Many retailers struggle with connecting with customers’ desires and needs. But instead of relying on sole instincts and trial-and-error tactics, retailers should develop their own predictive analytics models to find the right untapped opportunity. They should begin much sooner than later. Retailers in various markets are realizing the potential of their efforts, becoming significant competitors as a result.
Predictive analytics is the rollup analysis of data that determines an anticipated outcome. For retail, this means determining customer segment behaviors through evaluating data patterns related to that segment. Data for advanced predictive models can be from numerous platforms requiring a mix of software and programming to reveal insights. For example, the R programming language is a popular choice to combine with analytic packages to create predictive models for numerous business scenarios.
Demand for predictive analytics is increasing. O’Reilly noted in a Strata article that business analysts are increasing interested in more complex data modeling. And Gartner noted that by 2016, 70% of most business processes will incorporate real time predictive analytics to establish a competitive advantage.
Applying predictive analytics can lead to developing robust process controls that ensures an organization a better chance to choose the right investments or activities.
Price management is a prime example. IT can monitor tech costs associated with a price management campaign, from website maintenance to inventory-related systems. Thus IT teams impacted by predictive analytics can direct resources on tasks that will likely raise or lower costs. Furthermore, the ongoing nature of a price management campaigns can encourage better supply chain management. This can lead to further cost reductions and improved operations.
A recent Forbes article highlights a few examples that analytics firm ForeSee has observed. Hickory Farms, Perry Ellis, and NFLshop.com all saw incremental increased sales through strategic usage of predictive analytics. And last year Chain Store Age noted how grocer Safeway achieved sales success with “Just For U”, a personalized pricing card program for shoppers. Personalized pricing is derived from predictive analytic measures.
To their best capabilities, predictive analytic models address the management of uncertain future outcomes within the organization. No one knows the future with a certainty. But a solid predictive model can provide an important indicator of what profitable activities are best pursued.
[…] Many retailers struggle with connecting with customers’ desires and needs. But instead of relying on sole instincts and trial-and-error tactics, retailers s […]