Guest contribution • 31.01.2019

Using digital data to drive brick-and-mortar retail success

Advanced Outlet Analytics

When it comes to using and analyzing relevant data, brick-and-mortar retail lags behind its online competition. While e-commerce retailers use detailed data from web analytics, CRM, and Google searches to analyze user behavior and generate personalized offers, the majority of conventional retailers and brands is still a long way away from utilizing this type of information.

If retailers or brands in the analog world want to determine the best location for opening a new retail outlet, find out how to optimize their product assortment or how to target their limited marketing resources, many of them still rely exclusively on static data structures or the implicit knowledge of their employees. Despite the broad availability of digital geodata, offline retail often still relies on a limited amount of information and gut feelings to set strategic directions.

In order for brick-and-mortar retail to get on board with data-driven decisions, there is now a scalable approach that forecasts sales for different points of sale, segments outlets based on their sales potential and product-market fit, and optimizes marketing efforts per store – and all based on different forms of digital data. This approach, developed by TD Reply and called "Advanced Outlet Analytics", can be applied in many industry sectors. Examples include food and beverage retail, fashion or the automotive sector.

Earned data: hidden digital data trove for retailers

Smiling Man; copyright: TD Reply
Niklas Stog from TD Reply
Source: TD Reply

B2B sales is challenged with targeting those outlets that are likely to result in the best sales prospects for the product in question. B2C retailers face a similar problem. They need to consider issues like, “Which categories and products have top selling potential based on the store, and how much inventory should be carried in these respective instances?” Answers to these questions can be obtained from information such as a company’s proprietary data (owned data) like first-hand sell-in or sell-out data. Brands without access to owned data or where data quality is insufficient might also consider purchasing sales data via digital POS providers (so-called paid data).

That being said, even if product sales data is available only a few companies have a clear idea as to what external factors influence sales performance and what the most effective levers are for maximizing success. Often going unnoticed by offline retail, answers to these questions can be found online.

Web services like Google Maps, Facebook or Flickr offer large amounts of geo-specific data with high information value. Brick-and-mortar retailers can adopt the view of the end consumer to find the most relevant information for their respective line of business. As an example, consumers search online to find out business hours (Google), user rankings and ratings (Google, Tripadvisor, Foursquare), store-specific offers and services (Yelp), directions (Google Maps) or relevant events and opportunities (Facebook). This behavior generates geographical data that can be personalized for each outlet and simultaneously scaled for the entire market.

Just by utilizing data from geographic services like Google Places or Open Street Map alone, retailers can get detailed insights into the surrounding area of a respective outlet. This includes information such as store density, relevant venues such as concert halls or schools, or proximity to train stations.

Integrating this data with proprietary numerical data is a critical and so far missing link that allows detailed evaluations and assessments of the relevant target market, corresponding sales potential and the most effective marketing efforts per outlet.

Forecasting sales and reducing out-of-stocks

One use case for the intelligent application of online data is improved sales forecasting, which can achieve over 90 percent accuracy in food and beverage retail for example. In addition to the sell-out data per outlet, data also includes information about local events obtained courtesy of Facebook, Google data on regional search interest and current weather data.

Based on these more accurate data-driven forecasts, the number of deliveries can be reduced by up to 60 percent, while the risk of out-of-stocks can be reduced at the same time. It also enables better scheduling of sales representative visits, which significantly increases cost efficiency.

Segmented market development – based on digital data

Another approach to using external online data is data-driven segmentation of outlets, which is relevant to both retailers and brands as it pertains to product assortment and marketing optimization. Information about restaurants, bars and hotels in the surrounding area (retrieved from Trip Advisor for example), the potential for high frequency of a respective location (via information from Google Places) or destination attractiveness of a vicinity (based on the number of photos uploaded on social media for instance) can allow predictions of potential sales volumes and product-market fit to prioritize outlets and assign them to specific brands and products.

If these segmentations are linked with information on marketing efforts and sales data, businesses are able to specifically prioritize the spots where corresponding activities pay off – including in-store promotions, sales promotions or a change in the product mix.

Graphic of data sources for retail analytics
Source: TD Reply

Turning big data into smart data

Taking advantage of the latest technologies such as machine learning and artificial intelligence also plays a central role in making the aforementioned approaches scalable and boosting continuous improvement. It is crucial that the models update dynamically and respond to changes in data and environmental factors.

Having said that, new technologies are not a silver bullet for business operations. New data and technologies are only an effective tool if they are linked to concrete questions and the implicit industry knowledge mentioned earlier. The iterative review of the generated results in the field and the subsequent optimization of the created models are very important in this setting.

"Advanced Outlet Analytics" is not a purely statistical approach that is being developed surreptitiously. It actually requires continuous adjustment to market reality and the existing knowledge of local sales and store managers. "Data science" and "machine learning" are the buzzwords of the moment, but either one can only be fully effective in communication with the entrepreneurial base.

Author: Niklas Stog, TD Reply

related articles:

popular articles:

Thumbnail-Photo: ComputerSalg: Impressive growth, new premises and more technology...
30.04.2021   #electronic shelf labels (ESL) #price labelling

ComputerSalg: Impressive growth, new premises and more technology

To keep up with the growth and the rapidly increasing inventory, the company moved to a new domicile in 2020

The growth comet ComputerSalg, which started as a physical store in 1996, where you could buy computers, hardware and software, has today grown to be one of Denmark's largest webshops. The corona crisis has accelerated the business further at ...

