By Andrew Woodward, email@example.com
The past year has been one of the most challenging in the history of modern retail. Yet among the tales of woe, there have been some surprising successes:
How were these results possible, even in the midst of a recession? These merchants applied powerful analytic tools to generate timely and granular information, which provided them with robust, data-driven actionable insights.
Skillful merchants know the value of robust, granular information, and have always used their own sales data to guide everything from merchandising to pricing decisions to store design. But effective retailing that aims to grow market share requires an accurate picture of the broader competitive landscape as well. Sales performance is only good (or bad) by comparison -- and particularly in this economy, good benchmarking data is key. Is a 3% increase in sales a success on today’s market? Not if your competitive set is up by 6%.
Merchants try to understand their industry using multiple sources -- monitoring competitor’s financial statements, survey-based research panels, data co-ops, industry analysts, trade publications and the trade ‘rumor mill.’ Increasingly, though, they are finding that these sources are no longer sufficient for benchmarking their current performance or forecasting industry sales for the coming 12 months.
On the one hand, the retail environment has become more complex than ever. Category sales have become more volatile. The growth of different sales channels -- stores, online, catalog, mobile -- and the expansion of major players into new product categories - as grocers move into non-food, apparel players add home goods or online merchants add new lines -- make it very complicated for some retailers to gauge their market share - to assess the true value, loyalty or potential of their existing customers -- or to effectively target the best prospects for acquisition.
At the same time, merchants are aware of the enormous strides being made in information and analytics. So the best among them are seeking more accessible, timely, granular and reliable sources of insight. Those who have been able to find it, have leveraged it to great advantage. The electronics and appliance retailer used sophisticated behavioral based targeting to drive its marketing program. The national chain used a detailed study of the competitive set to discover that they were gaining market share. And the restaurant chain used consumer spending patterns to identify good candidates for their offer.
Even as the recession ends, consumers remain very cautious, credit remains tight and the battle for share of wallet becomes ever more competitive. But we have seen that growing store traffic, sales and profit is possible. Information and data-driven insights are the enabling factors to deliver the performance numbers merchants are looking for.
Andrew Woodward, senior VP, merchant solutions for MasterCard Advisors. He can be reached at firstname.lastname@example.org.