March 23, 2018
Retailers know that success in an ever-evolving marketplace hinges on truly understanding their shoppers and catering to them. But today’s shoppers are always changing, from what they’re buying and why, to when and where they buy. Shoppers currently have more choices and more avenues to purchase than ever before, and they frequently purchase outside of traditional channels, opting instead for free expedited shipping, subscription services, click-and-collect, and local farmers markets.
In some regards, independent retailers probably knew this first: The days of winning shoppers by offering basic price promotions on big brands are over. Successful retailers will instead build their value proposition around what today’s consumers value: products that reduce stress or time investment; products that promise to enhance health and wellness; products with an impact on the greater good; and the treasure-hunt excitement of discovering new products.
To do that, retailers need to deliver on value and understand their shoppers’ values, offering the hot products and knowing why those products resonate with today’s shoppers, so they can build an educated and effective assortment.
So how do successful retailers reliably discover and deliver what customers want now? It takes a comprehensive, dynamic strategy to meet the changing needs of today’s consumer, but the tools are within reach. Successful retailers of every size are turning to data to meet and keep consumers in their stores. Using these insights to build the right assortment for today’s educated consumer is the only path to continued success. But, for many retailers, data can feel like a foreign language that’s intimidating to learn. In reality, it’s much easier—and more lucrative—to become data-fluent than you might think.
Here we examine four areas of retail operations made smarter by data and how to get started.
Assortment optimization and localization: Getting the right items on the shelves
Independent retailers have earned a strong reputation as incubators for new product development from emerging brands—and rightfully so! Fostering the growth of new local suppliers builds community with shoppers in addition to local economies. Believe it or not, data can strengthen execution on this important differentiator.
Using data, retailers can evaluate current assortment performance at multiple levels, then determine optimal, localized assortment recommendations at the individual store level or by clusters of stores to satisfy shopper needs according to geography. With this specific knowledge of local performance, which goes beyond knowing macro market trends, retailers gain the ability to gauge the likely impact of strategic and tactical assortment decisions on sales and profitability.
Even the best data-driven plans leave room for flexibility. While determining which products best suit customer needs, assortment optimization should allow for new or emerging items to be added or sourced per customer demand.
With category and store goals clearly defined, data lets a retailer assess each item for its ability to maintain balanced performance toward both the customers’ expectations and the retailer’s financial requirements.
Item lifecycle planning: The right items at the right time
In terms of item lifecycle planning, retailers can build trust with their consumers by maintaining a consistent presence in their core assortments. However, a strong seasonal play is a must for remaining relevant to your customer throughout the year. The most successful, agile retailers know that seasonal items require a plan, an exit strategy, a strategy for competitive pricing and a promotion that’s rooted in data. Working together, retailers and their vendor partners benefit greatly from using syndicated data to build an educated seasonal forecast that complements the full year’s data-driven assortment.
Consumer segmentation and product attribution: The right items for shopper-driven reasons
We now know that in today’s retail landscape, assortments must be customer-focused. Setting goals can no longer be solely numbers-driven but must encompass the retailer’s desire to build shopper loyalty. To earn that loyalty, successful retailers understand the why-behind-the-buy, and data gives them two important tools to do so: consumer segmentation and product attribution.
Consumer data, rendered into a digestible format of shopper profiles and preferences, is often called segmentation. Today’s segmentation is no longer based solely on the bucketed consumer demographics of the past. Today’s segmentation is a much more informative way to see consumers, their motivations and their behaviors in a holistic manner. Thorough product attribution adds layers of context and nuance to what retailers can learn about their shoppers through consumer insights. The process of merging consumer insights with a detailed understanding of each product through attribution gives retailers the best advantage to meet customers’ definition of value.
The omnichannel experience: The right offering in the right place
Ensuring you have the right products planned for your shelves is only the beginning of the battle to win consumer loyalty. For the consumers of today and tomorrow, there is an intractable relationship between the online and the physical store experience. A large portion of today’s shoppers has grown up with technology and expect to be able to use it everywhere, including for everyday shopping. This generation of consumers sees online shopping as an extension of their in-store experience, and they expect retailers to provide seamless service between the two.
While this may sound challenging to a brick-and-mortar retailer, it’s worth noting that data does not only help make this possible, but it also offers further insights into individual shopper preferences, habits, and personalities. With yet another valuable layer of data to construct consumer profiles across all channels, this integration equips retailers to deliver on consumers’ needs for relevant services, information, and products. Implementing an omnichannel strategy with personalization not only helps you better serve your customers and increase sales but also leads to increased efficiencies in business operations such as inventory investment and profitability.
We’ve all watched the market shift before our eyes. We’ve been either dazzled or bewildered by ever-changing technology and its impact on customers and our businesses. The question is not whether independent retailers need to evolve with the marketplace, but rather how quickly they embrace it, leverage digital assets to take the next step in shopper connectivity, and produce their most educated, profitable assortment.
Christina Chambers is senior director of retail development at SPINS.
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