Predicting a Retail Transformation
Sandeep Dadlani, Executive Vice President, Head, Retail, CPG and Logistics & Head of Americas talks about predictive analytics, which is transforming the retail industry
Buoyed by digital convergence, social media, Big Data and new technologies, the fast-changing retail landscape is at the cusp of an important transformation. Retailers, who were known as 'artists' for selling their merchandise on creativity and experience instead of math and science, now must cater to a new generation of buyers who hardly enter a store! To stay ahead of the game, it is imperative for retailers to not only accept the ways of digital shopping but also adopt new business models to attract and retain customers.
Up until few years ago, most company websites displayed a toll-free contact number at the bottom of the web page as the point of contact for customers. Should anything go wrong post purchase, it was pretty much the only way (apart from writing in) to contact the company. Today, thanks to social media, the avenues of communication have increased manifold.
Retailers who are using these points of engagement to their advantage are already marching ahead. For example, a customer might contact a company via social media to let them know about a product/promotion they have enjoyed or a grievance. The retailer of today uses this data to learn more about that customer's expectations to tailor-make offers and promotions in future. This, not only generates a greater brand recall, but also increases brand loyalty.
Online commerce is also entering a new and exciting phase. A few years ago, multichannel integration meant that a customer would shop online and collect the item at the store. The retailers today, are taking multichannel integration to the next level - they ship one-time-delivery items even to holiday destinations! Their data processing is sophisticated enough to know that the delivery address isn't likely to be used again - at least not until next summer.
Predictive analytics has been around for a while as a technology, but organizations have only just started to see its benefits in business. Retailers are keen to use the treasure trove of Big Data that already exists. It's just a matter of leveraging it as effectively as possible. An example is a store that is able to tell when a certain customer strolls in (or is online) and immediately predicts what he/she is likely to buy, thereby making a targeted offer. It's far removed from 'art' but then again, they are catering to customers who do most of their shopping on their iPads!
Furthermore, predictive analytics is helping businesses expand beyond retail. In this challenging business environment, a lot of retailers are interested in getting into new business lines. For example, a retailer might be interested in expanding into the financial services sector. This retailer must therefore be able to predict if its customers will also be willing to spend on say financial planning and transactions, banking products, loans, and mortgages from that retailer. This is where analytics plays a crucial role, helping companies transform and expand new business lines.
The retail industry is at an inflection point today. New avenues are offering great opportunities for retailers to transform their businesses. Technology used to be a big enabler of a retailer's strategy. Today it is the strategy.