Efficiency is an essential part of keeping your retail business running. Knowing where everything is, where they’re supposed to go, and what your customers want is all part of your daily operations for keeping your business like a well-oiled machine.
That’s where retail analytics come in. Analytics in retail enables you to improve the performance of your business, regardless of the size of your company or its specific needs. It’s also a rapidly-growing industry on its own, with its market size surpassing USD 10 billion in 2022 and only poised to go higher.
Bolster Your Business By Using Retail Analytics: An Introduction
What is Retail Analytics?
Retail analytics is a process that studies your business performance through the careful collection, interpretation, and use of data, usually from all facets of your operations. It’s an encompassing discipline that entails several actions, from reviewing your daily sales to controlling your incoming raw material shipments for the next months.
There are several ways you can broadly classify retail analytics in increasing complexity:
- Descriptive Analytics: aims to summarize the overall performance of your business, letting you know if you’re meeting your goals, reaching target customers, and other similar concerns
- Diagnostic Analytics: looks to identify and establish relationships between your data, figuring out the possible reasons behind your business’s performance
- Predictive Analytics: uses your gathered data to give you an idea of what opportunities and challenges your business may encounter next
- Prescriptive Analytics: sets goals that your business can follow to obtain the best possible outcome from your predictions
Each type of retail analytics works in tandem with the other, feeding into a continuous cycle that can help you consistently improve your business. With long-term retail analytics, you can effectively improve your overall business performance.
Why Are Retail Analytics Important?
With the amount of work involved in retail analytics, you might be worried about putting in more work than the returns you’d get. However, even implementing basic retail analytics has the potential to drastically improve your business’s performance. Here are some ways retail analytics can benefit your business.
Better Inventory Management
Retail analytics helps you keep track of where your products are or how many product units you have left, which is crucial for a business that needs to closely monitor its inventory. This is crucial for a post-COVID market where retailers like Amazon lose USD 6 billion a year because of inventory problems.
Proper inventory management through retail analytics helps minimize the margin of error for calculating your existing inventory, reduces potential overhead costs from purchases, and gives you ideas on what products are in demand. This gives inventory management multiple benefits aside from merely being a way to organize your existing stock.
Sales Strategy Improvement
Retail analytics gives you a comprehensive overview of several data points possible for your business, which includes the performance of your sales. With so much data at your disposal, you have access to everything you need to strategize and execute a successful sales plan.
This benefit is also cyclical: you can build on your previous sales strategies' successes and avoid past failures. You can also use your findings to help with other growth areas, integrating the data you’ve gathered with areas like content marketing and e-commerce management.
Deeper Customer Insights
Your audience interacts with your business in various ways, and each point of contact can give you valuable insight into their behavior. You can learn why they engage with your business, what they’re looking for with your products and services, and, most importantly, influence their future decisions in your favor.
Retail analytics also account for behavior offline and online, so you have plenty of opportunities to analyze and act in your audience’s best interest in a variety of areas. Around 74% of customers base their brand loyalty on whether or not a brand understands them, making customer insights crucial for keeping an engaged customer base.
Supply Chain Optimization
Unless you’re exclusively offering SaaS to your audience, there will be occasions when you’d need to keep an eye on your supply chain. Whether it’s the raw material needed for processing or delivering a software suite for your employees, monitoring your incoming and outgoing resources is vital to keeping your business workflow smooth and operational.
Your business benefits from analysis by checking which areas face bottlenecks or what other areas need some work. With an optimized supply chain, you can ensure your production stays steady for continued profit.
Operational Efficiency Assessment
While customers are a significant subject for retail analysis, your staff can also benefit from the data you gather. Operational efficiency is tied to how well your team can perform their tasks, which is closely tied to how conducive their environment is to seamless work.
Analyzing your retail performance can give you clues on how to better your performance, like checking if your company's software improves turnaround time for orders or calculating the best supplier for your materials in terms of cost.
How To Implement Retail Analytics In Your Business
Ultimately, retail analytics can give you many advantages, no matter the size of your company or industry. While there are no one-size-fits-all solutions to how to best use retail analytics, there are some methods that come close.
Here are three suggestions on how you can integrate retail analytics into your operations and ultimately end up growing your business:
One of the most significant advantages of using retail analytics is access to tools like retail analytics software and other similar tools. Automation can simplify many of the day-to-day problems that your business may face and can even help you improve your long-term performance.
