Volume 1, Issue 11 (November, 2014)

Online ISSN-2347-7571

Published by: Sai Om Publications

Sai Om Journal of Commerce & Management

A Peer Reviewed International Journal

RETAIL ANALYTICS: A TOOL TO OBTAIN SUSTAINABLE

COMPETITIVE ADVANTAGE
Dr. Murlidhar Chandekar
Principal, VMV Commerce JMT Arts and JJP Science College,
Nagpur, India
Email: mchandekar@rediffmail.com
ABSTRACT
In todays growing competition and tight economy Retail Analytics helps business outlets to develop &
implement scalable, truly operative & definitive strategies, not simultaneously being implemented by
any current competitor. This definitely helps firms to obtain Competitive Advantage. The reasons
behind such popularity include the rapid change that organizations face today, the complexity of the
business environment, the impacts of globalization and unstructured markets, the ever changing
consumer needs, competition, the revolution of information technology and communications, and the
liberation of global trade. Developing sustainable Competitive Advantage has forced the retailers to
embrace the new technology to realize operational improvements, and also in response to changing
consumer behaviour.

Keywords: Analytics; Competitive Advantage; Value; Technology Customer; Retail

INTRODUCTION
Generally termed as a wave of future, Retail Analytics not only provides the data, but also shows how
to put accumulated data to optimal use. It helps to gain a strategic advantage. No data will give the
competitive advantage. It is the analysis that helps how to use the structured or unstructured data to
drive a change across the organization in this growing competition1. Analytics can be defined as the
analysis of data to draw hidden insights to aid decision making. The data generated by big firms is
huge in nature to the tune of billions of gigabytes. The availability of the metadata helps to pinpoint
the Customer expectations from the merchant. It also suggests the upcoming market trends in this
Competitive Environment. Harvesting and extracting business insight from old and new data helps
retailers to establish a Competitive Advantage in this rapidly changing retail market. Analytics is
impacting the retail industry in a big way. As data proliferates and analytics tools become social
obligatory, retailers are looking to apply more timely and relevant business insights.
OBJECTIVES OF THE STUDY
1. To understand the concept of retail analytics
2. To know the linkage between retail analytics and competitive advantage
Developing Sustainable Competitive Advantage
Competitive advantage is a key determinant of superior performance, and ensures survival and
prominent placing in the market. Superior performance is the ultimate, desired goal of a firm2;
competitive advantage becomes the foundation. It gives firms the ability to stay ahead of present or
potential competition and ensure market leadership. It is an advantage that is not easily copied and,
thus, can be maintained over a long period of time.As is known Firms are facing a tough challenge to
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A Peer Reviewed International Journal
achieve the organizational success in a growing global competition. Achieving these goals and break
the commoditization trap that drives down pricing with margin, a retailer has to address various issues:

Necessity to understand valuable Consumers with their needs?

Factors motivating the customers to purchase.

Retail outlet location

Logistics and Information system.

Improved merchandise.

Customer Service

Business customization to satisfy customer needs.

Simply getting the answers to the above issues is not a solution to the challenge, but a retailer must try
to gather true market information about the impact of these issues. Efforts should be made to have
active involvement of the customers in the market at various locations satisfying their needs instead of
increasing, only the count. Decision making should be in line with customer requirements taking into
account how, when and what is appropriate in a changing market conditions3.
Why real time analytics is imperative to Retail Business growth
Providing that insight into how business stakeholders and technology decision makers can collaborate
and together become smarter is the basis for retail analytics on global basis. While analyzing a Big
Data, majority of the retailers are expected to focus on major issues as mentioned below to retain
customers and their loyalty towards market product. Treating customers equally on par will not
generate the desire results, as every customer has a specific requirement about a product. Thus a
retailer must differentiate each customer taking into account some of the following aspects.

Market area location as a profit driver.(Demographics)

Area product demand.

Profit share percentage considering other market players for the same product

Future product demand in the area and the competitors.

Customer trends, behaviour with respect to changing technology.

Customer loyalty and retention strategy

Product availability and customer service efficiency.

Right product to the right customer.

Customer education by way of updated marketing programs.

Inventory quality and quantity management with respect to customer demands.

Customer updated feedback relative to the changes incorporated.

From the market research a retailer must understand a truth that customer growth will lead to achieve
targeted business excellence in specified time, so as to create a sustainable competitive advantage4.
Competition is a direct link to a failure or success of a business how the organisations handle it and
significantly increase the chance how to come out on top by creating a competitive edge.
Retail Analytics Techniques
Research shows various analytics techniques best suited to the business customer retention and its
promotion considering the market fluctuations. Few of them can be listed as underVOL. 1, ISSUE 11 (November 2014)

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Sai Om Journal of Commerce & Management

A Peer Reviewed International Journal

Customer behaviour identification

Customer behaviour modelling.

Customer treatment modelling.

