Unlocking the Predictive Value of AI in Retail

Unlocking the Predictive Value of AI in Retail

Data strategy holds a huge store of value for the retailers. Unlocking the predictive value of retail data needs backing from a strong intent to accomplish the business outcomes. There are plenty of insights concealed in the regular data collected from various sources, which might be pure gold! However, it's time-consuming and requires investment to extract.

This is where AI & Machine Learning come into play. AI is like an umbrella for a variety of techniques that enable machines to do cognitive tasks. This can include observing, moving, reading, or analyzing data to human-level perfection or even better!

If you think AI is just meant for influential tech companies, you can't be more wrong! It is already disrupting every sector, from finance to healthcare to manufacturing, and the retail industry is no different.

Predictive AI Analytics + Retail Industry- A Great Combo?

Analytics can be best defined as any effort to analyze data to discover underlying trends. There are several forms of data analytics, and today, we are going to take a closer look at predictive analytics and its implications on retail.

Predictive analytics can be the magic wand to forecast your company's future! Predictive analytics, for example, can be used to answer queries such as, "What is the likelihood of your customers to repeat-buy your product next month?"

Retail analytics involves gathering useful data on supply chain activity, inventory levels, consumer demand, revenue, etc. All of these can be utilized for a number of purposes, such as sustaining procurement levels and concluding important marketing decisions. There are multi-faceted advantages of retail analytics- from improving scan-based trade or to guiding a sales strategy.

Top Benefits Of Predictive AI In Retail

• Behavioral Insights

The first & most obvious benefit of leveraging retail analytics is that it provides solid & practical insights when it comes to customer behavior.

You can easily manage every aspect of the business when you are aware of the RoI and it is possible with retail analytics. Retail analytics provide merchants with a highly precise picture of what will work & what won't, by analyzing social reactions to a product or a campaign's impact on the conversion rates of the store.

• Improving Marketing ROI

As previously mentioned, retail analytics aid in monitoring and improving return on investment in a variety of business aspects. When the store manager can track the impact of in-store influences on purchasing behaviors, he can tailor future promotions suitably.

It will be possible to draft efficient campaigns and optimize marketing endeavors depending on what resonates with the target audience. Retail analytics also aid in determining the feasibility of consumer loyalty plans, periodic discounts, the best one-time deals, and other similar initiatives.

• Optimizing In-Store Operations

The in-store metrics of retail analytics provide a better overview of consumer activity within the store. Monitoring their buying habits and store durations can reveal a plethora of prospects for all types of retail businesses, from single stores to vast shopping complexes.

Managers can better perceive: i. The best store layouts, ii. Optimized product placement to grab more eyeballs, iii. Service delivery quality & how to make it better

Retailers can utilize these analytics to examine and optimize the best staffing, the most enticing design strategies, and the most innovative sales tactics.

• Targeted Communication (Online Retail)

We are living in a world where the personalization of services distinguishes any business from its competitors. It is found to be 20% more effective if compared to traditional marketing.

And, guess what, data analysis has made it possible! Nowadays, retailers gather data at every stage of the purchasing process. So, every time you see an advertisement for the cloth you swiped through a few days back, you should know why.

• Enhancing Loyalty

Retail analytics serves to strengthen the interaction between the visitors and the store by picking up the smallest details of the visitors. It enables the retailer to deliver the best experience to every customer by providing them little moments of delight!

Retailers may display appropriate products and provide exciting offers to the most receptive audience, improving their chances to make a purchase. The marketing material can also be tailored by learning from the purchase history & preferences. This also improves brand recall by making customers feel "homely" and valued. Quite naturally, this boosts their loyalty to the store.

• Predicts Demand To Better Manage Inventory

Data analytics assists retail organizations in understanding their consumers' purchasing demands. Thus, they can focus accordingly on the areas of high demand and manage inventories better.

• Price Optimization

The popular practice is that the prices of products are cut after the buying season concludes and the demand is on the wane. However, predictive analysis can help a great deal in managing the rise & fall of demand. Walmart, for example, has built the world’s largest private cloud network to track transactions(in millions) in real-time regularly.

• Determining Location For New Outlets

This is very beneficial for retailers who want to expand and open a new store in a particular location. Data analytics assists retailers in determining where most of their customers will flock. Analytics also provides a crystal clear idea of the market circumstances, purchasing power, and demographics of a region. This allows retailers to opt for places that are suitable for operating a new retail shop and pull maximum footfalls.

Closing Note:

The retail industry confronts issues such as a lack of security and data privacy. There is also a shortage of skilled professionals who can analyze data and incorporate the insights garnered through analytics in operation strategies.

However, with proper implementation, data analytics assists in increasing consumer loyalty, promoting brand image, and a plethora of other aspects. With technology(read AI) in the limelight of the retail industry, it is logical to assume that data analytics will continue to play an important role.