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Using analytics to change retail outcomes

By Retail Technology | Friday February 22 2013

K.R. Sanjiv and P. Srinivasa Rao of Wipro Technologies argue that analytics are the key to developing competitive differentiators in an increasingly diverse and complex retail market

Radical changes are occurring in the retail environment. Markets are becoming saturated as growth slows down. Product lifecycles are shrinking making it difficult to predict what the consumer will want next. Consumers are shifting to online shopping and mobile channels, turning loyalty into a forgotten customer attribute.

That’s according to K.R. Sanjiv, senior vice president and global head of analytics and information management for business and technology consulting and IT services provider Wipro Technologies. “Leaders in retail are questioning the tools and skills they have to analyse, interpret and overcome the challenges,” he said, “asking, ‘how can I enhance my decision support capabilities and become responsive to changes in markets and customer behaviour?’ The answer is analytics.” 

Providing answers for competitive advantage

Sanjiv added: “It may not be the answer to all the problems in the retail industry, but it is increasingly providing early adopters with answers, helping to catapult them to the top.”

P. Srinivasa Rao, vice president of analytics and information management for Wipro Technologies, takes up the argument. “As data proliferates rapidly, analytics stops teams from becoming overwhelmed. It enables them to act quickly and smartly to improve sales, customer loyalty, margins and operational efficiency,” he said. “The retail industry has championed and used analytics for years, and been very smart in doing so. It realises the value it can give to understand what, when, where and how much should be on retail shelves.”

The analytics experts said now it needs to make the step from understanding the customer to predicting what he or she will buy next. “Retailers should be able to say, ‘I know what my customer will want this evening and I’ll have it in the store by this afternoon,’” added Rao. “This is the measure by which bottom lines will be built or destroyed.”

High tech in a high stakes business

Retailers are already warming up to the idea of using predictive analytics to stay competitive. As shown below, a recent study by RIS News in partnership with Wipro confirms that analytics has increased its share of the IT budget for approximately 60% of retailers over the past three years.

Here is a selection of process areas where Sanjiv and Rao say analytics can be meaningfully deployed:


  • Driving customer experience: as competition grows, analytics answers questions such as, “how do I drive customers into my store and increase engagement? Can I use important events, such as birthdays and anniversaries, to increase sales and will mobile offers help?” Retailers must ensure that the customer experience across online and in-store channels is seamlessly integrated.
  • Enabling improved financial decisions: as margins in retail shrink, analytics is increasingly being used to drive critical decisions, such as whether to open new stores or close existing unprofitable stores, or work out which products are most profitable.
  • Managing merchandise replenishment: most retail operations use a combination of historical trends, intuition and plain guess work to decide on the merchandise to stock, leading to hasty decisions when stock fluctuates. Analytics is helping retailers make smarter and more effective decisions regarding, for example, replenishment of SKU [stock-keeping unit] types and volumes.
  • Accurately uncovering store requirements: it is often difficult to gauge what is happening within your own store. By the time data is available and a decision is taken, the environment has changed. Analytics can tackle issues such as stock optimisation between stores and create promotions based on stock movement and customer behaviour.
  • Fine tuning the supply chain: analytics is providing crucial input towards more effective supply chain management, giving retailers steer on issues such the need to see a global view of their stocks, or the opportunities to tap vendors across geographies for volume discounts. 


Quick wins that create the future 

Rao added: “Analytics is not only about technology, hardware and data. It requires a cultural change in thinking. Therefore, support for analytics must be business-driven, not IT-driven.”

Snajiv concluded: “The other half of success is rooted in retailers being able to invest in process, technology, mathematical and behaviour models. Staff with backgrounds in sociology and psychology should be hired to provide a full picture of consumer behaviour. This creates an organisational structure that puts analytics at the centre of operating DNA. Above all, the effort should be powered and propelled by business goals.”

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