Challenges, Opportunities and Outlook of Analytics in Retail Industry
Submitted By: Group 7
ROLL NUMBER| NAME|
65| Vishal Nigam|
57| Shveta Dang|
48| Riju Mathew|
38| Padmanava Gupta|
36| Nidhi Babbar|
27| Kavita Chatterjee|
Date: 23rd April, 2013
1. Executive Summary
3.1. Analytics and Retail Industry
3.2. Indian Retail Industry – An overview
3. Prerequisites of Analytical Retail
4. Current Status of Implementation of Analytics in the Retail Industry 5. Hypothesis
7.3. Sample Questionnaire
7. Future Prospects
References and Acknowledgements
Analytics have become one of the most powerful tools available to retailers, and are being used for a broad variety of purposes. Organized retail has typically used analytics to optimise various aspects of their business, including Customer Experience Management, Product Assortment, Pricing Optimization, Loyalty program management etc. There are a variety of business questions, where analytics can be used to provide quick and accurate solutions. Analytics have become one of the most powerful tools available to retailers, and are being used for a broad variety of purposes. This report summarizes trends in the use of analytics in retail across eighteen different categories, as well as several more emerging analytical activities. It is based on interviews with major retailers, retail analytics experts, and the published literature.
At every stage, analytics can be used as an aid to take key decisions for 1. Right Prospect / Customer – based on estimates of Lifetime Profitability 2. Right Channel – based on estimates of response rates & ROI 3. Right Message – based on resonance with target customer group 4. Right Offer /Promo – based on estimated response rates & ROI
This whole process is generally described as Customer Driven Marketing. At its essence is using available data about customers’ transactions, demographics & other characteristics, to segment target and personalize the organization’s marketing efforts. The data, to be used for customer driven marketing, is usually taken from the retailers Loyalty Management System. Such systems, were conceptualised as being, simply an incentive for occasional shoppers to convert to loyal shoppers. One major issue regarding analytics is that retailers may feel as if there are too many analytical options to explore. The breadth of analytical processes and applications suggests that retailers need to selectively target investments in analytics based on their strategies and industry positions. In a difficult economy, retailers may also need to adopt first those analytical applications that have saved money for other adopters, including pricing and assortment optimization. There is little doubt, however, that the aggressive adoption and exploitation of analytics has led to competitive advantage among some of the world’s most successful retailers.
2.1 Analytics and Retail Industry
Retail is an industry that is in a constant state of change. Increasing competition, a wide array of product offerings, increasing customer sophistication, multiple touch points to the customer, and consumer complexity are just a few of the many examples that constitute a dynamic and constant state of change in the area of retail sales. As the population continues to increase and consumers are presented with more choices, the numerous challenges that a retailer faces become more pervasive. To stay competitive, retailers must take an analytical, guided, and prescriptive approach to better understand their business and anticipate customer behaviour. To stay competitive, retailers must understand not only current consumer behaviour, but must also be able to predict future consumer behaviour. Accurate prediction and an...