Benefits and Types of Retail Analytics Tools
Retail companies rely heavily on data to make marketing decisions, increase customer satisfaction, mitigate risks, and meet other business goals in the long run. But gathering and analyzing large volumes of data can be quite challenging, particularly as a company expands. That’s why investing in a retail analytics platform has become important. The software can make this process hassle-free, accurate, and quick for retailers, contributing to their growth and profitability.
Retail analytics – What it is
Retail analytics essentially involves collecting and actively interpreting data from different sources. This data could be related to consumer behavior, trends and patterns related to shopping, or other details about a business’s customer base.
Benefits of retail analytics tools
While gathering and interpreting data is essential, it can be highly time-consuming and error-prone when done manually. This is where retail analytics tools enter the scene. They not only save time and prevent manual errors but also offer a range of other benefits.
- Offers personalized product recommendations
One of the best advantages of retail analytics tools is that they help businesses understand their customers’ experiences and consumption patterns. This helps them better predict which products people are looking for and accordingly recommend options.
A few years ago, retailers would do a lot of guesswork when deciding which products to promote and which ones to discontinue. This approach has undergone a steep change since the emergence of retail analytics. These days, computer software systems provide accurate information about whether a particular product’s demand is high or low and if its demand changes during a particular season. With such detailed insights, retailers can confidently decide which products to restock, take off the shelves, and market more aggressively.
Knowing one’s target market is crucial to ensuring a profitable business. It starts with understanding the target group’s demographics, such as age, gender, location, and profession. These details are difficult to procure manually, but a retail analytics tool makes it easy. With such information, one can create a marketing and sales strategy that maximizes profits.
Retail analytics platforms can help a business get insights into how competitors have priced their products and whether or not those pricing strategies are working. They can also help understand their consumers’ price tolerance level or the maximum price they are willing to pay for a product. This amount is based on the difference between the price quoted and the lowest price at which the product is available in the market. Based on such insights, the business can then easily determine the ideal cost of a product and ensure they earn profits and retain customers.
Types of retail analytics tools
Every retail analytics software has unique features and templates and works differently, so businesses must choose wisely. While some may be suitable for physical stores, others are more applicable to e-commerce websites and online retail platforms. Knowing the different types of retail analytics tools and their working mechanisms can help retailers select the most ideal option for their business.
- In-store analytics tools
These are essentially POS systems and in-store video cameras that offline retailers can install at their stores to gather qualitative data. For example, they can understand the average demographics of their target group or find out which products or displays attract the most attention. - Web analytics tools
These platforms track consumers’ digital footprints using cookies and other mechanisms. Doing so helps the business gauge what landing pages visitors linger on and the source that led them to these pages. Accordingly, they can determine the positioning of their ads and products on their official and third-party websites and finalize the prices. - Customer analytics tools
The software collects data from the applications, systems, and devices customers engage with the most, such as phone logs, POS systems, and websites. Based on this data, retailers can not only understand what products are popular but also the reasons for their popularity. It also helps understand why some products are exchanged or returned frequently and what modes of client communication, such as phone, chat, or emails, work best. - Merchandise analytics tools
Retailers can use these platforms to assess whether they arrange products correctly on the shelves to attract the maximum number of customers. They can also gain insight into what offers, packages, or discounts best drive consumers to purchase and whether they need to change their profit margins.
Some of the best retail analytics software solutions available today are easy to use, scalable, and highly accurate, while also being reasonably priced.
- Looker
- Spotfire
- Board
- MicroStrategy
- Sisense
- Lightspeed Retail
When investing in a retail analytics tool, businesses should consider their requirements, like whether they have offline or online stores (or both), their budget, the type of merchandise they offer, the audience they would like to target, and the shelf life of their products. They should also consult other retailers and discuss the best retail analytics software with them. It even helps to check out the chosen retail analytics tool’s online reviews to make informed decisions.
