In 2020, Walmart implemented a data analytics platform called “Alchemy” to improve its supply chain management. The platform uses machine learning to analyze data from over 200 streams to predict demand and optimize inventory levels. Alchemy has helped Walmart reduce stock-outs, increase the availability of popular products, and optimize transportation routes.
Today, along with inventory management, the platform enables Walmart to personalize its marketing campaigns by analyzing customer data. The company’s success with Alchemy highlights the power of data analysis in the retail industry for driving business growth and improving customer experience.
Let’s imagine you’re a retail leader faced with the challenge of managing grocery and convenience stores during a pandemic. As we all know the shift toward e-commerce is monumental and naturally, it impacts the way you do business.
Managing inventory and logistics poses significant challenges. Customers are flocking to online channels, leaving you to forecast and manage different sales channels. To make matters worse, your suppliers are also struggling to keep pace with the sudden surge in demand. It’s time to rethink your inventory management strategy and streamline logistics to stay ahead of the game.
As a retail business leader, you know that data is the key to staying ahead of the curve. In the post-pandemic world, having a solid data foundation can make or break your success, and falling behind is not an option. Silos need to be shattered and opportunities optimized to unlock the full value of your data. Don’t miss out on the chance to outsmart your competition and maximize your profits. It’s time to take your retail game to the next level.
Data to Dollars: How are Retailers Turning Data into Profitable Insights?
Retailers are held back by outdated legacy systems that keep them trapped in silos, resulting in messy data that doesn’t tell a compelling story. To succeed, retailers must use data to influence customers and add value across the business. With the right data, retailers can predict future trends, manage inventory effectively, and handle multiple sales channels with ease. Simply collecting data won’t cut it – to stay ahead of the game, retailers need to uncover new insights and patterns with the help of machine learning and algorithms. Collaboration with partners and streamlining data sharing are key to onboarding products quickly and staying ahead of the competition.
According to a study by McKinsey Company, data analysis has been a game-changer for the retail industry, helping businesses understand their customers better and make smarter decisions. The study found that retailers that use data analytics increase their operating margins by an average of 60%. Data analytics also improves inventory management, reducing stock-outs by up to 80%, and reducing overstocking by up to 50%.
By better understanding their customers through data analytics, retailers can tailor their products and services, increasing customer loyalty by up to 80%. Data analytics has helped retailers reduce fraud and increase revenue by up to 10% through personalized recommendations and targeted marketing.
Overall, the study highlights how data analysis has transformed the retail industry, enabling retailers to stay competitive and drive growth by using data to make better-informed decisions.
Demystifying Data Sources
A popular supermarket chain faced a recurring problem of stock shortages that led to unhappy customers and lost sales. To tackle the issue, they improved their data governance practices by leveraging a combination of public, proprietary, and purchased data sources.
By analyzing sales data from POS systems, inventory management systems, and eCommerce site logs, they gained insights into customer behavior and preferences, resulting in a 10% increase in sales. The company also used public data sources like weather forecasts and social media to predict demand for certain products.
The retail giant purchased demographic data to better understand their target audience, leading to a 15% increase in customer satisfaction. By aligning their data governance practices with business objectives, the company achieved more efficient inventory management and restocking processes, ensuring they always had enough stock on hand to meet customer needs.
The Art of Data Shaping
A retail company was struggling to manage and analyze a large amount of data from various sources. The solution was to load the data into the cloud while keeping the Point of Sale (POS) data on the premise. Structured data required minimal transformation, while unstructured data was shaped during the ETL Extract-Transform-Load (ETL) process. Data was extracted from its original sources, cleaned up as necessary, and stored in a more structured format in the database.
By managing and analyzing data efficiently, the company was able to make better business decisions. The organized data structure made it easier to extract valuable insights, leading to data-driven decisions. According to a report by McKinsey, companies that use data analytics for decision-making have a 126% profit improvement compared to competitors who don’t. In addition, a study by Forbes Insights found that data-driven organizations are 3 times more likely to make significant improvements in decision-making.
The Reservoir of Digital Insights
In retail, data comes in various forms and must be stored appropriately based on its structure. Structured data is already formatted and stored in databases, while unstructured data like social feeds, videos, and digital images are stored in blob or file storage.
To improve online shopping experiences, retailers can use a data lake to gather and analyze structured and unstructured data from various sources. For example, streaming videos can be used to detect customer shopping selections and tailor the online shopping experience. By using a data lake, retailers can optimize their marketing campaigns, improve customer experiences, and increase revenue. Additionally, data can be stored in other formats like relational databases, blob storage, or file storage depending on specific needs.
According to a report by Grand View Research, the global data lakes market size is expected to reach USD 20.1 billion by 2027, growing at a CAGR of 20.6% from 2021 to 2027. In the retail industry, data lakes are being increasingly used to store and analyze large amounts of structured and unstructured data from various sources.
How Machine Learning Systems Analyze Data
Machine Learning has become increasingly useful in the retail industry, allowing retailers to optimize their inventory management and reduce costs. By processing data through machine learning algorithms, retailers can prepare and organize their data for analysis, and develop models that can predict future outcomes.
For instance, a company can use machine learning to forecast demand and identify slow moving products, allowing them to optimize their inventory levels and reduce costs. By leveraging the data, retailers can identify trends and customer preferences, which in turn allows them to offer targeted promotions and increase sales.
According to a report by Fortune Business Insights, the global machine-learning market size is projected to reach USD 209.9 billion by 2029, growing at a compound annual growth rate (CAGR) of 38.8% from 2022 to 2029.
By using machine learning, retailers can keep up with customer demand, manage inventory levels effectively, and ultimately improve their bottom line.
Beyond Real-Time Analysis
Retailers need to keep up with the fast-moving world of e-commerce, where data needs to be processed quickly to offer customers a seamless shopping experience. Micro-batch transactions make this possible, analyzing data in real-time to suggest add-ons during checkout. Meanwhile, larger batch jobs can be run when resources are available, using the latest data pipelines and virtual machines.
COVID-19 has rocked the retail world, forcing a shift toward e-commerce and highlighting the need for effective inventory management and logistics. To thrive, retailers must break down silos and embrace the power of different data types like Purchased, Public, and Proprietary. With the help of data shaping, ETL processes, and data lakes, retailers can store and analyze their data for valuable insights.
How can Data Analytics Help Your Retail Business?
- Optimize inventory to improve sales performance
- Personalize customer experience and achieve increased loyalty
- Analyze data to make informed decisions
- Enhance supply chain visibility and efficiency
- Mitigate risks and identify opportunities proactively
- Reduce costs through data-driven insights
Machine Learning to Drive Strategic Data-Driven Insights in Retail
Data analytics through Machine Learning is the key to unlocking these insights, helping retailers reduce inventory costs and stay competitive. By making informed decisions based on data, retailers can optimize their businesses for success. In fact, businesses that invest in AI can expect to increase profitability by an average of 38% in only a few years, according to a report by Accenture. The future of retail is data-driven, and retailers that recognize this will thrive in the years to come.
Revti Vadjikar is a digital marketing associate who creates and distributes compelling stories about data science. She creates engaging blogs, case studies, visual and video content for US-based businesses operating in a variety of industries. She is an engineer who is passionate about reading non fiction stories