What are analytics in retail, and why is it important?
Retail in analytics refers to collecting, analyzing, and interpreting data from various sources within a retail organization to gain insights into customer behavior, sales performance, operational efficiency, and other critical business metrics. Retail analytics aims better to understand retailers’ business, customers, and operations, enabling them to make data-driven decisions to improve performance.
It is critical for planning tools to include retail analytics for retailers looking to gain a competitive advantage and improve their performance by leveraging data and insights to inform their decision-making and drive growth.
Why do so many retailers struggle with Analytics for retail?
The top three factors are listed below:
- Business process: Retail business has changed at a breakneck speed. The way you used to run your business is no longer relevant in today’s competitive and omnichannel environment. Many retailers struggle with a lack of expertise and resources to effectively analyze and interpret data in a way that’s applicable today.
- Data Integrity: Retailers often struggle with collecting accurate and complete data from multiple sources, making it difficult to draw meaningful insights from their data. Moreover, many analyses take place in Excel, which can be error-prone.
- Data Integration: Integrating data from different sources and ensuring data consistency can be challenging, especially for retailers with multiple store locations or an omnichannel presence. For many, it’s often manual and often out of date for businesses to act promptly.
The complexity and diversity of data in the retail industry make it difficult for retailers to effectively leverage retail analytics in a consistent and timely way that supports a business process relevant to today’s competitive environment.
How do we overcome these issues?
Every architect starts with a blueprint before they build. In retail, that blueprint is your business process. Once you outline your business process, you can more easily identify the Retail Analytics you need to support each process step.
Your business process will help you standardize the performance metrics you need to drive your business. Furthermore, it provides you with a structured and consistent approach for collecting, processing, and presenting data and information within your organization. A business process within your planning tools with standardized reporting that supports your business objectives enables decision-makers to make informed decisions based on accurate and up-to-date information.
Standardized reporting typically involves using defined methodologies, templates, and definitions to ensure data is collected and reported consistently across the organization. It also involves using technology and tools like data warehousing, business intelligence software, and reporting templates to automate data collection and analysis and present information in a standard format.
Standardized reporting supports an established business process by:
- Defining reporting requirements and goals by asking, “what are we trying to accomplish with this report?” What decisions are made using this information? “What insights will help the organization achieve its goal?”
- Establishing data collection processes – Data consistency and reliability are critical. Data accuracy enables trust and, in turn, improves productivity. And more importantly, decisions are based on accurate information.
I have seen variations in executing Standardized reporting, but this is my take on it.
A well-designed business process with standardized analytics can help organizations improve data accuracy and reliability, reduce the risk of errors, and support informed decision-making.
Standardization improves productivity in the workplace by eliminating wasted time and providing a common framework of data delivery for users to understand and act upon quickly.
This is a recurring theme when we conduct business process reviews for our Planning tools with clients. There is always a minimum of a week of lag between the decisions made during these business review meetings and the time it takes to analyze the action impact. I asked about the team’s prep time needed for an assortment planning review. Invariably, the planning team answers: “they need to rerun their Revised Plan for a more accurate open-to-buy.” And from the Buying team: “they need to spend a week compiling data and formatting it; they will create posters and bring clothing in to show the assortment.”
Cohn’s Law suggests that the more time you spend reporting on what you do, the less time you have to do anything. Isn’t the time better spent on actioning to the decisions of these meetings rather than pulling data?
Give time back to your Planning & Buying team.
Automating and standardizing your analytics and reporting is important for retailers because it provides a common understanding of performance metrics across the organization; it enables effective decision-making and supports continuous improvement by providing the timely data and insights needed to identify areas for improvement.