Skip to main content

Retail analytics for a Smarter Planet

Radical change is in store for retailers

When e-commerce emerged on the retail horizon almost two decades ago, analysts sounded the death knell for brick-and-mortar stores. And while many stumbled, these stores are hardly down for the count. What will always continue to evolve are the rules of retail. New competition disrupts anything status quo. To stay in the game, retailers need to maximize value from every resource, using big retail analytics, cloud, mobile and social technologies.

The data is in the details: cultivating customer relationships

Whether you sell online, offline or both, retailers have unprecedented access to customers’ desires. How you handle that data will separate leaders from laggards. Retail analytics tools can help you understand consumers more as individuals than as segments—using personal profiles, browsing history, recent purchases and current activities to deliver a smarter retail shopping experience. In doing so, retailers can create a single view of the customer, keeping each one happy to return and shop.

Finland-based Hong Kong Department Stores uses sophisticated web analytics (PDF, 580KB) to understand what their customers buy and why. By developing targeted marketing campaigns, the company personalized the shopping experience, achieved a 250% higher conversion rate, boosted online fishing-equipment sales and enhanced customer loyalty. And clothing designer Eli Tahari uses retail analytics to predict customer orders (PDF, 764KB) four months in advance with 97 percent accuracy. Results include a 30 percent reduction in supply chain and logistics costs, guaranteed availability of products and lean inventory levels.

Taking retail to the cloud

Cloud technology is one of the most powerful ways that retailer operations can cut costs and increase the efficient use of computing resources. Cloud can deliver high value because it scales rapidly to match your changes in volume, accommodating spikes in activity during peak periods. This flexible approach to smarter operations allows you to optimize your merchandising solutions and create a more agile supply chain ecosystem.

Cloud enables retailers to personalize the in-store experience by merging real-world and digital data.

Retailers can use cloud to transform marketing and customer management, executing business critical functions such as digital marketing, segmentation, marketing campaigns and e-commerce. Cloud enables emerging trends like context-based services that help personalize the in-store experience by merging real-world and digital data. For example, office supply giant Staples uses a cloud-based platform for precision marketing (PDF, 625MB), personalizing ad spots based on a customers’ market basket size, resulting in a higher conversion rate per shopper.

Merchandising for the mobile consumer

Since the average person checks their mobile phone 150 times a day, mobile is a powerful way to cultivate consumer relationships. Marketing to mobile devices can enhance the in-store experience, providing offers and interactions based on each consumer’s location and activities in the moment. For example, NS Shopping in South Korea uses advanced analytics (PDF, 98KB) to boost sales and increase customer retention rates through targeted offers and personalized web and mobile interfaces.

Mobile platforms can also be used to empower your store associates, giving them access to information and point-of-sale capabilities using tablets or other devices. Associates can check inventory in any location to hold a product or complete a sale before the customer ever leaves the store.

Creating a more responsive, efficient and transparent supply network will help you consistently deliver on changing customer demand while maximizing investments. Today, British grocer Tesco is testing a new mobile solution to help ensure that store shelves are stocked in a manner that precisely meets customer expectations. The goal is to improve store operations beyond the current manual processes and barcode-based methods.

USD 83 billion is lost each year in the US from poor customer experiences. Source: The State of Marketing Survey 2013 RIS News and IHL Group

Like, share, shop: the social consumer

Social media is one of the most important new sources of insight into consumer trends and analyzing consumer sentiments: over 50 percent of consumers say they visit a social site multiple times each day, interacting with each other and with their favorite brands. Monitoring social media is also an integral way to protect your brand and reputation.

At the same time, social collaboration tools can better connect team members within your organization. These smarter workforce tools were put in place by leading outdoor gear retailer Cabela’s, helping them to attract, hire and retain more engaged employees and reduce turnover.

Minding the store: security for retail

Retailers are on the most-wanted list for hackers, who use opportunistic attacks to get in, get what they want and quickly get out. In 2013, auction site eBay saw over 145 million records compromised, while Target stores dealt with upwards of 70 million breaches. How do you protect your operation — and your bottom line?

Retail Security Threats: Types of Attackers. Outsiders 83%. Multiple 13.1%. Malicious insiders 3.3%. Inadvertent actor 0.6%. Retail Security Threats: Types of Attackers. Sustained probe, scan 26%. Malicious code 25%. Unoauthorized access 22%. Access or credential abuse 14%. Suspicious activity 11%. Denial of service 2%. Source: 2013 IBM Cyber Security Intelligence Index of Retail.

An in-depth security strategy is the key. Users must be educated in effective password creation, safe network use and monitored while on corporate networks. Retailers should also have a broader security plan in place, one that contains elements to effectively contain a breach, assess the damage, remove the vulnerability and then communicate responsibility to the public; a speedy response can help mitigate total damages and minimize the loss of consumer confidence.

Along with these remarkable channel shifts, a historic convergence of social and mobile technologies will continue to change the way retailers conduct business. Customers are more demanding. They expect you to listen, understand and serve them seamlessly anytime, anywhere and anyplace. Take action to meet their expectations.

Contact IBM

Follow IBM Retail

Meet the experts

  • Stephen Laughlin Stephen Laughlin
    GBS Global Industry Leader - Retail and Consumer Products

Smarter Retail stories

5 in 5

A vision of retail in five years

In the next five years, IBM Research predicts that buying local will beat online.

Big Data and Analytics

Transform by embedding information-based insights into every process, decision and action.

Smarter Commerce

Put your customer at the center of your business with a Smarter Commerce approach.