Customer centricity has become a business imperative driven by the consumerization wave and e-tailing which provides consumers with a plethora of options to choose from. Retailers that adopt product sourcing and development strategies aligned with what the customer wants stand to have a better chance of success.”Turning customer-centric” can be achieved by investing in easy to adopt, advanced technologies that make execution a natural progression from mere static analytics.
Assortment tuning driven by Analytics
Such technologies facilitate information on customer purchase behavior across multiple channels, which then act as a feed for the creation of Customer Centric assortments for every touch-point, thereby maximizing salability. Assortment tuning has been done by merchandisers for decades, but customer centric tuning is the need of the hour.
Keener understanding of the evolving market trends, local trends in buying patterns as well as the customer segments by geography, demographic and psychographic tastes is critical.
This can be addressed by customer profiling and analytics that help a retailer understand customer behavior and buying patterns; and then tuning the assortment based on geography, demographics and psychographics.
Gartner observes that “Without advanced analytic capabilities, retailers will not be able to compete in the digitalized marketplace”.*
But how? – Customer centricity in action
For instance, a store carrying mid range and premium goods across different age bands must be able to tune the assortment by store and season, taking into account the characteristics of consumers living near the store. If people living near the Springfield store have middle class income and are comprised of millenial buyers, then the assortment must include mid-range goods but also have some high end goods for aspiration buying. Space allocated to the fashion preferred by younger buyers should be more than the fashion preferred by baby boomers. This kind of assortment tuning needs to happen by location and channel to create a desirable experience for the consumer.
Customer centric assortments are an outcome of using a collection of customer and sales data and related analytics to come up with an assortment mix, tuned by geography as well as demographic and psychographic attributes. Validity and success of the tuned assortment needs to be measured and analyzed again to improve business continuously. Thus a transformation in the way assortment is planned and managed in an information- centric culture is needed.
Learn how you seamless integrate analysis and insights into action and make the shift from Product Centricity to Customer Centricity on this interactive customer centric merchandising page.
Manthan Retail Analytics and Customer Centric Assortments
Manthan Retail Analytics offers the much required link between discovery and execution with its combination of comprehensive pre-built (out-of–the box) and self-service analytics that brings to surface actionable merchandising insights.
With modern business intelligence capabilities that span descriptive, predictive and prescriptive analytics, Manthan Retail Analytics helps retailers localize assortments, design promotions, optimize pricing strategies and align product placements. All based on customer needs and preferences. This is achieved by combining customer behavior, buying patterns, geo-spatial, census data with product, sales information to predict and prescribe merchandising actions.
A 3Billion, Multi-format retailer partnered with Manthan in an effort to move toward customer-centric business planning for its fashion business. Customer segmentation using Manthan’s clustering algorithm, helped the retailer reclaim an average of 5% of lost sales and reduce out-of-stocks from 7% to a more customer-friendly level.
* Retailers Find Success Using Self-Service and Advanced Analytics, Robert Hetu, 24 April 2015