The retail sector needs a lot of data about its clients and their purchasing behavior. This is essential to boost sales and keep ahead in the highly competitive retail market. One way to gather this vital information is through data mining. Data mining is the process whereby large data sets are analyzed to look for specific patterns. These patterns indicate the typical behavior of the data sets. The retail industry collects large amounts of data and puts them through scrutiny to discover patterns in purchasing trends, sales, movement of goods, use of products and services, seasonal consumer behavior, and peak sales hours. The quantity and quality of data collected hugely impact the results derived after its analysis.
How does this data help?
The information thus gathered helps the retail industry maintain and solidify its customer base. They can now offer the exact services that the customers are looking for. Retailers can use the patterns to improve service, and design better transportation, and distribution. Increasing consumer satisfaction helps in consumer retention.
The application of data mining in retail will automatically lead to increased income, optimal use of resources, and successful selling.
How to do it?
The large data sets are classified into separate categories and evaluated from varying angles. These data is fed into computers and experts evaluate them using data mining software to identify similar behavior and correlations. With the help of a little investment, the retail industry can now benefit from the information gathered from huge data sets.
You are a specialist in your product or service but data mining can help you stay at the top of the game. Here are a few things that data mining can specifically help a retail business.
Determine opportunities and set business goals
The benefits of data mining in retail are immense. Say, you have a product or service. To sell it you need to determine the various market opportunities. Data mining will give you ample information about the type of consumers looking for such a product, where they are located, how much they are spending, etc. You will also get a gauge of the competitors. Now you can chalk out a plan to reach these prospects with your product or service.
You have certain goals that you want to achieve by the end of the quarter or the year. The information collected via data mining can also help you set realistic and achievable goals.
Maintaining relationships with customers and prospects
To succeed in any business you need a steady and reliable customer base. This is possible only when your customers are happy and satisfied with the service that you are providing. Data mining will give you insights into whether your customers are staying put with your service and are happy with it. You will learn if a shift is made. You will learn if they are exploring other options. You can then improve or update your customers about any change.
Further, the information at hand will also enable you to connect with the prospects. You can connect with them to pitch your service. You can add or enhance your product and service to rope in these prospects.
Take a look at the market
The information that you will get after analyzing the large chunks of data will also help you make an estimate of the market situation. Certain interesting market dynamics will come to your fore. For instance, you will learn what other items your customers or prospects are buying alongside the product or service you are offering. Whether you are placing your product on the physical shelf or the virtual shelf, you will learn what placement strategy ensures maximum sales.
If you want to peep into your competitor, data mining can provide useful insights into that as well.
Improve your marketing with data mining
Knowledge of exact location, time, and method is vital to keeping up in the retail market. It will also give you information about where your customers are situated and where you can promote your business or your products.
Use the data to optimize your store layout, product placement on shelves and isles, promotion techniques, improve product visibility, and also learn about customers who keep coming back for the product.
Promote your business
You now have information about your customer’s and prospects’ preferences, buying habit, spending pattern, location, their socio-cultural background, and many more. You can use all this information to devise a detailed promotional plan.
Customers prefer when you address them with a customized message. While it is not possible to go to every individual customer, you can definitely address a group keeping in mind their likes and dislikes.
Cut down the risks
When it comes to risk management, the benefits of data mining in retail cannot be stressed more. Information received via data mining can be utilized to identify and assess the items that are easy prey to market dynamics. This knowledge can help a retailer identify the time when these objects are more susceptible to changes in the market.
The retail sector is prone to loss due to items spoiling on shelves. Data mining can predict the market demand for such items at different times of the year and prevent such losses.
Broaden and keep your customer base
As discussed above, data mining provides vital customer data like socio-cultural and economic conditions, age, gender, location, profession, etc. This information comes in handy in providing them with unique shopping experiences. You know what, when, and how your customers like to purchase certain items.
Now, chalk out a scheme to keep them coming to your store. Let them know that the products are going to be available as and when they want. Their satisfaction will gain you word-of-mouth publicity. At the same time, you can reach out to similar prospects that are yet to avail of your service.
The application of data mining in retail can help solidify your business goals.
Summary
Retail consumers are the most diverse of all. Keeping track of their market behavior to augment sales is difficult. Data mining can help the retail industry with customer and market information.
