Retail Analytics: A Beginner’s Guide
- Can you predict your customers’ behavior? If you can, congratulations. That helps you better anticipate their needs and serve them better – which is good both for you, the retailer, and the people visiting your store. If you can’t do that, though, you’re leaving money on the table. You really should know things like why they’re entering your store, where they go when they get there, what they put in their cart, and how to retain them so they’ll come back again. This is the science of retail analytics, and it’s something you should know something about.
So what is retail analytics? Well, analytics is just a formal term for systematically analyzing data. In the case of retail analytics, that data is coming from your customers – what they’re buying, when, and how it’s affected by factors like sales and promotions, advertising, inventory, and more. In fact, studies show that most retailers actually capture some sort of data – as much as three quarters of retailers gather insights about their shoppers. Unfortunately, it’s the follow-through that’s the problem; the vast majority of small retailers don’t do much with the data they collect.
Properly interpreting that data is important. Retail analytics can help inform you about all sorts of important business decisions, including managing your inventory (what items should you sell, and how should it be priced), marketing – where do you put your marketing dollars, and what should you say to your customers – and much more. Certain kinds of analytics can even help you optimize the layout of your store to bring foot traffic where it’ll have the most impact.
Ready to dive in? To get actionable models and profiles of your customers, you’ll need to invest in retail analytics software – generally, a service that takes raw data, processes it, and delivers usable information. Depending on the data you want to input, you might be able to get started with the point of sale terminal you already have. Analytics software can also assess the efficacy of communication you have with customers, such as email newsletters. And if you install specialized sensors in your store, you can even get information to help plan the physical layout and inventory placement. Here are some of the most common categories of retail analytics you should consider.
Point of sale data. As already mentioned, modern point of sale terminals can capture a lot of valuable information that’s incredibly valuable to you – it can reveal profit margins, sales trends, and shopper demographics. This kind of data can tell you what to products are driving your revenue so you can manage stock and inventory, plan the layout of your store, and more. POS data can also help you infer timing data; for example, you can chart sales in such a way that you can find the best days and hours for sales to set store hours and staffing.
Marketing data. Do you have any sort of email distribution? Many retailers stay in touch with customers through email, such as digital circulars, weekly newsletters, and sales flyers. Almost any email marketing package should be able to help you track and interpret basic data like open rates (how many people are reading your email), CTR (click-through rate — which links are being opened), and even heat maps (which parts of the email are customers focusing on and which are they ignoring). This can help you fine-tune your offers and deliver more effective promotions to help get customers to order online or make the trip into the store.
SKU interaction data. With the right sensors and analytics, you can see things that are typically “invisible” to the POS terminal. For example, what products do customers physically handle, whether or not they purchased? How long did they dwell with a particular package? Did they return it to he shelf and choose something else instead?
Footfall data. Finally, how well do you understand the foot traffic in your store? If you only know they enter, look, buy, and leave, you should look to various kinds of beacon technology to better monitor your customers. There are active beacons that can track the comings and goings of visitors, as well as more passive tech like wi-fi that can geo-locate people and monitors their comings and goings. With the right tools, you can find out how long people spend in your store (also know as dwell time), how that time varies by day, week, and time of year, which parts of your store get the most attention, and more.
Find out how an IoT platform like Canopy can provide help with retail analytics in addition to other features such as digital signage and unattended device management.