Data has always played a role in the way retailers operate. Even in the days before online shopping and an interconnected wired world, stores would track how certain products performed and how their promotions fared in terms of bringing in more customers.
These days, technology has taken us to a far more advanced state. We now have what is called “big data,” a large mass of information — gathered through many different channels — used to optimize retail performance. Below, we’ll look at some of the ways big data has impacted the retail industry, changing the way all shops, big and small, are using the information they collect to increase sales and drive more revenue.
More Accessible Ways to Buy
Back in the good old days, shopping didn’t happen in a whole lot of different ways. Consumers could show up in person to a retail location, or perhaps order a product through a far-from-instant channel (such as a phone line or a catalog). And then big data came along and retailers started to get creative, experimenting with new and innovative ways for consumers to make purchases. And as it turns out, consumers like choice! They can now buy through websites, mobile apps, and in Amazon’s case, even little Internet-connected buttons they can place next to their dryer. As retailers collect data on purchases made through these different channels, they can decide which ones they plan to focus more on and which ones to fade out.
Imagine owning a retail shop back before technology really began to take hold. There wasn’t a smart way for stores to decide which products to discount in order to clear out stock and make room for new items. Retailers would instead have to take a stroll around the store and place a new tag on everything, and that would only happen after they did the manual calculations on the new prices. It sounds like a chore, and it was. Big data provides businesses with the insight to see exactly what they paid for a product wholesale, as well as the ability to take market trends into consideration when generating a discounted price. When the prices are right, retailers can at least make their money back and consumers get a great deal in the process — one they’re more likely to take advantage of.
Staying in Stock
Product stock: it is the blessing and the curse of being in the retail business. If you have a hot product, you’re thrilled to have any of it in stock. If you have a dud of a product, you’re wishing you hadn’t ordered so much of it. What if you could take consumer purchasing trends into account when ordering stock, ensuring you have more than enough of the hot stuff and just a few of the more niche products? Big data makes this possible. With intelligent business systems that make use of all the data a retailer collects, as well as data collected industry-wide, a store can observe and understand trends, make smarter purchasing decisions, and carry more of what consumers want and less of what they don’t.
Gathering consumer data isn’t an entirely new thing: store loyalty cards have been around since the 1980s, for example, using the promise of discounts as a way to get consumers scanning and sharing their purchase data. This used to give retailers an eye into demographic purchasing trends, albeit more slowly, but these days, consumer data can now be used to offer a completely personalized experience. Have you ever gone to a website with a “You Might Be Interested In…” section? This is big data at work, using not only your past purchases but your past search and browsing history to present products you might be more apt to purchase. When consumers are given an experience that is unique to them, they’re far more likely to buy, and it’s thanks to big data.
Assessing Marketing Effectiveness
How many people are clicking on that Google AdWords ad featuring your new product? Are you pulling in new customers through your Facebook advertising campaign? Big data is all about pulling all of the analytics in to give companies a good look at how aspects of their business are performing, and that includes retailers. Once upon a time, retailers might advertise in a newspaper or magazine and would only be able to use the number of people bringing in a coupon, or even just correlation, to point to their campaign’s effectiveness. These days, big data can track a consumer the entire way through the buying process: from the very first time they’re exposed to an ad online, all the way to when they decide to plunk down their hard-earned money and make a purchase.
Better-Met Support Needs
When you zoom out and look at how many things retailers are tracking, you might find yourself a little overwhelmed. There’s so much you don’t think about: for instance, the types of support questions being asked, which are tracked and collected to the point where someone says, “We should make a special FAQ page on the website for this.” Or even something as simple as demand inside a retail location during a busy period. If a retailer has data showing that, last year, there was more foot traffic during a certain period of time and that’s likely to be true this year, they can hire more staff to ensure consumers are able to come in and be helped more quickly. Big data can help retailers be more ready for the support issues consumers may have when trying to interact with their products, whether it’s a problem with something already purchased or the simple wish of getting in and out of a store quickly. The better a retailer is able to serve its customers in this way, the more happy the consumer will be, making it more likely they’ll return and make a repeat purchase in the future.
When you keep in mind that big data acts as a way to bring all of this together, you can begin to appreciate how it has changed the way the retail industry works. And as technology improves and the channels we’re able to track become more plentiful, big data will only get bigger and more useful.