The retail industry is rapidly changing, fueled by evolving consumer needs and drastic technological advancements. Nowadays, shoppers need personalized experiences, seamless interactions across channels, and access to various products at competitive prices.
To meet these expectations and maintain a competitive edge, retailers must know how to leverage customer data and data analysis effectively.
This is where retail business intelligence (BI) comes into play.
With advanced BI solutions, your organization can gain valuable, actionable insights into consumer behavior, streamline operations, and make data-driven decisions to drive sales.
In this article, we’ll explore the benefits of business intelligence in the retail industry, its various applications, and much more.
Let’s get into it!
What Is Retail Business Intelligence?
Retail business intelligence, or retail BI, essentially means transforming data into useful insights within the retail sector. This process involves adopting different analytical methods to identify trends and patterns.
Today, there’s a range of solutions available to help enhance your enterprise business intelligence:
- Data mining
- Text analytics
- Predictive analytics
- Prescriptive analytics
- Dashboards and visualizations
Each of these tools has its own advantages, so it’s crucial to choose the ones that suit your specific requirements.
Different players in the retail industry, such as store owners, chain managers, suppliers of consumer goods, and commercial real estate (CRE) professionals, can all reap the benefits of retail BI solutions. More on this below!
One important thing to note here is that BI does not advise retail store owners on what to do or the implications of making a particular decision. Instead, it offers descriptive insights into current and past events, shedding light on the factors contributing to the present situation.
Important Metrics in Retail Business Intelligence
Regarding retail BI, we can’t afford to overlook retail metrics – measures that gauge the effectiveness and performance of different retail activities.
Here are a few important metrics you should include in your next reports:
- Comparable store sales (comps) and sales per square foot;
- Average basket size and transaction value;
- Brick-and-mortar visitation trends;
- Conversion rate – i.e., the percentage of visitors who make a purchase;
- Year-over-year (YoY) and year-over-three-year (Yo3Y) sales and visit growth;
- Cost of goods sold (COGS);
- Customer retention rates;
- Retail competitive intelligence about relevant markets;
- Customer habits and profiles;
- On- and offline website traffic and customer engagement;
- Inventory turnover (how quickly inventory is sold);
- Gross margins return on investment.
Key Benefits of Retail Business Intelligence Solutions
Business intelligence offers substantial benefits to the retail sector. From enhancing customer satisfaction to revealing market trends, the potential is vast with the right retail BI solution.
Let’s explore 3 core advantages of retail intelligence below.
- Optimize business operations: Efficient day-to-day operations often translate to resource optimization, enhanced store performance, and minimized waste. Retail BI solutions assist in achieving these objectives. By pinpointing bottlenecks and inefficiencies, these tools pave the way for operational improvements. For instance, BI tools facilitate business process automation, leading to faster and more precise outcomes.
- Improve customer satisfaction: Enhancing customer experience helps retain customers and foster brand loyalty. BI tools aid retail companies in defining audience preferences and providing personalized offerings. Moreover, they will identify and target potential buyers. With all this insightful data, you can understand customer interactions with products, their preferred platforms, and shopping habits. This enables personalized marketing campaigns, ultimately boosting customer satisfaction and loyalty.
- Reduce cost: BI drives significant cost reductions by pinpointing areas for expense reduction, such as in the supply chain, inventory management systems, and marketing campaigns. For example, BI helps identify supply chain inefficiencies, streamline logistics, and reduce shipping costs. It also optimizes inventory levels, preventing overstocking or understocking issues that lead to financial losses.
Applications of Business Intelligence in Retail
Depending on your company’s size, it’s possible to successfully harness sensitive retail data as long as you’re equipped with the right software system.
Try out the 4 following ways to harness retail business intelligence for your company.
1. Create Personalized Shopping Experiences
Improving customer engagement leads to higher sales performance, but how do you create that exceptional customer journey? The key is to have a deep understanding of your customers.
Leveraging BI solutions, your business can easily track users’ browsing habits and purchase decisions, thereby understanding their preferred products, shopping preferences (online or in-store), product expectations, favorite brands, etc.
Knowing these customer needs allows you to tailor special offers based on their interests. Instapage reports that 44% of shoppers are inclined to make repeat purchases when offered a personalized shopping experience.
2. Enhance Marketing Efforts
Business intelligence gives retailers answers to important questions that truly matter when it comes to developing an effective marketing campaign, such as:
- What products are best-sellers?
- What are the demographics of our customers?
- Which retail outlets are driving the highest sales for a specific product?
Plus, through the collection and analysis of historical sales data from various sources like web browsers, social media platforms, email campaigns, and user forums, BI tools empower brands to anticipate consumer purchasing trends. By aligning this information with individual customer personas, your organization can effectively deliver tailored marketing campaigns with great precision.
3. Streamline Supply Chain Operations
Supply chain management systems are complex and involve many different stakeholders, from production to product delivery to warehouses. This complexity often leads to disorganization and underperformance in certain departments.
However, business intelligence tools offer a solution by providing valuable insights from the data generated during daily retail operations. This enables your retail company to detect logistical bottlenecks that require immediate attention, thus streamlining supply chain operations.
