Retail Outlook: Not Just ‘Business as Usual’ Any More

Brick-and-mortar stores stay competitive with online retailers via predictive analytics


Yet, online retailers are not affected as strongly by this problem. When a shopper purchases a product through an online retailer, the e-commerce store will often show that the product is in-stock even if it will have to be shipped from a warehouse outside of their area; or drop-shipped from the other side of the world. On the other hand, brick-and-mortar stores are expected to have a product in-stock at the exact time and location that the customer happened to walk into a store. If the product happens to be out-of-stock at this particular location, it can lead to a lost sale. This disadvantage alone costs traditional retailers millions of dollars each year.

Leveling the playing field

Predictive analytics can help level the playing field. Smart inter-store inventory balancing solutions proactively suggest inventory transfers between stores that will move slow-selling merchandise to stores that are out-of-stock and in demand for the same SKU. All of this is done in advance (before the customer appears at the store) thanks to predictive analytics technology.

However, buyer beware. The term “predictive analytics” is now all too common and is now used in such environments as banking, healthcare, social media and more. It’s important to understand that retail supply chains are unique and have important factors (see chart illustration) that should be considered when calculating the optimal transfers between stores.

In order to truly take all these factors into account, retailers need to ensure that they use Business Specific Predictive Analytics (BSPA). This technology isn’t exclusively available to brick-and-mortar giants with millions of SKU’s in thousands of stores. Small-to-medium-size retailers can take advantage of BSPA that is now built into ERP systems such as Microsoft Dynamics or RMS.

If a retailer is new to predictive analytics, it is strongly suggested to request a proof-of-concept or an analytics assessment from your software vendor so that you can see, firsthand, exactly how your business will benefit with the system in place.

Over the long run, intelligent retailing will always win. Building a sustainable competitive advantage means that you need to let smart predictive analytics tools into the driver’s seat. Following up with lean and strategic marketing will boost your retail business even further. On the other hand, if you choose to just stick to “business as usual,” you may soon find yourself in such similar outcomes as Blockbuster and Borders.

Yan Krupnik, a graduate of Ryerson University, Toronto, is the Marketing Manager for Ontario-based Retalon, which provides a predictive analytic platform solution for retail.

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