Some ways to integrate automation with your business include:
- Using a retail analysis dashboard to simplify your overview of all your incoming data
- Automating your reports at regular intervals for easier manual analysis
- Backing up and saving your data to prevent data loss
- Collating your data for easier use in other software/applications
- Improving your workplace efficiency by freeing up employee resources
Automation is a multiplicative benefit: the more you automate, the more you free up people and resources to focus on the things that matter. Retail analytics takes the guesswork out of the causes behind your performance, allowing you to automate the processes you can and assign more resources to the ones you can’t.
The data collected during retail analysis is useful in a variety of areas, from content creation to e-commerce growth. Retail analysis can improve the various growth strategies you use with your business, bringing verifiable, actionable, and accurate data to increase your chances of success.
Strategy integration may look like the following:
- Using foot traffic data to identify the best places to place specific products you want to sell
- Leveraging production costs to find better suppliers for the materials you need in the future
- Bargaining with potential brand ambassadors for their talent fees based on demand forecasting
- Allocating budgets for specific ad channels based on their KPI last quarter
With consistent application of retail analysis in the different areas of your business, you’ll soon realize that there’s a wealth of information that you can use to devise better business strategies. This can guarantee long-term and steady growth without taking a lot of risks.
Better Use Of Tools And Software
A business has plenty of different tools and software it can consider to improve its operations; however, all of these rely on data. But with so much data to gather, it is easy to make a mistake in how you use your tools. Incorrect data can lead to a cascade of misinformation that can ultimately cost you profits and cause significant losses.
Retail analysis can help prevent this by:
- Providing a clear and comprehensive overview of all the crucial data you need
- Allowing you to highlight data sets or sources that you want to focus on
- Integrating with specific suites of software for automated data entry
- Giving you a point of reference for reliable and actionable data over time
- Highlighting specific opportunities in your business operations that can use specific tools/software
Tools and software are only as good as what they’re working on—so it’s best to provide them with a solid foundation to work by using retail analysis. With the data you acquire, you’re able to create a more robust framework that works better with the tools you have on hand.
Our Recommendation: Pacvue
The Pacvue platform is software that gives your business the flexibility to make smarter business choices based on intelligently-gathered data. It’s specifically focused on eCommerce growth, helping you manage your marketplace and identify opportunities you can act on for better performance.
Not only does this platform give you an accurate overview of how your business is doing across different channels, but it also compiles and schedules reports for better access to critical information. With the extra time and resources freed from collating and interpreting your gathered data, you can focus on the areas that need your attention.
This allows your business to supercharge its performance and remain competitive and efficient at the same time. With dedicated customer support, this is a tool that takes advantage of retail analysis by transforming your findings into actionable strategies.
Is There A Case For “Too Much Analysis”?
Data is at the heart of what makes retail analysis so effective. But it is easy to be overwhelmed by data, no matter the size of your business or how many data sets you’re taking into account.
To avoid this, your business needs to find the right middle ground between gathering data and gathering “actionable” data. Most tools and software about retail analysis can give you a sweeping viewpoint about all the different data that you can gather with your business. That makes choosing what data you want to analyze and act on even more important.
Some considerations you can keep in mind include:
- Is this data relevant now, or will it play a more significant role down the line?
- How much does this data reflect incoming trends, especially trends that hugely impact my business?
- Does your business have the time, resources, and manpower to act on the recommendations you draw from your retail analysis?
- What are your competitors in the same areas or channels, and does your data align with their performance?
- Are you starting to slow down collecting and interpreting data because there’s too much of it to process immediately?
- If you have partners or collaborators: will their performance and contributions drastically change the outcome of your data?
- Do industry projections align with what your retail analysis concludes, and should you take that course of action regardless of whether it does or not?
- Has there been innovations in your industry or changes in customer demand that your retail analysis tools/software may not have accounted for?
Retail analysis is only as good as the interpretations that you can draw from it. If you find that you’re starting to get too much data that you can’t act on it properly anymore, it may be time to re-examine how much retail analysis you actually need.
Retail analysis is a crucial component of growing your business. It might feel intimidating to start with a long and involved process, but you’ll find that the gains you make add up—all you need to do is start.
There are plenty of methodologies, experts, tools, and software that you can use to integrate retail analysis into your business. With a clear understanding of your goals, you’ll find that choosing the right retail analysis strategy is easier than you may think.
And with long-term application of the lessons and methodology of retail analysis, you’ll find a steady and reliable way to grow your business.