Editor's Note: This blog post was originally published on July 2, 2018 and has been updated for the newest trends and information.
As retail patterns have had to pivot 360 degrees, with most retailers quickly adapting to an online environment, retail companies are scrambling to update their artificial intelligence models to reflect these major changes in how they do business.
Previous models had not accounted for the advent of an unprecedented pandemic, leaving retail companies with new trends and variables to analyze and adapt their business to—and leaving them without historical data that they’re accustomed to.
In other words, the pandemic has disrupted how retail companies think about—and perform—their business operations.
Fortunately, tools are available to make data analytics much more accessible and affordable than ever before—which is good news for the retail industry that took a substantial financial hit in 2020 when it had to shutter its doors to many and adjust to new buying patterns.
Why advanced analytics in retail?
Retailers possess the unique advantage of direct customer relationships because of the insights they provide through mass amounts of data. Coupled with the right tools, retailers can leverage this information to their advantage and stay ahead of their competition. Most of the data generated about customers derives from three components of their business:
- Point of sale
- Customer loyalty programs
These components allow retailers to utilize what is known as “actionable data,” which can be broken down into four general buckets:
- Descriptive analytics (what happened)
- Diagnostic analytics (why it happened)
- Predictive analytics (what will happen)
- Prescriptive analytics (what to do next)
With the data generated through various retail channels, the right predictive analytics programs can help your retail company make informative decisions on promotions, pricing, inventory, and procurement. Ultimately, you want to sell the right products to the right customers at the right price—and in 2020, that can be a real challenge.
Advanced analytics is the key to getting past that challenge. Beyond delivering the right products to fit demand, advanced analytics can also drive marketing campaigns and help you decide where to allocate marketing resources.
Partner with data-oriented vendors
Aside from deploying advanced analytics systems and practices internally, make sure to partner with data-oriented vendors. While suppliers and vendors with better analytics tools may cost a little more than their less techy competition, the results will almost always overshadow any savings otherwise. Business intelligence that drives continuous improvement and operational efficiency is a value-add that should always be prioritized by retailers.
If you’re a retailer looking to take advantage of advanced analytics, look for a partner to help you modernize your applications. Chances are, your retail organization already has the data to get started. Migrating to the cloud and modernizing existing apps can prove both cost-effective and efficient.
Learn more about how you can leverage your data to help your business stay competitive by reading our in-depth guide to advanced analytics.
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