Pricing integration

Situational merchandising

Customer Data Integration

Customer feedback mapping and forecasting

Customer insight management

Leveraging the benefits of Retail Analytics

So far market research suggests that, in a Retail market the power is shifting to customers. Upcoming
trend in the industry is to make customer feel connected to the organisation and the service offered
should make him become brand advocate. Customer feedback and its analysis help retailers to make
them available conveniently as per customer needs. Introduction of new tools like CRM gives a
Retailer a big data view of customers who have prosperity to buy more rapidly and more easily
informing about the Customers loyalty.
Application of analytical tools is all about pre-defining about the customer satisfaction factors from the
metadata generated out of regular interaction. Converting this data into legitimate and practicable
solutions to generate Competitive Advantage is the real benefit in this competitive market. So in basic
terms, some of the following key issues highlight the application.
Benefits of working together: Many business intelligence experts are recommending that both
customer and retail business organisations should work together. This is of course for better
understanding of each others needs, capacities, and overall better business relationship. The customer
and a vendor must have an effective communication. This will mutually benefit both of them.It should
be a close and obligatory association of the two interested parties in the mutual interest5.
Trust: Trust is central to interpersonal and commercial relationships because it is crucial wherever
risk, uncertainty, or interdependence exists. Increasing the trust customers have in the organisation,
products, marketing, and industry is one of the most cost-effective ways to sell more and close faster at
better profit margins. Regular interaction with the business customers links them to the business
growth.
Value: The firms ability to create and capture value depends on the strength of competition and the
characteristics of the firm. In markets where customer demand outruns industry capacity, many firms
can add value. The value created by the firm equals the benefits the firms customers receive minus the
costs the firms suppliers incur and minus the costs of using the firms own assets. To increase value
created, the company increases benefits to its customers, lowers costs of its suppliers, uses its
resources more effectively, or combines suppliers and customers in new or more efficient ways.
Improved merchandising: Customised approach to a product placement (in a retail outlet) is helping
a customer to buy a product of choice and quality very quickly reducing purchase time. It helps to
calculate demand plans leveraging historical data or sales forecasts.
Improved customer loyalty: Tool helps to retain customer loyalty towards an organisation by way of
studying the changing market trends and customer needs. Scientific approach of the business owner
compels First time customer to be a repeat customer and finally becomes brand advocate.
Growth in a Profit share: Analytics helps to have a control over customer attrition. Drastically
reduced attrition helps to achieve targeted sale of the products. Increase in the sale results in the profit
percentage of the organisation. Pricing strategies can be altered satisfying the customer, to outperform
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A Peer Reviewed International Journal
considering the competitors6.
Product Brand creation: Many stakeholders feel a joy of repeated purchase of a particular product
from an organisation satisfying their needs. Advocacy of the product by a loyal customer generates
more no of customers of the brand promoting brand name.
Manpower empowerment: Experience manpower and the employee help to retain loyalty of the
customers and using a tool like CRM.
CONCLUSION
Retail Analytics is a situational and seasonal aspect of marketing to develop & retain a customer base.
It helps to develop innovative and informative business promotion measures with a differentiating
creative touch as compared to competitors. Multi-channel advertisement reaches the product to every
corner of the market increasing the customer base to a product. Predictive analytics helps to analyse
the market segment response. It helps to feed customer insight to a product development. It helps to
reduce a customer deviation to a competitor. Analytics helps to identify, differentiate, analyse and
customise the Big Data for gaining a larger share of customer base and business promotion. Thus In an
existing set up of crowed market with a growing competition, Analytics is a tool to develop a
sustainable Competitive Advantage. Empowerment to Business managers and decisive top
management is the key, to the effective implementation of business data collected out of retail
analytics, converting it into a right solution for the business promotion.
REFERENCES
1. Competitive Advantage - Porter, Michael E. (1985). Free Press. ISBN 0-684-84146-0. TATA Mc
Graw Hill
2. Reinventing The Retail Analytics- By Joseph L.Breeden ISBN 9-781-78272-1116 Publish date 10
Mar 2014 BY Risk Books Publishers
3. Retail Analytics Techniques http://www.ibm.com/smarterplanet/in/en/retail_analytics/nextsteps
/solution/W796709C89108S80.htmlRealising the potential of Retail Analytics-By Thomas H
Davenport Babson Executive Education.
4. Retail Analytics: The Secret Weapon. Emmett Cox. ISBN: 978-1-118-09984-1. 176 pages. October
2011 , Wiley Publication House
5. www.wikipedia.com
6. http://analytics.typepad.com/files/retailanalytics.pdf
7. http://jigsawacademy.com/jigsaw/courses/retail-analytics
8. http://www.happiestminds.com/retail-analytics
9. http://www.retail-analytics.com/
10. http://www.sap.com/pc/analytics/applications/software/industry/retail.html

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