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Despite common wisdom, much of the in-store data retailers are collecting isn't being used for marketing. Instead, it's helping improve retailer operations.
New research is providing insight into how companies are using that data.
There are two predominant areas where businesses look to employ the data they collect from customers. First and foremost, businesses look to improve the store operations from in-store analytics. Companies say information collected in that area can help the day-to-day operations of their business. Tim Callan, chief marketing officer of RetailNext, which conducted the research, says businesses use that information in a variety of ways, including to better staff their stores, optimize floor plans, and identify stores’ strengths and weaknesses.
In addition to fine-tuning business operations, companies also look to improve marketing efforts with in-store data collection. Businesses try to determine the effectiveness of current campaigns through data collection. Additionally, 43 percent of companies said they use data for business intelligence or customer insights.
Overall, stores said data collection has grown in the past two years. Sixty percent of respondents said in-store analysis increased significantly in the past two years, while 23 percent said it increased slightly. Just 17 percent of respondents said data collection stayed the same.
Although data collection has increased recently, companies are still focused on particular areas when collecting information. Companies still look to conversion as the top focus of their data-collection efforts. Conversion focuses on the percentage of visitors who become customers. Overall, 89 percent of stores said conversion is an important metric to their business. Other important measurements include shopper yield, the amount a company yields from a customer in a given visit, average transaction value, entrance traffic and sales per square foot.
"Not surprisingly, conversion — a staple of the retail industry — was, by far, the most chosen critical metric among top-two answers," said Callan. "Shopper yield, which is a fairly new and sophisticated metric, was the second most popular answer. It's interesting to note that sales per square foot, often referenced in retail industry analysis, ranked lowest among this set of retail executives and thought leaders."
With the growth of data collection in the past two years, businesses are also looking forward to the next big trend in retail. Most companies said omnichannel retailing — which blends shopping channels such as smartphones, computers, in-store and others together in a way that is easy to use for customers — is the next big trend they are eyeing. Each of those channels then plays off one another and helps to make customers more educated about the products they are buying.
The poll of nearly 100 retail executives also revealed that they expect to see the growth of in-store mobile point-of-sales systems and increased application of big data in the coming years. Respondents also expect to see mobile commerce continue its growth. Lastly, executives believe they will need to continue to deal with the threat of showrooming in the coming years.