Customers today have access to a wealth of information even before they begin their shopping. To offer them the right product mix at the right price and through the right channel, retailers should know what they value the most. Analytics can help them achieve this by delivering a smarter shopping experience and helping them build smarter operations, merchandising mix, and supply chain. Indira P Rani, Vice President (Distribution Sector) with IBM India/South Asia, talks to “Images Retail” about the importance of analytics to retailers.
How would you rate the awareness levels among the Indian medium and large retailers about retail analytics?
We do see an increasing level of awareness among modern retailers in India about analytics. They now understand the potential of analytics and the value it can bring to their business in the form of better customer insights and more efficient operations. In a competitive and changing market environment, where customers are more aware and demanding, analytics can help retailers provide superior shopping experiences.
Analytics can also help bring in more business efficiency in areas such as merchandising and supply chain, among others. Retailers in India have started recognising the importance of business analytics and we are witnessing increasing traction, which is expected to rise further in the coming years.
If the current usage of business analytics is low among the indian retail community, what do you think are the reasons?
The implementation of analytics solutions needs a certain level of understanding of retail business in the IT environment. In India, the retail industry is dominated by the traditional sector, which has very low adoption of IT. Even in the modern sector, which has emerged only in the last few years, the primary focus so far was to build a basic IT platform to meet immediate requirements. The sector had not scaled enough to face the complexity of business for which analytics is needed. Hence, the adoption of analytics had not yet taken off. However, with the strong growth of the modern retail sector and increasing maturity of the IT systems, we would see higher adoption of analytics among retailers in India.
What are the factors driving the growth of business analytics among the Indian retail community?
The market dynamics in modern retail is changing. Competition is high. Shoppers are far more informed and using channels like social media to get information and share their experience. By using analytics that can derive information from both structured and unstructured data (like social media), retailers can customise their promotions, offer real-time information to customers, and create a unified shopping experience across all touch points. Analytics can also improve the merchandising and supply network by predicting customer demand and a real-time analysis of inventory across all levels. Another area where analytics can help retailers is strengthening their entire retail operations, including supply chain, planning, and budgeting. With an integrated view of their entire operations, retailers can predict possible scenarios and take corrective measures instead of reacting to them.
In what way can business analytics and retail forecasting impact the profitability of retailers?
Retail the world over is a highly competitive market place with a relatively lower profit margin. Hence, it is absolutely critical for retailers to have an optimal operation system in place, along with better insights to the market trends and customer preferences. Analytics enables retailers to build these capabilities in their operations. It helps them ensure better utilisation of their resources, reduction in cost, and higher market penetration. All these add to the overall profitability of the retailer.