See Your Customers In High-Definition
Guest Post by
Santhanalrishnan.R, Senior Principal, Infosys
An old statesman once said that "all politics is local." The same could be said about retailing. We live in an exciting age - big box stores offer us every product under the sun in their modern, beautifully furnished outlets. Those chains have achieved admirable economies of scale and can therefore pass the savings on to their customers.
When you take a closer look at each store - you tend to come to a startling revelation. None of these outlets is equal, beyond a point. They all have distinct inventory issues, consumer buying habits, and market vulnerabilities. Only when retailers realize that all stores are local will they get the data-driven insights for which they're constantly searching.
As suppliers to the stores, Consumer Packaged Goods companies (CPGs) are one step removed from the customers who shop up and down the aisles. But they are an important element to the overall effort to achieve the best store-level insights. To many of us, "store level insight" means snapshots of data from the sales force or the sharing of data from retail customers. Other conventional sources of retail insight might be syndicated point-of-sale scanner data and consumer panel data, but neither of these sources is typically store level.
What else do retailers have at their disposal? Well, sales force audits take quite a bit of effort and they lack the desired precision in general. Then there's syndicated point-of-sale or consumer panel data sources. These two methods rely on sampling a few thousand outlets (or a few hundred thousand households at best) to project market-level trends. CPG brands have raised concerns about sample sizes. Plus, the higher the level of granularity you need, the higher the cost. Think about it: All that effort and cost and you're still analyzing the market area, not the outlet itself.
The holy grail of retailing has always been granular level insights into each store. That's become more of a challenge as stores get larger, chains expand, and a handful of CPG companies turns into hundreds of them. If you drill down, you'd want to know what product is selling where and how much of it. You also want to know about the interplay between pricing, assortments, store level displays, and special promotions. These metrics are all important aspect in the formula that influences a product's market share. Granular store-level insights help brands move the right inventory to the right place and drive double-digit improvements.
Still, there's no doubting that achieving store-level insights is a hard nut to crack. Retailers and leaders of the top CPGs both know this for a fact and have confirmed in a recent study by Infosys 'State of the Store'. The challenges are many, from different formats across retailers to the harmonizing of data for different frequencies. The benefits, however, are simply too big to ignore. The leading CPG companies of tomorrow will become that way by deriving competitive advantage through store-level insights.
How they're already achieving this is by leveraging Big Data for their very-local needs. The right cloud-based retail data acquisition platforms come with operational and data management support. Combined with the right analytic themes, these platforms help achieve a broad range of goals, from improved alignment of inventory with sell-out trends to better consumption visibility. What the platform set in motion is a virtuous cycle that delivers better value to all stakeholders.
When brands combine data from local sources with demand signals from other sources (like social media), they better understand localized demand signals, take stock at store level, and suggest incremental orders where necessary. The result is that they improve their organization's responsiveness. In order to achieve high-definition insights into your consumer base, think locally and balance your efforts with the best retail execution tools you can muster.