Thumbnail-Photo: Hobbii has knitted a huge business together
01.04.2021   #electronic shelf labels (ESL) #electric displays

Hobbii has knitted a huge business together

The enormous growth has been possible because Hobbii has chosen technology that supports the processes in the warehouse and in the stores.

The yarn company Hobbii is Denmark's fastest-growing company. In a very short time, they have managed to create a huge business that is supported by modern technology and efficient work processes when handling the expected 1.5 million orders in ...

Thumbnail-Photo: Burberry creates augmented reality pocket bag experience...
29.04.2021   #digital marketing #smartphone

Burberry creates augmented reality pocket bag experience

Virtual shopping bag for an indivual 3D-experience

To mark the Spring/Summer 21 launch of the Pocket bag, Burberry has created an augmented reality experience that allows users to design their own 3D Pocket bag sculptures, inspired by the maritime themes of its SS21 campaign. Named ‘In ...

Thumbnail-Photo: Plantorama: new concept focuses on sustainability...
16.07.2021   #digitization #sustainability

Plantorama: new concept focuses on sustainability

Installation of electronic price tags in garden and animal center chain

Plantorama, Denmark's largest garden and animal center chain, has opened two new sustainable centers under a modern concept, which in addition to everything for gardens, housing and animals, also offers electronic price tags as well as a ...

Thumbnail-Photo: Shopping for clothes with an avatar
19.05.2021   #fashion #artificial intelligence

Shopping for clothes with an avatar

H&M develops digital fitting room for a better shopping experience

Those who need new clothes at the moment will have a hard time trying them on in the store. This is because many stores have to remain closed due to the ongoing pandemic. To improve the shopping experience and to nevertheless offer the opportunity ...

Thumbnail-Photo: German retail specialist AWEK microdata GmbH joins Zucchetti Group...
07.06.2021   #epos systems #epos software

German retail specialist AWEK microdata GmbH joins Zucchetti Group

Boosting the Group’s leading position in the DACH region

For over 30 years, AWEK microdata GmbH has been one of the leading German providers of checkout software and comprehensive services for medium-sized retailers.AWEK designs euroSUITE, a professional software solution for medium-sized businesses for ...

Thumbnail-Photo: The Citizen CT-S4500:  Cost-Effective 4-Inch POS Printing with Perfect...
31.05.2021   #printers #label printers

The Citizen CT-S4500: Cost-Effective 4-Inch POS Printing with Perfect Document Scaling

Compact, functional & stylish design with market-leading print speed

Say goodbye to inefficient laser printing as global specialist printer manufacturer, Citizen Systems, announces the all-new CT-S4500 POS thermal printer. A new and improved POS printer that’s been designed to serve across multiple ...

Thumbnail-Photo: Arvato Supply Chain Solutions in Poland starts cooperation with Sephora...
11.06.2021   #brick and mortar retail #digitization

Arvato Supply Chain Solutions in Poland starts cooperation with Sephora

Plewiska/Poland - Arvato Supply Chain Solutions is expanding its cooperation with the cosmetics company Sephora. In April 2021, the company therefore commissioned a new distribution center to support its e-commerce and B2B business in Pruszków, Poland.

The new warehouse covers an area of 7,000 square meters, making it almost 2,000 square meters larger than the previous one. One of the innovative solutions used here for Sephora is self-driving vehicles called Weasels®, which automate transport ...

Thumbnail-Photo: Reflexis Systems Named a “Leader” in Nucleus Research’s 2021 WFM...
30.06.2021   #personnel management #coronavirus

Reflexis Systems Named a “Leader” in Nucleus Research’s 2021 WFM Technology Value Matrix

This marks the third consecutive year as a Leader for Reflexis, now part of Zebra Technologies

Reflexis Systems (now part of Zebra Technologies), a leading provider of AI-powered workforce management and real-time execution solutions for multi-site businesses in retail, food service, hospitality and banking, has been recognized by Nucleus ...

Thumbnail-Photo: Ensuring Retail Compliance During Disruptive Times...
21.07.2021   #personnel management #coronavirus

Ensuring Retail Compliance During Disruptive Times

Improving Compliance with Store Auditing Solutions

The pandemic has forced retailers to change so much about how their stores operate and function. From implementing new cleanliness and safety procedures to modifying how certain items are displayed and sold, these changes aren’t simple to ...

Supplier

SALTO Systems GmbH
SALTO Systems GmbH
Schwelmer Str. 245
42389 Wuppertal
Citizen Systems Europe GmbH
Citizen Systems Europe GmbH
Otto-Hirsch-Brücken 17
70329 Stuttgart
Elo Touch Solutions (Belgium) NV
Elo Touch Solutions (Belgium) NV
Wingepark 5B / 301
3011 Rotselaar
TCPOS GMBH
TCPOS GMBH
Saarwiesenstr. 5
66333 Völklingen
iXtenso - retail trends
iXtenso - retail trends
Celsiusstraße 43
53125 Bonn
Reflexis Systems GmbH
Reflexis Systems GmbH
Kokkolastr. 5-7
40882 Ratingen
EuroShop
EuroShop
Stockumer Kirchstraße 61
40474 Düsseldorf
Delfi Technologies GmbH
Delfi Technologies GmbH
Landgraben 75
24232 Schönkirchen