Baseball’s great accidental philosopher Yogi Berra once said, “If you don’t know where you are going, you might wind up someplace else.” In the retail business, knowing where you’re going means understanding sales, inventory, promotions, pricing, and assortment.
How do these considerations change by product? By store? On Black Friday? It’s hard enough for a bodega shopkeeper to keep track of all of this information accurately and efficiently, let alone a regional, national, or global retail business. Retailers and suppliers alike need a complete view of the forces that shape their businesses, so they can harness those they control and manage the ones they do not.
Many firms have adopted an inside-out approach to leveraging data and analytics, often starting with organizing their own information through data warehousing. Big data technologies may be employed for transactional or shopper data.
Summarizing and reporting on this data often yields many interesting insights, but don’t stop there! Having a diverse set of relevant data, coming from both inside and outside an organization, often matters more than sheer volume. Start with your partners. Critical business decisions, such as supply chain and promotional considerations, are often made collaboratively.
After all, suppliers and retailers need each other. Fusing supplier and retailer information together, for example for budgeting and planning purposes, can be an effective way of discovering and executing high-impact changes through collaborative effort.
This leaves rest of the world: the economy, the weather, social trends, the competition, and the billions of people that are currently not your customers. An integrated, shared view of the broader retail environment will help you and those you collaborate with to make sound strategic decisions. A complete off the shelf solution does not really exist, for every business is different.
Don’t despair, however: you don’t have to start from scratch. Many useful data sources, such as census and macroeconomic information, are available for free and easy for analysts to use. Fused social media data, including engagement and sentiment information, are also available. Finally, a number of data analytics companies offer custom solutions for retail.
Having worked from the inside out, the final step is to turn data into competitive advantage through sound decision making. Focus on key business problems, which may involve coordinated action with partners, and leverage your data by combining analytics with human wisdom.
Many retail businesses are not seeking automated systems in all cases; rather computer assisted processes. A store manager can use suggested orders from an analytics system as a guide and then adjust based on local conditions that the big brain in the sky has no knowledge of: the traffic jam, the high school football game, the store appearance, prom season.
When you and your partners have a shared view of the competitive environment, you can focus on the issues that matter. Analytics on a diverse set of data produces the trends, insights, and forecasts that enable better collaboration, better strategic decisions, and better operations. It doesn’t have to be complicated: start with the business decisions that matter and work from the inside out. A broad set of data unified by analytics, is a winning combination.
This post originally appeared as a Tech Guest Viewpoint article at Chain Store Age.