Business intelligence trends in the Retail & Consumer sector
Retail apocalypse is a term that was coined a few years ago in connection with the expansion of e-commerce, which was supposed to foreshadow the end of the traditional brick & mortar sales model.
Since then, digitization, cost optimization and automation have become permanent elements of the strategy of most firms. The changes, which before had been evolutionary, became revolutionary as of the beginning of 2020. The outbreak of the pandemic and its consequences, such as trade restrictions and changes in consumer behaviour, have caused problems for many companies.
According to the latest PwC survey, The New Image of a Polish Consumer. The attitudes and behaviour of Poles in view of Covid-19, 34% of the respondents declare that they are shopping with the use of a computer more frequently during the pandemic, and 23% declare that they are using their smartphones for shopping more frequently. As many as 87% and 66% of the respondents using computers and smartphones, respectively, declare that they will continue to use this form of shopping after sanitary restrictions have been lifted. At the same time, the shopping decision-making criteria are similar in the case of both channels. The most important ones are the following: availability of products, wide range and convenience. On top of that, online shoppers appreciate easy returns and safe delivery. Interestingly, however, only 11% of the respondents declare that they buy their groceries online, and 87% prefer to buy them in a traditional shop.
The occurrence of new trends and the fast pace of changes make the quality and effectiveness of the decision-making process totally dependent on data and business intelligence.
Trends and areas which are important from the perspective of the Retail & Consumer sector:
- Data quality
- Cost management
- Financial liquidity
- Growing role of self-service
Data quality
Many companies have to deal with multiple systems, a variety of data formats and different definitions of business data (e.g. margin) on a daily basis. As a result, data consolidation and reporting take several days, and most tasks are performed manually. Even though the decision-making process is getting longer, its effect is uncertain, because it is based on low quality data.
The implementation of a data governance policy, i.e. common definitions of data across the organization, clearly defined data ownership and automatic reporting, is crucial to ensure efficient response to the changing business environment.
The implementation of such mechanisms allows e.g. to reduce the amount of time needed for monthly reporting by a few to even more than ten days and to reduce the workload by a few FTEs.
Data quality also directly affects the precision of forecasting and, very importantly, the creation of advanced analytical models used e.g. for prediction or clustering.
Cost management
To survive in the changing reality with a future outlook that is difficult to predict, it is critical to manage costs very precisely at both the network and the individual shop level. Smart BI Platform Retailer Dashboard is a business intelligence tool which allows detailed insight into the individual cost items and permanent tracking of their values and trends.
Source: PwC Smart BI Platform Retailer Dashboard
In the case of this solution, the possibility of advanced data comparison (benchmarking) is a very important element of the sales network monitoring and optimization. The possible benchmarks include the shop format, area or FTE. The large volume of information allows full insight into the efficiency of both the network and individual shops.
Financial liquidity
At present, retail companies are among those that are the most vulnerable to the restrictions imposed. Working capital management and the improvement of financial liquidity are the key to maintaining business continuity and surviving on the market. Smart BI Platform Net Working Capital, which is presented below, allows the efficient monitoring of financial liquidity from the perspective of receivables, liabilities, timeliness of invoicing and inventory levels. CFO may, among other things, evaluate the efficiency of factoring, see what the cash conversion cycle looks like, or analyse the scenarios of closing the balance for the following month.
Source: Smart BI Platform Net Working Capital Dashboard
Growing role of self-service
According to the IDC report, by 2023 50% of retail companies that incorporate self-service technology into their digital transformation strategy will achieve a 35% margin growth, a 10% growth in customer loyalty and a 5% decrease in staff turnover. The pandemic has visibly accelerated the implementation of self-service solutions. Self-service checkouts have replaced traditional ones, increasing the shops’ capacity while at the same time ensuring the observance of social distancing requirements. Some companies have accelerated their experiments with modifying the shop format, combining interactive self-service stations with increased warehouse space to increase the availability of products. Research shows that in brick-and-mortar shops approx. 90% of the shoppers use smartphones to compare prices, obtain additional information or check people’s opinions about products. Creating interactive shop space will allow retail companies to augment customer experience. New technologies and shop formats are introduced on the basis of A/B testing. During such experiments it is crucial to obtain as much data as possible in order to analyse it and validate the assumptions. The SmartBI Platform Retailer Dashboard is an example of an analytical solution for effective testing of, for example, before / after refit scenarios.
Source: SmartBI Platform Retailer Dashboard
Every crisis is a business opportunity, that can be advantageous only when company has a good quality data. Thanks to business analytics tailored to our needs, we are able to understand data and make effective management decisions.
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