Retailers Use Data as a Compass

In the digital age, gut instinct is no longer enough for retail decision-making. This analysis examines how retailers are using data as a compass to guide everything from design and production to distribution, marketing, and customer service.

“At this point in the digital age, acting on ‘gut instinct’ when it comes to making operational decisions are long gone. Today all elements of a business’s operations – design, production, distribution, marketing, customer services – can be monitored, measured and analyzed,” according to Bernard Marr of Forbes. Today’s retailers use data to develop a deeper understanding of their customers. Using the information collected both online and in physical stores, retailers can predict what their customers are likely to purchase, whether they’ll buy in-person or on their tablet or phone, and which items are top sellers and need more frequent re-stocking. How the Retail Industry Uses Data Nordstrom, one of America’s biggest names in retail, is taking innovative steps to appeal to individual customers. The company devotes 30 percent of its budget to technology and even created the “Nordstrom Innovation Lab” to test and develop new products. The retailer uses state-of-the-art technology to track conversion of customers, time spent in the store, what areas of the store they spend time in, and for how long. The Nordstrom credit card and rewards point system is highly incentivized for both the customer and the retailer. Through this, the company can collect huge amounts of data about customer purchases and preferences in order to best allocate the advertising budget and continue to appeal to these customers. Additionally, J.C. Penney, a retailer established 115 years ago, realizes that innovation is the only way to survive in today’s evolving marketplace. The company has begun the process of improving its technology usage to increase profits. Jeffrey Davis, the new CFO, predicts that analytics will support the company as it develops its multichannel model. Davis stated that re-allocating a greater portion of the $400 million spent on capital expenditures to technology will lead to lower costs and an increase in sales. One company that supports these retailers’ businesses also us

By Fred Hoch at TechNexus Venture Collaborative