4. Optimize Prices
Modern customers are savvy shoppers who seek value for their money. They compare prices online and favor retailers offering competitive prices and discounts. Hence, a store’s pricing strategy significantly impacts its profitability.
Unfortunately, some merchants still rely on outdated pricing methods, basing decisions on past trends or intuition. However, there’s a better way. Business intelligence can help set optimal price points that boost revenue while providing customer value.
Retail business intelligence takes into account several factors when determining product pricing, including:
- Seasonal trends
- Market prices
- Competitor pricing
- Customer behaviors
Note that the frequency of price adjustments is not fixed; it’s an ongoing process requiring you to make data-driven pricing decisions whenever needed.
Major Challenges When Applying Business Intelligence in Retail
Developing a robust retail business intelligence solution presents its fair share of hurdles. Along the journey, there are several challenges to address in order to harness BI technologies effectively.
1. Data Quality and Accuracy
With the vast amount of data generated in retail, including sales transactions and customer behavior, maintaining data accuracy and consistency is no easy feat.
Merchants often encounter disparate data sources and formats. To obtain reliable, actionable insights, it’s crucial to ensure the quality and reliability of the data. This can be achieved by establishing a centralized database, standardizing the data entry process, merging duplicate data, and conducting regular data audits.
2. Data Security and Privacy
Another prevalent challenge for retailers is safeguarding data privacy and security. Retail companies often have to handle large volumes of customer data, both personal and financial, making them prime targets for cyberattacks.
To mitigate the risk of security breaches and data theft, it’s essential to implement robust security measures. One effective strategy is deploying access control, which means implementing role-based access to make sure that users only have access to data and systems relevant to their roles.
Additionally, employing two-factor authentication and biometric authentication adds extra layers of security, verifying users through fingerprints, voices, or facial features.
3. Tool Complexity
Many business intelligence platforms are available for use. However, numerous tools may require specialized knowledge for effective configuration and customization.
One approach to tackle this challenge is to engage a proficient BI team with expertise in implementing such technologies. This saves time and effort while ensuring the tools are tailored to your unique requirements.
Alternatively, opting for user-friendly business intelligence solutions also helps simplify the process, empowering employees to derive meaningful insights independently. Intuitive tools like Microsoft Power BI or Tableau Public offer pre-built templates, allowing for quick information extraction and interactive report creation.
4. Data Overload
As mentioned earlier, retail businesses generate massive data sets, posing challenges in the effective data management and analysis of retail business intelligence software. However, some simple steps can alleviate this issue.
A fundamental practice is to regularly clean and update the database by removing obsolete or outdated data. With a structured and up-to-date dataset, your BI system can operate optimally, yielding valuable information for informed business decisions.
Implementing data visualization tools is another strategy to transform complex data into easily understandable visual formats, facilitating clearer interpretation and analysis.
Top BI Platforms for the Retail Industry
All the benefits and applications discussed earlier would not be possible without the right tools. Let’s take a quick look at 3 leading BI platforms that you can take into consideration:
Microsoft Power BI
Developed by Microsoft, Power BI offers interactive business intelligence capabilities, allowing users to create smart reports and dashboards with intuitive visualization features. It also boasts built-in AI capabilities and pre-built data connectors.
Being part of the Microsoft ecosystem, Power BI seamlessly integrates with other resources such as MS Azure and Microsoft 365. It also ensures end-to-end encryption for real-time monitoring. With Power BI, your retail company can transform large-scale enterprise datasets into informative dashboards and reports, facilitating smarter business decisions.
Tableau
Tableau is a versatile platform providing diverse dashboard development functionalities, consolidating data onto a single platform for extracting actionable insights. With a user-friendly interface akin to Power BI, it simplifies data exploration, supporting a visual query language accessible even to non-technical users.
Moreover, Tableau facilitates real-time raw, relational, and semi-structured data integration. Its automatic forecasting feature empowers users to select from eight time-series forecasting models, streamlining predictive retail analytics for informed decision-making.
Qlik Sense
At the forefront of Qlik’s offerings is Qlik Sense, a robust solution enabling organizations to consolidate all their data sources into a unified view. The Qlik Analytics Platform lets users develop, extend, and embed visual analytics seamlessly into existing applications and portals.
Embedded functionality operates within a shared governance and security framework, making it possible for users to build and integrate Qlik into various applications, information services, or IoT platforms with ease.
Elevate Your Retail Game with Top-notch BI Solutions from Neurond AI
In the competitive retail landscape, propelling your company forward has never been easy. By adopting business intelligence, organizations can improve customer service and get a hold of current shopping behaviors and future expectations.
However, many brands and retail businesses are unequipped to keep pace with ever-evolving technology and consumer trends. Indeed, implementing these new solutions across online and brick-and-mortar channels requires substantial investments in software and personnel.
Fortunately, numerous companies offer tailored business intelligence solutions and are ready to assist you. At Neurond AI, we specialize in harnessing BI tools to transform data into easily understandable information and visuals, ultimately boosting your profits and business performance. We provide comprehensive support in developing end-to-end business intelligence solutions, from initial planning to implementation and beyond. Our services include identifying trends, advanced data analytics, integrating it into Enterprise Data Warehouse (EDW), creating user-friendly dashboards, and more!
Contact us now to get started!