With so much doom and gloom around retail right now, what will it take to have a successful 2019? NA Consulting founder Naeem Arif thinks data utilisation is key
Like many other industries, retail is increasingly data-driven. Faced with key questions and challenges—how to make the most of a promotion, how to encourage customers to buy more often, which new technologies to introduce—few retailers want to rely on estimates or guesswork.
Whether operating online, offline or both, it’s becoming ever more important for retailers to prioritise customer data in strategising for survival and growth.
However, the quantity of available data is vast, and rapidly ballooning. A recent study found that between 2003 and 2008, 14.7 exabytes of new information were produced globally.
To put that in perspective: 1 exabyte is a billion gigabytes. All the words ever spoken by human beings, written down, would amount to something like 5 exabytes. In this landscape, securing the right data and applying the right analysis can be a bewildering challenge.
However, when utilised correctly, retailers can unlock the secrets to streamlining their business operations, maximise their promotions and ensure that their customers remain engaged, inspired and loyal. Here’s how.
The advent of smartphones has revolutionized customer data collection. In the retail sector, the key data stream unlocked by smartphone-use is tracking data.
Smartphones (and all other wi-fi or Bluetooth devices) have a unique fingerprint, called a MAC address. So long as a device is switched on, its MAC address can be logged by sensors. With this technology, it’s possible to track their customers’ movements through the physical space of a store, unlocking a treasure trove of valuable data. Where in your store do your customers go? How long do they spend there? Do they browse once or do they return? How long are they spending at checkout?
Tracking can also identify longer-term patterns, such as whether a particular customer is a repeat customer (although not who that customer is, because that would involve collecting personal data).
The implications of smartphone tracking are far-reaching. With the rich data provided by tracking, retailers can optimise every aspect of store design and layout, from the position of staff to the design and placement of marketing material and tills. Real-time feedback through tracking data enables retailers to confirm that these data-driven changes are encouraging customer spending and curating the best possible customer experience.
Retailers typically employ people-counting technology to measure footfall. With the right analytic approaches, this data has a wealth of applications. For a retailer allocating marketing resources across several locations, strong data and analysis on footfall trends can help determine which strategies will be most effective in particular stores.
Footfall data can also facilitate A/B testing, for example of different window displays. Data from people counters can also help retailers to optimize staffing decisions, by providing detailed and accurate information about peak times during the day or the year. Building on this information, staff rotas can be planned strategically to ensure that customer-to-staff ratios are as efficient as possible.
Online coupons provide lots of opportunities to collect rich customer data. By recording the number of particular coupons used at checkouts, retailers can test which coupons are most attractive to customers, and therefore what kinds of discounts on which products have the most impact.
Online coupons also generate useful social media data, showing the conversion rate for customers who originally expressed an interest in a promotion by clicking on a link to it. In turn, this generates data about which social media platforms drive the most traffic for your company, and when in the day, quarter or year your content drives will have the most impact.
The data available to businesses is vast, so retailers should focus their attention on data relating to specific outcomes. Examples of this kind of valuable data include information on how long customers spend in your store, whereabouts in your store they spend that time, how long it takes them to check out and how close they live to your store. This kind of data is especially rich when it is collected across multiple locations, allowing for cross-store comparison.
Gathering this data is just the first step. The next step is to format it to allow for comparative analysis, against existing data or pre-established benchmarks. Industry averages are key benchmarks: for instance, if your customers are waiting longer to check out than your competitors’ customers, you need to know about it.
Once a trend like this is established in the data, action can be taken, for instance by collecting further data about where bottlenecks are occurring to optimise the checkout process and reduce wait times. To give another example, once analysis of tracking data establishes which part of your store is seeing the least foot traffic, action can be taken either to increase traffic to that part of the store or to minimise the loss resulting from the reduced traffic.
Where web, mobile and social media data allows for the personalisation of the customer experience, it represents a step-change in the value of data collection. For instance, because e-commerce retailers can automatically track whether a particular visitor to their site is new or returning, they can present different information to customers at different stages of the customer journey, boosting conversion rates for each stage.
Through mobile data collection, similar processes can be applied offline too: for example, in locations where a majority of customers have already browsed online, more display-space might be allocated to products which are likely to be overlooked during online browsing, for instance clothes made of comfy fabrics.
We often hear that technology is killing the high street, but I’d argue that technology and data provide the best opportunity for high street retail to evolve.
Those retailers who successfully utilise data-driven strategies and find ways to integrate the online and offline customer experience will build the thriving high street of the future.