4 Retail Industry Challenges That Predictive Analytics Can Solve
The retail industry today has more access to customer data than ever before. However, this data doesn’t always translate into successful outcomes. Today, retailers are more hard-pressed to convert user customer information into actionable insights that give them an edge over others in attracting future sales. But in most cases, retailers are unsure of how exactly to put the available data into use. What retail companies need is to find a way to gain actionable information that will help them track not just what’s currently selling, but what will sell in the future. Predictive analytics is the ideal solution to this. Predictive analytics is concerned with the micro-level (i.e. down to a specific individual) rather than macro-level predictions that are based on averages or generalities. By using predictive analytics, retail industry players can take into account each individual and evaluate their purchases in real time to accurately predict what they are most likely to buy based on their specific buying habits. Apart from this, here are some crucial retail industry problems that can be brought under control using predictive analytics:
- Inventory management
When retail companies have a poor inventory management system in place, it can often result in loss of sale situations for the business. This, in turn, will create a picture of lower demand for certain items, making future order predictions based on that past data inherently inaccurate. Savvy retailers use advanced capabilities like predictive analytics that provide real-time data to move inventory where it’s needed before its late.
- Pricing policy
Predictive analytics is a highly useful tool in setting retail prices. This technique allows companies in the retail industry to set prices after taking into account all possible factors in real-time. Besides, considering competitors’ pricing, using predictive analytics, retailers can take into account everything from real-time sales data to information about whether to optimize prices for a particular point in time.
- Revenue forecasting
Forecasting revenue based on historical sales and customer data may not be a practical method anymore. This is mainly because there are also chances that a few of those customers could have switched to competitor brands. Predictive analytics generates more accurate forecasts based on the predicted buying habits of new customers of the brand.
- Catching the Straying Customer
Bringing back a loyal customer who appears to be disengaging from your brand is an arduous task indeed. Especially, in today’s market scenario where customers are spoilt for choice. With the help of predictive analytics, retailers can understand which customer is straying, which customer has the potential to be a long-term user, and which shopper will make his next purchase.
- Improved customer service
As predictive analytics helps companies in the retail industry to know their customer in a better way, it would help them in an appropriate marketing plan. Similarly, before talking to the customer, it is important to know about their basic interests likes and dislikes. Retailers can help them make informed decisions, perform better social media marketing and answer on-site queries by leveraging predictive analytics.