As we head into Black Friday and the Christmas shopping season, let’s drill down into one of the ways big data and data analytics can improve retail performance — and by extension, can improve the prospects of commercial real estate in the retail sector.
You may have heard of one of the biggest retail buzzwords in recent years: omni-channel strategy, which refers to a sales approach that cohesively integrates multiple shopping “channels” — physical stores as well as customers’ smartphones or computers — rather than keeping each element separate.
“The most sophisticated retailers are ensuring their marketing strategies are geared toward enabling customers to convert on any channel,” according to Google’s marketing research and digital trends team, Think With Google. “Why? Because they realize that a shopper who buys from them in-store and online is their most valuable kind of customer.”
Google cited a 2015 study by market intelligence firm IDC finding that omni-channel shoppers have a 30% higher lifetime value than those who do their shopping only in physical stores or only by mouse or finger tap.
One way big data comes into play here is by providing a means of bringing together all the inventory and shipping information in the entire business, as opposed to retailers’ maintaining separate inventory records for store branches and for warehouses.
“Getting inventory to the right place at the right time is crucial to optimizing sales,” found a recently released survey by retail management consulting firm Boston Retail Partners, or BRP. “With enterprise-wide inventory visibility and accessibility, retailers will have the flexibility to re-allocate inventory from one store or channel to another where it is most likely to sell.”
In its online survey of more than 500 top North American retailers, BRP found that 71% of retailers do not have formal processes for planning omni-channel demand and 44% indicated that improving analytics is a top priority. (About three-quarters of the respondents in the survey, which was conducted in September and October, are specialty retailers, and the same proportion generated at least $500 million in annual revenue.)
Improving e-commerce operations through the use of brick-and-mortar stores – and through a more unified approach to inventory – is helping BestBuy become competitive with Amazon, the Wall Street Journal reported this week.
Before Hubert Joly became CEO in 2012, products were listed as out of stock if they weren’t in one of the company’s warehouses, even if they were sitting on store shelves, the Journal said. It described the transformation that has occurred since then: BestBuy stores now “do double duty as e-commerce warehouses,” with half of online orders picked up in a store or shipped from a store. The result? As the article reported, BestBuy’s operating margins have rebounded, same-store sales are up, and more than 88% of the retailer’s $36.3 billion in U.S. sales in the fiscal year that ended in January were in-store.
Home Depot, whose e-commerce sales rose 17% in the third quarter, has also been working on integrating e-commerce with in-store shopping. The retailer said early this year that many e-commerce shoppers end up picking up about 40% of online orders from brick-and-mortar stores.
Retailers, it seems, should be thinking not just about how to make the most of this holiday shopping season but also about the bigger picture: how to use big data to ensure their entire enterprise functions as one seamless unit. And commercial real estate players would do well to pay attention to which retailers are doing just that.
Ely Razin is CEO of CrediFi, a big data platform serving the commercial real estate finance market. He can be reached at firstname.lastname@example.org.
This article was written by Ely Razin from Forbes and was legally licensed through the NewsCred publisher network.