Analytics playing critical role in retail business.

Suchitra and her friends are among the regulars at the Shopper's Stop store at Inorbit Mall, Mumbai. More often than not during her shopping jaunts, if she opted for an ethnic ensemble, she'd make the trip upstairs to the first floor, to pick out a pair of shoes to go with it. One day, when she walked into the store, she was pleasantly surprised to find that the foot-wear section had been moved to the level below, right next to the Indian wear section She hadn't planned to buy anything that day, but that's exactly what she ended up doing. Ethnicwear, shoes, the works.

To Suchitra, it seemed just a coincidence that the footwear section happened to have been moved just where she wanted it. But coincidence, it wasn't. Rather, the move was the result of an adjacency analysis conducted by Shopper's Stop, which after sifting through 24 months of customer data, found a pattern wherein it was found that women who buy ethnicwear (salwar-kameez-dupatta) tended to buy footwear as well. Based on this insight, Shoppers Stop moved its footwear section from the first floor to the ground floor where the ethnicwear section was located. Soon enough it found, that this translated into a 25% growth in sales.
Welcome to the world of analytics. Providing retailers valuable insights to decide on where to operate, what to stock, which customers they should try and retain, how to communicate to them and even how to minimise own-store cannibalisation. That's analytics, the gospel which is increasingly playing a more critical role in the retail business in India.

Most retailers today have revved up on using analytics inside their stores. Shopper's Stop, for instance, has used analytics to start an internal programme called 'First Insight', which leverages its 'First Citizen' loyalty database. This has a nine-year historical track of every stock keeping unit (SKU) every First Citizen consumer ever bought from ther retail chain, and in that, reflects the actual buying behaviour of the Indian consumer.

"To benefit from this data we work on models such as analysis of buying behaviour to support merchandise planning," says Vinay Bhatia, VP - marketing & loyalty, Shopper's Stop, who also manages the analytics team.
Analytics is being used in the retail sector in three broad areas — studying customers, analysis of transactional data and for predictive modelling. In the first instance, retailers try and track their prime customers, their locations, their lifestyle, socio-economic background and even their level of maturity as buyers. Transactional data throws light on areas like layout planning and adjacencies, where merchandise is moved from one area in the store to another to maximise sales.

Source: ET Bureau, Mar 3, 2010