“At this point in the digital age, acting on ‘gut instinct’ when it comes to making operational decisions are long gone. Today all elements of a business’s operations – design, production, distribution, marketing, customer services – can be monitored, measured and analyzed,” according to Bernard Marr of Forbes.
Today’s retailers use data to develop a deeper understanding of their customers. Using the information collected both online and in physical stores, retailers can predict what their customers are likely to purchase, whether they’ll buy in-person or on their tablet or phone, and which items are top sellers and need more frequent re-stocking.
How the Retail Industry Uses Data
Nordstrom, one of America’s biggest names in retail, is taking innovative steps to appeal to individual customers. The company devotes 30 percent of its budget to technology and even created the “Nordstrom Innovation Lab” to test and develop new products.
The retailer uses state-of-the-art technology to track conversion of customers, time spent in the store, what areas of the store they spend time in, and for how long. The Nordstrom credit card and rewards point system is highly incentivized for both the customer and the retailer. Through this, the company can collect huge amounts of data about customer purchases and preferences in order to best allocate the advertising budget and continue to appeal to these customers.
Additionally, J.C. Penney, a retailer established 115 years ago, realizes that innovation is the only way to survive in today’s evolving marketplace. The company has begun the process of improving its technology usage to increase profits. Jeffrey Davis, the new CFO, predicts that analytics will support the company as it develops its multichannel model. Davis stated that re-allocating a greater portion of the $400 million spent on capital expenditures to technology will lead to lower costs and an increase in sales.
One company that supports these retailers’ businesses also uses data to create better processes. UPS chief information and engineering officer Juan Perez states that they have been using data and analytics technology to improve flexibility, capability, and efficiency, and that the right insight at the right time helps line-of-business managers to improve performance. The aim for UPS is to use the data it collects to optimize processes, to enable automation and autonomy, and to continue to learn how to improve its global delivery network.
Going Forward
When looked at as a whole, retailers’ data tells an important story about customers’ preferences. The companies mentioned here have used these insights and the stories they tell to impact the bottom line. We at TechNexus work with startups that develop technologies that enable retailers to create the connected stores of the future. If you’re thinking about improving your company’s data analytics processes, or want to learn more about the emerging technologies that will redefine retail, let’s connect.