These days, data is an invaluable source of knowledge for retailers. So how can they leverage it to increase their revenue? Gregor Maciak, Director of Innovative Digital Solutions for Econocom’s Digital Application Services business unit, has three tips for being au fait with consumer habits.
The sales, beginning of the school year and Christmas are the three key periods for retailers, with the sales alone accounting for 20 to 30% of their revenue. To make sure they don’t miss out on these opportunities, retailers can’t leave anything to chance.
And yet many of them are still wondering if it’s worthwhile using Big Data. As Gregor Maciak puts it: “You realise how useful big data can be in this industry once you hear customers walking away.”
But you have to know how to use this data: here’s how…
LISTEN TO YOUR CUSTOMERS
“In the vast majority of cases, before going to a point of sales, a customer will find out about it. These days that means going online, on social media, and being on the lookout for opportunities,” explains Maciak. These signs of interest from customers are important for retailers as they provide “hot” data – i.e. information that needs to be accessed quickly and is used by a company for quick decision-making. “By crossing hot data with cold data – favourite product, loyalty, sales, stock, average basket value, conversion rate, etc. – you can build adaptive strategies that match customers’ digital practices and then respond quickly to grab their attention,” Maciak adds.
For example: if a customer wants to buy a new computer or a pair of shoes, they’ll typically go online to make sure their visit to the brick-and-mortar store is productive. The website then gathers vital data on the consumer’s path-to-purchase, the products they’re interested in and those they’re likely to buy. This data allows them to draw up a digital profile of customers, their tastes and interests, and thus build strategies to attract customers and lure them into the brick-and-mortar stores, for example with coupons or customised offers.
In other words, big data offers retailers empirical information to help them understand and explain shoppers’ typical behaviour. Whilst retailers’ strategy is based on behaviour patterns they’ve observed, big data goes one step further: as Gregor Maciak puts it: “If you can explain a behaviour pattern, you can predict it – and that’s the real big data revolution.”
CUSTOMISE YOUR STRATEGY
“Whilst big data is deemed intrusive, customers tend not to object to data being collected about them if it means they’ll get some special service out of it,” says Maciak. “So the quest for the Holy Grail involves building smart digital scenarios for a given segment of customers: you can constantly improve your hyper-knowledge of consumers and build up a 360° profile of your clientele that will enable you to continue to hone your strategy. Big data also allows you to optimise the number of sales staff at a retail outlet to cope with exogenous events such as weather or traffic. For whilst 70% of sales in shops in town centres are made during good weather, the figure is much lower for shopping malls – except of course during very bad weather! In this case, people tend to go for online special offers or invitations to in-store events when the weather is better.”
Using data for specific purposes and situations can thus allow retailers to order the right products, in the right quantities and sizes, and optimise their mark-up. This will consequently not only mean there’ll be fewer products that are hard to shift during the sales, but will also affect their future collections: “With in-store cameras that analyse the expression on customers’ faces, we can predict customer behaviour and have a better idea of whether or not a product will be successful, and with which type of customer,” says Gregor Maciak.
BOOST YOUR PERFORMANCE
“If you don’t break into data, you won’t be able to keep pace with market changes,” warns Maciak. “Big data analytics allows you to gain a thorough understanding of all the exploitable data so you can implement a digital marketing strategy that matches customers’ actual needs and desires. It also means you can adjust both the resources used at the points of sales and your inventory strategy, which will allow you to negotiate more shrewdly with suppliers,” says Econocom’s retail expert.
Of course, all this is geared towards boosting performance: “Retailers who were early adopters of big data have increased their revenue,” says Maciak. “Plus, it’s easier for them to expand internationally. It’s safe to predict that retailers who don’t adopt big data probably won’t be around in ten years.”
So to sum up: retailers, don’t underestimate the power of data! As well as being crucial for the longevity of your business, exploiting your data will ensure you’re in tune with customers’ uses.
> Further reading: check out our article on how Zara uses data. Find out how the high street chain uses data to help its designers, improve the customer experience and manage inventory more effectively.