Analytics is key for your omni-channel success
The newest IBM Global Consumer Study reveals that in a single year internet commerce jumped nearly 100 percent, with 27 percent of retail purchases made online in 2013 versus 14 percent in 2012. Along with this remarkable channel-shifting, a historic convergence of technologies is changing how retail business is done. To thrive, retailers must commit to change rapidly and substantially. From the explosion of mobile technologies to the spread of social networks, retailers need to navigate the speedy, endless and evolving trail of communications. With the disruptive nature of the cloud and a new generation of advanced big data and analytics, retailers can not only gain small efficiency points, but leap-frog competitors by delivering more new and expected benefits to customers.
At the heart of all these shifts, customers expect retailers to understand them and their lifestyles, whether in-store or online, listen to them and serve them with the right product and right price, any place and anywhere. The multiplication of retail channels and the increasing use of social media are empowering consumers. With a wealth of information readily available online, consumers are now better able to compare products, services and prices—even as they shop in physical stores. In order for retailers to capitalize on these and other changes in the industry, they need ways to collect, manage and analyze a tremendous volume, variety, velocity and veracity of data. If retailers succeed in addressing the challenges of big data, they can use this data to generate valuable insights for personalizing marketing and improving the effectiveness of marketing campaigns, optimizing assortment and merchandising decisions, and removing inefficiencies in distribution and operations both in-store and online, taking advantage of the huge omni-channel business opportunities.
How can retailers use analytics to capture these omni-channel opportunities?
Insights driven in-store order fulfillment: Amazon is rapidly expanding fulfillment centers and locating them near major metropolitan areas in an effort to locate key, high-demand products close enough to efficiently serve same-day or next-day delivery. Retailers have more limited warehouse infrastructure for their online businesses, but may have a big advantage in many store locations nationally and even worldwide. But now we may see stores remodeled to add direct order fulfillment and stocking in the back-office, limiting the assortments stocked on the floor. The stores can use big data and analytics to analyze the customer data from a wider range of sources than ever before. This analysis includes POS systems, online transactions, social media, loyalty programs and call center records, these insights deepening their understanding of customer path-to-purchase preferences, locations and inventory (how much should they should stock in-store for faster delivery whether the customer purchased in-store, online or through call center?) This can be critical for competing long-term with the likes of Amazon and other resourceful retailers.
Insight driven in-store shopping experience: Retailers are always looking to expand their insights into their customers. Take show rooming for example, many retailers are scared at the thought of shoppers comparing prices with competitors while physically in their store. It is harder for some to accept, but this growing usage of mobile devices for comparison of real-time offers could really benefit many brands that have a physical location. Combine that with online and app-based brand and product touch points and you have an omni-channel experience. IBM Research recently has come out with technology IBM Presence Zones, where retailers are able to gain insight from in-store shoppers and combine with online behavior to better understand their customers. Using this information retailers can personalize promotions and offers across customer touch points and channels of interaction. The customer also benefits as they get a unified experience through omni-channel commerce. The customer is empowered via their mobile device through contextually relevant interactions based on their current locale and previous purchases.
Insight driven personal e-commerce shopping: Customers are always expecting their retailers to understand their needs and deliver personalized merchandise that fulfills their needs. The clothing Retailer, the North Face is taking an unusual approach to boosting their e-commerce sales, they are piloting a digital “expert personal shopper” fueled by IBM's Watson platform. The expert personal shopper application developed by Fluid and powered by IBM’s cognitive computing platform Watson, acts like an online engine which makes personalized recommendations for customers based on their online queries.
- Insights-driven retail merchandizing: Better knowledge of competitive pricing, demand trends and customer buying preferences (online and in-store) can initiate sales and promotions that help avoid losing business. The use of big data and analytics can help retailers build smarter supply chains and optimize merchandising across a multi-channel retail operation. Analytics can help in areas like predicting optimal product pricing based on price and demand elasticity, selecting and localizing the right merchandise for each channel based on a customer’s path-to-purchase behavior, locations and buying preferences.
Retail is in crisis. But it’s a crisis that can stimulate transformational change. Retailers who understand their customers, leverage data and insights to evolve the customer experience, and focus on their differentiators and assets have the opportunity to thrive.
Few useful video links:
- IBM presence zone
- Presence Zone inside Story (IBM Research)
- Fluid Expert Personal Shopper Demo (NRF 2014)
- Big Data & Analytics Transforming Customer Activated Retailer