CRM Solutions in Retail can Help to Derive Business Intelligence, Market Basket Analysis and Demand Forecasting

The retail sector in India is witnessing exponential growth with the rise of modern retail stores which are taking over the traditional neighborhood stores. According to research firm Nielsen, sales at modern stores are increasing at a much higher rate than those of traditional stores; 29.3% versus 6.2% in 2010. The Boston Consulting Group has estimated the size of organized retail market in the country at $28 billion and projected growth of nine times over the next 10 years. With the Indian retail market finally opening to Foreign Direct Investment from global chains such as Wal-Mart and Carrefour, the sector is all set to experience a makeover in which business functions such as CRM will play a major role. Customer Relationship Management is already a core business strategy for such multinational brands, with loyalty programs and data mining playing a crucial role in acquiring and retaining customers.

Business Intelligence in Retail CRM
CRM strategies can help provide integral business intelligence. CRM provides the necessary customer data which gives businesses the acumen required to make informed decisions. When a company understands what the customer wants, it can align its business goals and strategies to fulfill these wants. This is the function of business intelligence. Businesses across the globe are increasingly using BI software to aid business functions. According to research firm Gartner, the market for such software is all set to reach $12.5 billion in 2012, a rise of 7.2 percent over last year.

Business intelligence goes a long way in helping managers gain crucial insight about their business and customer to take efficient and actionable decisions. Managers in the retail sector can use business analytics to get insights about store operations, product demands and trends, customer’s purchase behavior, stock and inventory to make strategic decisions about product placements, loyalty programs, promotions, marketing and much more. For a sector where competition is on the rise and customers tend to be highly price-conscious, customer insights help retailers to provide the right mix of product, place and promotions to increase store revenues. It can help improve the overall shopping experience to keep the customers coming back.

Understanding Market Basket Analysis
As most purchases from retailers tends to take place on impulse, the concept of Market Basket Analysis helps retailers understand buying behavior and utilize this to make strategic decisions. Market Basket Analysis seeks to understand customers’ buying behavior by linking together types of purchases. Often customers are more likely to buy item A if they have already bought item B. With the use of this technique, companies can estimate sales and forecast demand for their products. Software used in market basket analysis are highly complex and are thus able to provide comprehensive information on customer’s shopping behavior, covering a variety of permutations and combinations.

One of the key advantages here is the ability for retailers to cross-sell their products. Furthermore, they can place products and promotions within the store in such a way as to facilitate purchase from customers. Retailers can also compare purchase habits between demographic groups, different stores, at different times of the week or during different seasons to further optimize their sales and marketing strategies.

Demand Forecasting
With a combination of business intelligence and market basket analysis, retailers are able to forecast demands across stores, different time periods and demographic profiles. Information from various customer interactions and transactions is integrated to conduct real-world retail forecasting. Demand forecasting is essential in the retail world to manage stocks, handle large volumes, highlight potential areas of concern and take actionable decisions to tackle falling sales. Furthermore, retailers can prevent wastage, residual stock and stock-outs caused by inefficient forecasting. Using this technique in retail enables efficient stock replenishment and equips retailers with the ability to respond efficiently to sudden changes in the market or environment that may cause a boost or decline in demand. It also prevents inaccuracies in holding stock to make the overall operations more efficient, leading to increased profitability. Daily forecasts of demand help retailers take the right strategic decisions for their business and keep customers satisfied.

Retail CRM is all set to witness a drastic surge in the coming decade. The way forward in this regard is to utilize essential business intelligence in understanding customer needs and forecasting demands to improve operations. Retail CRM solutions are designed to enable opportunity recognition, manage sales processes, track business activities and sales. They also provide cross-functionality between different stores and departments. With such capabilities, there is no doubt that CRM solutions for retailers will be a crucial link for business strategies in times to come.