In 2022 How Critical are Retail Analytics for Success?
Recently we've been helping a number of UK retail businesses review their ageing reporting provision for order replenishment. This critical purchasing function is at the core of a successful retail operation, especially where minute gains in volume margins can have a huge impact on profitability. Order managers rely on key information to maximise margins; product sales (volumes and value), customer ordering trends, stock in hand against supplier costs, shipping and leads times. Traditionally order management teams have relied on manually pulling data out of sales and stock systems and combining it using Microsoft Excel, this process can take a lot of time and the results aren’t always accurate. This reporting inefficiency can lead to buying decisions based more on instinct and habit than on true insight.
As margins become squeezed and competition and customer demands turn cut throat, remaining competitive by future-proofing your business is essential. Automation is already prevalent in the retail industry: Amazon, for instance, uses robots for order fulfilment, and Walmart relies on FAST Unloaders for warehouse space optimisation. But one aspect that retail business owners often neglect is analytics.
Reporting is crucial for the success of any business and leveraging modern analytics tools could give your organisation the competitive edge it needs to thrive in a rapidly evolving industry like retail. Automated reporting can keep you in the loop about the products your customers keep coming back from, optimising your inventory, stock purchasing and replenishment. Or you can leverage these tools to gain insights about various KPIs and generate effective margin reports to avoid costly or unprofitable activities. Automated reporting also gives you a bird's-eye view of how well your different campaigns are performing. Modern tools provide you with an instant overview of the results of your email campaigns, web traffic or advertising efforts and, coupled with visualisation tools, ensure even the most sophisticated marketing data is presented in an easy-to-understand way.
While implementing automated reporting comes with an initial cost (mostly training time and initial capital) the benefits are most certainly worth it. Most retail companies rely on complicated and often ineffective data storage solutions where part of the data might be stored in a CRM, and the rest spread across accounting software, social media and marketing platforms, and locally stored Excel files. This data segregation means that any time a business owner needs a custom report, they need to involve a developer or other expert to collate the data. While some automated analytics tools might still require you to migrate your data to a centralised location, the added benefit is that you only need to do that once. Once you’ve created the data workflow, getting customised, sophisticated reports is easier than ever.
This, of course, saves you valuable time that can be allocated to other aspects of your organisation. Relying on automated reports and modern analytics tools also ensures smooth communication between the different parts of your organisation. Your colleagues and managers can leverage the latest reporting data, minimising human error and driving smarter business decisions.
Let’s take a look at some specific cases where modern analytics tools can give your business a competitive advantage. Effective pricing margin analysis, for instance, relies on you having the right data to make the right decisions. Automated reporting can keep track of KPIs and give you access to insights and patterns that would otherwise remain hidden. This can help you identify unprofitable activities, products or services and highlight those that drive your profit margins up. This can be particularly important when it comes to scaling your business. As your team or your retail organisation grows, it becomes increasingly necessary to have an easy and efficient way to share the data with the main decision-makers, ideally without relying on human labour (and thus minimising human error).
Where automated analytics truly shine, though, is when it comes to stock and inventory management. Modern retail organisations need to have an effective and reliable way to process customer returns. Today’s consumers expect the return process to be as simple as possible: something that can only happen if you switch from manual processing of your returns to an automated process. Modern analytics tools keep track of your inventory and returns, and update the database or reverse customer billing with little to no input from your human staff.
The same is true for store planning and inventory management. Smart stock purchasing decisions depend on you having the right data and understanding your customers’ needs. With automated reporting, you can determine which products your customers prefer and organise your physical stores to ensure they can easily find what they need. Information on buyer trends such as behaviour, demographics or location analytics can help maximise your revenues by ensuring the relevant, most sought-after products are displayed in the right place at the right time.
Furthermore, automated analytics can also ensure you have the stock whenever and wherever you need it, without incurring unnecessary warehouse costs. Not having the product your customers want means they will likely turn to a competitor that has it, and instant access to the most sought-after products is no longer a perk but a consumer expectation. If your business still relies on traditional inventory management, this might mean you’re losing valuable business. Instead, automated analytics can provide you with a greater visibility and access to real-time information so you can ensure you make more effective stock purchasing and replenishment decisions. Ensuring your customers know they can always find what they need at your store or your website is critical for brand loyalty and various studies have already shown that as much as 70-80% of the average retail organisation’s profits come from repeat business.
Modern retail analytics are increasingly becoming the norm and offer savvy business owners a much-needed competitive edge in the highly dynamic, cut-throat landscape of retail. In addition to improving communication capabilities and helping you provide better customer satisfaction, they can help you make better decisions and grow your business. With sophisticated, yet easy-to-use automated reporting tools, you gain unmatched visibility over your business performance, streamline key processes and remain in control of your day-to-day operations, whilst leveraging invaluable insights to drive your profit margins up.
If you’re ready to take that next stop to leverage or create data assets, then get in touch with us using the button below. We can design, create, and implement a complete solution built around your systems. Or check out our page here and see our retail analytics showcase in action for an idea of what we can do for you