Retail has been around ever since mankind started bartering. The earliest transactions were very specific to the individuals buying and selling, then someone had the bright idea to open a store. Those transactions were a little more generic, but the store owner still knew his customers and what they wanted. As the chains rolled out, customer intimacy was sacrificed for scale, and retailers began to rely on segments and clusters. But thanks to the widespread availability of data and the technology to convert said data into information, retailers are getting back to details.
The retail industry is following a maturity model for analytics that is has progressed through five stages, each delivering more value than the previous.
Store Analytics
Brick-and-mortar retailers (and pure-play catalogers as well) that collect anonymous basket-level data are able to get some sense of demand to help with allocation decisions. Promotions and foot-traffic can be measured to understand marketing effectiveness and perhaps focus groups can help test ideas. But decisions are influenced by the majority, using faceless customer segments and aggregated industry data points. Loyalty programs help a little, but in many cases the cost outweighs the benefits.
Web Analytics
The Web made it much easier to collect data on specific, yet still anonymous consumers using cookies to track visits. Clickstreams and product searches are analyzed to understand the purchase journey, gauge demand, and better understand up-selling opportunities. Personalization begins to allow retailers target market consumers with recommendations.
Cross-Channel Analytics
This phase is a minor one, but where most retailers probably sit today. They are able to use information from one channel to bolster activities in another. However, there are technical challenges combining data silos so its not an easy task. But for those retailers that are able to perform analytics on both sources of data, the pay-off is pretty nice. Revenue per customer begins to go up as customers have a better brand experience.
Mobile & Social Analytics
Big data technologies are enabling a 360-degree view of the customer by incorporating psychographic data from social sites alongside traditional demographic data. Retailers can track individual preferences, opinions, hobbies, etc. in order to understand a consumer's motivations. Using mobile devices, consumers can interact with brands anywhere, anytime, accessing deep product information and reviews. Mobile, combined with a loyalty program, presents an opportunity to put shopping into geographic context, understanding paths to the store, patterns within the store, and be an always-on advertising conduit.
Omni-Channel Analytics
All this data along with the proper technology represents a new paradigm in which the clock is turned back and retail becomes very personal once again. Rich, individualized data better illuminates demand, allows for highly localized assortments, and helps tailor up-selling. Interactions with all channels help build an accurate profile of each consumer, and allows retailers to tailor the retail experience to meet the heightened expectations of today's sophisticated shopper. And of course this culminates in greater customer satisfaction and business profitability.
