Rapid advancements in technology over the past decade have made it possible for retail managers to collect, condense and categorize information in a highly efficient manner. However, the ability of the decision maker to correctly interpret this information has improved very little. The accurate interpretation of information goes beyond the ability to correctly read rows and columns of numbers, percentages and absolute values. It begins with an understanding of where the information comes from, how it is obtained, and whether or not it is relevant to a particular business decision.
One problem retailers' face today is the impersonal, transactional nature of the shopping experience. In effect, customers pass through stores anonymously, forming little or no relationship with the retailer. Decision Support Systems (DSSs) offer a way to improve a store's effectiveness and efficiency and to build and direct their marketing strategy based on customer needs and preferences.
Analytics form the core of DSSs which help retailers realize advantages in inventory management, buying, sales and marketing, and store productivity.
The key decisions relevant for a retailer pertain to management of the merchandise mix. Retail Managers need to make complex decisions on the brands stocked, the product depth, width and support. Modeling the merchandise mix will allow for such decisions to be made intelligently while ensuring that customer preferences are catered to, maintaining low inventories, and improving store productivity.
All in all, analytics will serve to be the backbone of intelligent retailing decisions, in this era of increasing competition and choice for the customer. While analytics ensures effective use of data which is collected, it also renders itself to the tasks of data collection and maintenance. The competitive advantage for retailers will be the ability to devise innovative means to capture data from customer touch-points cost effectively, and channeling such data into actionable insights through analytics.
2000-10 DecisionCraft Inc.