In general, eCommerce brands seem to have an advantage when it comes to measuring analytics because they are able to track these metrics precisely through tools that show how long a mouse hovers over an area, or how often a page is visited.
Unfortunately for live retail stores, they cannot precisely track how long a particular customer spends in a section of the store or where that particular customer came from. That is why retail analysis software is an essential part of any successful store.
You may expect retail stores to have steady decline thanks to the introduction of large eCommerce suppliers such as Amazon. However, despite retail apocalypse, stores such as Target, Walmart, Dollar General, Best Buy, Costco, etc. are all thriving. These stores did not give up at the first sign of distress, rather, they invested in retail forecasting and retail demand planning software, among other retail analysis tools, in order to plan, gauge, meet, and exceed the demand.
This cutting-edge software provides retail brands with an opportunity to track customer retention rates, measure the volume of sales, identify the product return rate, pinpoint transaction trends, and much more. These key indicators allow retail brands to understand their target audience in a much more personal way.
By having a more specific customer profile, brands are able optimize the overall customer experience. For example, retail analysis software can help a business forecast a product in order to predict the demand. We will use the example of a perishable good like milk. If a business knows about how much milk they are going to sell in a given month, then they will know exactly how much to order. This saves the company money in two ways. First, if the company were to order too much milk, the extra milk not sold would expire and the company would not be able to make back the money it spent on buying the milk. Second, if the company didn’t buy enough milk, then they would lose money that they would have otherwise made by having the correct supply for the demand.
Not only do they save money from preventing over-stocks or stock-outs. But the company is also able to save valuable inventory space by having the exact amount of necessary space. For example, perhaps the company ordered the correct amount of milk to meet the demand, but they are not able to store the milk because all of their fridge space is being taken up by eggs. In this situation, we will assume that milk has a higher profit margin than eggs; therefore the store loses money by storing a less important product over a more important one, or simply not being able to store one of the products and it expires.
This situation is clearly negative when discussing perishable goods; however, the same can apply to any sort of retail product. A company can lose money by ordering large amount of a low-selling product in place of a high-selling product. With seasonal trends and a growing market, it becomes harder and harder to plan retail demand and therefore becomes increasingly necessary for companies to use retail analysis software.
Retail analysis software allows the company to know how much milk they are going to sell, as well as how many eggs they are going to sell, on any given month. It allows planners to see product profit margins, perform and ABC analysis to determine product priority, identify specific product needs, their space and weight, and several other factors in order to make an important decision when deciding how much to plan for, manufacture, ship to each location, and buy. Each of these benefits save money in their own distinctive ways so it is no surprise that together, they potentially save hundreds of thousands to millions of dollars depending on the size of the company.
Earlier we talked about retail analysis helping a company gain a clearer portfolio of their target audience. We just talked about how distinguishing top products from low-selling products can generate and save profit. Now when you put those two together, a specific customer with the specific product they are going to buy, a company can start planning their store around those customers.
By creating a store layout that encourages each member of each target audience to go to specific sections of a store, having specific products placed in optimal view on eye-height shelves, the store will increase revenue and gain even more information about their customers and products they sell during each season. This process will make for a constant growth, increasing the retail forecast of the coming year and thereby optimizing the retail demand plan as well.
The ultimate goal of most retail entities is to have a more successful year than the last, every year they exist. That is how their value can be gauged in the stock market. With a retail analysis process getting more accurate and increasing profit year over year, any retail company will naturally expand and simultaneously increase their value.