In the cut-throat world of retail, BI has become the key competitive differentiator, especially considering continuously changing consumer demographics and the fact that the consumer is indeed king, now more than ever before.
The following are the well-known areas where BI can assist organisations in any industry where sales are made to consumers:
- Merchandising: Analysis of past sales and forecasts of future customer behavior leads to more accurate allocation of merchandise to outlets. Assortment and size optimization based on customer demand patterns ensure that the correct assortments, sizes, and distribution packs are sent to the correct stores. Daily price, seasonal, promotion, and markdown optimization ensure that items are optimally priced. Space optimization ensures that profit per square foot are maximized. Optimized fulfillment ensures that products are replenished based on demand. Accurate analysis also results in a more efficient use of manpower.
- Marketing: By understanding customers better through profiling, segmenting, gauging propensity, or using market basket analysis, retailers can create better-targeted campaigns, reducing expenses and increasing response rates, revenues, and gross margins.
- Operations: Understanding and predicting changes in demand by hour, by day, by location, by promotion, by price change, means that the store floors, the call centers and the delivery crews are running at top efficiency and are appropriately staffed.
However, I believe BI can assist retailers even further by analysing supply chains. Just as clients can be analysed, suppliers can be segmented, bad returns should be predicted and popular product lines must be forecasted. This will ensure a fully operational and profitable supply chain. It is time to think differently about business models and to use BI to effectively compete in today’s cutthroat industry.
