Big data in the retail industry has introduced a scientific component to the marketing campaigns. Brick and mortar stores are facing immense challenges from the e-commerce giants, the startups, dynamic pricing and the growth in thrift shopping. Further pressure has been added on the retail industry due to the pandemic that led to closing down of physical shops and customers going online to make their purchases. In such a state, retailers are eager to get all the help they can to stay afloat by satisfying their customers. Big data analytics in retail is giving that benefit to retailers, hence smart marketers more than ever are using the data to test and devise their strategies.
So while the data science in retail will never be able to replace the creativity that goes in the retail marketing campaigns, it will surely provide the retailers with the tools and in-depth knowledge about the customers and the market to perform better. Big data can solve quite a few issues faced by the retail brands and help them to boost their sales, customer satisfaction and eventually, ROI.
What is Big Data Analytics in Retail?
Big Data can be described as a large volume of data that is studied to uncover the trends, patterns and associations of human behavior and interactions. Technically Big Data is defined under three pivotal factors:
In the retail sector, big data can be associated with finding out and analyzing the data to achieve an in-depth understanding of the shoppers. Furthermore, use retail data analytics to create marketing and other strategies to attract new customers.
With the use of this data science in retail companies can create recommendations for customers based on their previous purchases. This will allow companies to offer a personalized shopping experience. Analysis of these large data also enables the retail to forecast trends, understand the market and make strategic decisions for better sales and customer engagement.
Why Big Data in the Retail Industry is Becoming Important?
- In 2019 the retail industry global big data analytics was valued at $4.43 billion according to allied market research.
- Global Big Data Analytics In Retail Market an industry analysis and forecast 2020-2026 reported in the Retail Market Big Data Analytics’ size is likely to be $14.1 billion by 2026. The market growth is rising at 23.4% CAGR and estimated to stay the same during the forecasted period.
- Though during the year 2019, the supply chain management in the retail market share saw the most use of big data analytics. During the forecasted year, i.e.2020-2027 the customer analytics segment will experience maximum growth. It will be the result of the requirement the industry needs to get valuable insights into the purchasing patterns, preferences and behavior of the customer.
Despite the COVID-19 has affected the retail industry due to the lockdown, the report states the retail companies will continue to spend significantly on big data analytics.
The Use of Big Data Analytics in Retail Industry
In retail big data analytics can improve business efficiency significantly and stay ahead of the competitors. As a result, many retail companies are using the big data mining procedure to get a better insight into the business. Some of the ways the retail industry is using big data are:
Predicting the Spending
Loyalty programs are used for collecting big data in the retail industry. Now, credit card transactions, user log-ins, IP addresses etc are used. Based on this information, the retail house can analyze the growth and ebb of the shopping and how the customers are spending. The history of the customer can be used then to predict their future spending and make personalized recommendations. It has been studied that Amazon used search histories and purchases to recommend items to the customer, and they generate 29% of the sales through this recommendation channel.
Offering Personalized Experience
With customer satisfaction becoming the core of any business now, the retail industry needs to offer the same, if not better service. With big data science in retail, they can offer customized support and benefits to the customers. For example, if a group of customers purchased bad products and needs to be called back, the retail company can contact those customers who bought the faulty products. By emailing these customers, the company gives them a heads-up about the situation instead of just offering a blanket email.
Forecasting the Demand
Along with big data, other algorithms allow the retail company to analyze the social media and browsing of the web. These can enable the company to predict the next in trend item that will be in vogue in the industry. Many companies are these days collaborating with other channels and media to predict and customize products. For example, often hair care companies anticipate the weather and start marketing items, in-store promotions and drive sales that cater to that season, like anti-frizz shampoo and other hair products during the summer that raises the humidity. Often there has been an increase in sales when big data analytics in retail is used to forecast the demand for the products.
Journey Analytics of Customers
A customer goes through several channels of research before a purchase. Since it is not a straight line, i.e. point A to point B. Hence the only way to understand it is by researching the customer’s journey and that can be facilitated by big data analytics in retail. The data can offer the retailer to get answers to questions like:
- What the customer is looking for
- What kind of product information customers seek?
- Where and why the retail company is losing the customers
- What are the features of a product that inspires and attracts customers to make the purchase?
- What are the effective ways to reach the customers?
Once the retailer receives these answers, the customer’s journey path can be traced, offering a better search and purchase experience with the big data.
Apart from these, the big data in retail data analytics provides the retailer to:
- Optimize the pricing bases the upcoming and decreased trends.
- Streamlining operations of back-office by maintaining the stock level from the gathered data of the registered products.
- Better customer experience by unlocking the customer data from call records, social media comments and in-store footage.
Wrapping It Up
Big data analytics in the retail industry is playing a significant part in shaping the future of the retail sector. With customers’ satisfaction being at the core of every service, the retail industry needs to offer the customers with promotions and products that are tailored for them based on their purchasing habits and preferences. The individual focus will eventually increase customer satisfaction by offering the in-trend products, thus brand loyalty and revenue of the company.