shopper likes you can recommend additional items — either during the browsing process or when reviewing the basket of products.
- Reduce cart abandonment: many shoppers browse, select items, then fail to pay because they change their mind. With more insight into what customers like, you can guide them more quickly into the checkout process and reduce the number of shoppers who fail to complete a transaction.
- Strategy: getting to know how customers interact with your store can feed into more general business strategy. Can you improve your product mix and guide shoppers to the products they want more effectively?
This insight can be further enhanced by adding additional data that is not directly related to the customer and their shopping behavior. For example, knowing the weather today and in the near future can affect many retailers. A supermarket may offer a limited discount on beer to shoppers that regularly buy beer — but the discount may be triggered by expected hot weather in the next few days.
The benefit of this business intelligence is clear. When a retail brand knows its customer better it is possible to improve the customer experience of that brand. Customers feel better understood, enjoy shopping with the brand and spend more.
Building and improving business intelligence in retail is a win-win strategy. The customer enjoys interacting with the brand more AND the retailer earns more from the customer.
Retail is a wide-ranging industry that can also include elements of e-commerce and direct-to-consumer sales. BI is an essential tool for companies in this sector because it not only improves how the business functions in the back office, but it can improve how the customer interacts with the business too. Read more why no other single technological enhancement can boast the potential for such a fundamental impact.