Market Basket Analysis: An Important Tool in any Retailers’ Arsenal
The current scenario in the retail industry is characterized by its highly customer-centric nature. Retailers are leaving no stone unturned to discover new ways of getting to know their customers better. Market basket analysis is one such tool that has caught the eye of several retail companies. The technique of identifying customer behavior, buying patterns, […]
The current scenario in the retail industry is characterized by its highly customer-centric nature. Retailers are leaving no stone unturned to discover new ways of getting to know their customers better. Market basket analysis is one such tool that has caught the eye of several retail companies. The technique of identifying customer behavior, buying patterns, and finding the relationship between products and content delivery by the retailer inside the store or on their online shop is known as market basket analysis. With the help of this tool, not only can retailers identify target markets, but they can also enhance their customer-base by creating, delivering, and communicating a superior customer experience. Market basket analysis allows retailers to easily and promptly look at the size, quantity, and value of the customers’ market basket to understand the pattern in which products are purchased. But that is not all; there are an array of benefits that market basket analysis offers to players in the retail industry. Here is a look at some of them:
Advertising and promotions
Modern retailers are using market basket analysis for making advertising and promotions more predictable by understanding how consumers respond to various offers and communications. For instance, this technique will help companies in the retail industry to know when and where a discount will have an impact on top-line sales and cut down on unnecessary reductions. It will give retailers a clearer picture of whether their promotional activities are merely shifting revenue around or if it is genuinely contributing to boosting the gross sales.
Precise targeting and improved ROI
By understanding what exactly their customers need, retailers can easily engage in specific targeting. Companies in the retail industry are using market basket analysis to optimize campaigns and promotions for with margins and sales uplift with more precise campaigns. This method will also yield good ROI as only the right customers who might be interested in the campaigns are targeted.
More in-store traffic
Retail companies can use market basket analysis to get a better understanding of what products and offers will drive more traffic to the stores. This can be done by correlating market basket analysis with foot traffic counts to understand what customers purchased when they were in the store. Once a retailer successfully identifies what initially bought the customers to the store, they can use market basket analysis to determine how to make their customers come back to the store next time.
Optimized store layout
Players in the retail industry can use market basket assessment to enhance their space planning and visual merchandising, consequently ensuring better efforts to cross-sell and upsell. For example, it will help retailers identify if end caps in the retail store are helping to drive more sales. In case they are, it can be analyzed if they are also driving sales of complementary products. This will help retailers to better plan their store layout and make the necessary changes.
To know more about the benefits of market basket analysis for companies in the retail industry