Whether you have a zettabyte or a megabyte of data on what your customers bought today, at what time, in what quantity and the price they paid, it is only valuable if you can draw insights from it. More than that, to get real value out of your data, you need to use statistics and science to predict outcomes from data and automate business decisions.
- Predictive analytics drives innovation, productivity and smarter operations.
- Retailers can predict stock requirements and the optimum price point for individual products.
- 99.9 per cent of retailers’ decisions can be automated.
Data analytics needs a deeper understanding. First there is descriptive analytics, this uses data to look at what has happened in the past. Then there is predictive, which uses data to look at what will happen in the future and finally – the King’s discipline – prescriptive analytics that uses the insights from the data to automate decisions. By combining the latter two, your organisation can drive true value in terms of increased innovation and productivity, and smarter operations.
But what does this really mean for retail? In today’s omni-channel world with savvy consumers increasingly using technology to find the best price and quickly being put off by queues and out-of-stock situations, competition is increasing.
By using data science, retailers can predict how much stock they need and reduce waste. They can also find the optimum price point for individual products in real-time. Better yet, they can automate decisions, so shelves are replenished at exactly the right time and price sensitivities of the customer are met. It’s important to note here that optimising the price does not mean creating an individual price for an individual consumer. It’s a product-centric approach that balances the needs of the retailer to make a profit and provides the product at the right price for the consumer.
Let’s take a real world example. You are in charge of BBQ meat. You have to make sure the customer always gets what they came for, balanced by the requirement to keep waste to a minimum. By using predictive analytics and automated decision making, you can do this with ease.
Digital disruption isn’t just a buzz term for retail – it’s happening now and those that don’t get to grips with using their data to their advantage risk being left behind.
By Professor Michael Feindt, chief data scientist and founder, Blue Yonder