The Revolution in Retail Data Science
We consider how data science, machine learning and insights can give retailers the edge in a competitive landscape.
by Alex White
Senior Partner, Talent & Research 16th Jan 2017
The market for retail analytics worldwide is anticipate to grow by £3.5 billion by 2020 to an estimated £7 billion. This exceptional growth will be fuelled by an increase in the role of data science, a development that will change the way retailers trade both online, and offline, and affecting the way stock is presented, enabling optimised pricing strategies.
Retail Data is the new ‘Gold Rush’
The UK retail sector is worth an estimated £350 billion, provides jobs for over 2 million people and represents close to 40% of consumer spending. Retail produces a vast quantity of rich data, with companies now only recently awakening to the power of big data and prescriptive analytics. But, this initiative towards data literacy and meaningful insights poses some significant challenges for the sector as a whole. Consumer spending habits shift rapidly, creating new trends that necessitate an agile response to enable retailers to respond to consumers capricious apatite for products. These risks can be controlled by up-skilling in the effective implementation, control and reporting of consumer metrics using data science.
Engineering data to produce cutting edge insights requires a set of skills which, until recently, have not been seen in the retail space. It is necessary to understand how to conduct analytics that provides the steering for both operations and sales strategy. Any sizeable retail business needs to appoint a ‘Chief Data Manager’, to oversee the analysis of supply chain data through the deployment of predictive analytics. The effective CDM works with senior retail executives to produce intuitive and quantitive data that supports strategic decision making, based on what clean data is telling them, enabling them to provide customers with the goods that they actually want, at a price point that works for both the retailer and consumer. High quality data and meaningful insights also empower a retail to return value to shareholders, and remain competitive.
Data Science and the Disruption to Retail.
Retailers that innovate are already uncovering the fact that data science is changing the face of retail, by creating more high quality customer experiences, generating more cost effective back-end ordering and supply arrangements, and improving the delivery process to the end customer.
By harnessing deep learning algorithms and machine learning techniques, retailers are able to better forecast and balance supply with demand with a high degree of accuracy, which translates in to real cost savings and increased ROI. In the future it is anticipated that Artificial Intelligence and Automation will fully manage almost all retail customer engagement and order fulfilment.
One essential analytics tool that retailers can utilise for increased efficiency is segmentation, which can be applied to pricing, supply, inventory, management and sales promotions, and returns solid predictions relative to business-wide sales and operational planning, this enables the creation of numerous and varied ‘what-if’ scenarios across the full spectrum of customer segmented analysis, highlighting areas for improvement in sales and campaign planning, strategic decision making and implementation. Data points are gathered via RFID tagging and beacons, returning high quality data that can be used to create unique customer experiences. The insights returned can provide invaluable data to retail marketing teams, enabling more effective retail sales campaigns.
Data Science and the future of retail
The future is all about unlocking value in data, and investing in data science is key. Savvy retailers are likely to gain the edge if they look to highly successful online companies, those that pioneer in customer insight, names such as Netflix and Amazon are at the forefront of innovation in analytics. Retailers who emulate best-in-class methods for analysing data in order to gain high quality insights on customers, products and supply chains are likely to thrive. The more ambitious and dynamic retailers are in this area, the more likely they are to maintain and grow their position in their industry space. This disruptive technology also enables smaller, ’challenger brands’ to compete on a level playing field.
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Author - Alex White.
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