IT Can Help Brick-and-Mortar Retail Compete Using Data Analysis
A key mission for any IT staff is to add value to the organization through the smart use of technology. That's a task that is usually very specific, not just to an industry but to most organizations since every company has its own way of doing things. But sometimes, innovations come from third parties that can help that mission, and I just bumped into one of those in the retail sector.
We've all heard the tales of how brick-and-mortar retail stores can't compete with big retailers such as Walmart or big online retailers such as Amazon. To some extent, it's true. No single retail store can carry the vast array of merchandise that Amazon can and no small retailer can amass the buying power of Walmart.
But physical stores offer something that Amazon can't, and something that Walmart doesn't do well, and that's physical availability. If you need an item and there's a store near you that carries it, then you can go get it now. You don't need to wait any longer than it takes to drive to the store. Sure, someday a drone may be able to drop off whatever you want in 30 minutes or less, but for now, this is still one of brick-and-mortar's key advantages, and those operations should exploit it to the hilt.
To expand on this advantage, brick-and-mortar stores, especially smaller operations, can further compete with the likes of Amazon and Walmart by using data they already have and then using that data to create a customer experience they can't get online or in a huge box store. The data that will do that creates a real-time picture of what's in stock and where it is in the store.
By providing such real-time data, stores can provide the items shoppers want while giving them even more immediate availability, without the frustrations of searching the vast aisles of a big box retailer, or worse, waiting while someone "checks in the back" for something that should have been out front all along. Amazon can deliver your purchases in two days for Prime members, faster in a few cities. Walmart can tell you if a product is in stock but will give you no indication of where in the store to find it or even whether it's in the store or the warehouse.
There's lots of room to improve on those experiences for smaller retail operations. The challenge, of course, is how to get the data from the shelves and put it where shoppers can find it. And as soon as this challenge is identified, it'll land on the IT administrator's desk.
Keeping Tabs on Inventory
The problem for a physical store is accurate inventory management so shoppers, not just salespeople, have some idea of what's on its shelves. Most retail IT admins should start there: a good inventory tracking system, because once that's deployed, you'll know what's supposed to be on the shelf. However, what's supposed to be there may not be the same thing as what's actually there.
The reasons for this will differ, but besides the obvious (such as the infamous five-finger discount), products may have been moved to a new location, either by a customer who looked at it and then put it down somewhere else or because a store employee put it in the wrong place. And, of course, the point-of-sale (POS) system may not have properly accounted for the sale, perhaps because of a missing universal product code (UPC) sticker, or worse, the wrong sticker on the right product.
Fortunately, the data of what's on your shelves is available to you. You can keep track of everything by having your sales staff check on items as they travel around your store, and then check what's there against expected stocking levels. Oh, wait—that would take a lot of employees and they'd all need some kind of terminal to know expected stocking levels.
So, how do you collect the data you need? And more importantly, how do you make it available to shoppers who want to know whether you have a specific item in stock? The answer, of course, is more data. But you need to collect it without using more employees.
Retrieving Data Automatically
One answer to this dilemma comes from Trax Image Recognition, a Singapore-based company that helps stores collect the data they need by taking a photo of their shelves with a smartphone. The photos of the products on the shelves are analyzed by using an artificial intelligence (AI) system called Trax Retail Watch, which can recognize the details of each product, count how many items there are of each category, and then over time apply machine learning (ML) to predict when to reorder.
"The shelf is the last [retail] area that hasn't been automated yet," said Steve Hornyak, CEO, Americas at Trax. Hornyak said that, while there's been a lot of automation in the supply chain and POS, that hasn't happened to what's on the shelf. The Trax [Retail Watch] system, "converts the products on the shelves into data," according to Hornyak.
The IT department at the retail store is then able to take all of the collected data and make it available for data analysis, or they can use one of the services provided by Trax Image Recognition to handle the same chore. Either way, the store needs to provide an interface with the POS system as well as the purchasing system and the inventory tracking system, all of which will likely force a connection to the general accounting system as well.
The combination of systems then allows the store to always have an up-to-date view of its on-shelf inventory, and that, in turn, lets the store provide real-time data to its customers. This way, if someone needs a specific item, then they know where to find it. And if the data is properly managed, where exactly in the store to find it.
"IT can be the intermediary," Hornyak explained, "or we have a REST API, so they can get the data."
Gaining an Edge Over E-Commerce
Of course, having access to this data also opens up a world of possibilities that could give the brick-and-mortar store a new edge over e-commerce giants, even ones as big as Amazon. If they have an item in stock where customers can touch it and where they can immediately have it, then that's something e-commerce vendors can't do. And when a customer needs a product right now, price is less of a factor than availability.
Having all of the data in your inventory as it goes from being ordered to being received to being sold can also tell you a lot about how you're doing as a store. You can find out if a product is selling out faster than your planning said it would and then make ordering adjustments. You can also tell when a product is no longer selling, and you can easily and quickly locate products that have been recalled. If you're friendly with your customers, you can map this data to a customer relationship management (CRM) system and match unique or specialty items to specific customers or groups and further cement their loyalty.
These are all steps that the big online retailers and the big box stores already do, usually with custom-developed systems. However, tools such as the Trax Retail Watch system are allowing smaller retailers to employ similar methods, and giving them new ways to compete and provide a better shopping experience while still leveraging their primary edge: direct interaction with the customer. This is something you can't do online, even with AI-powered chatbots, and it's a critical edge that only an IT staff with a good understanding of the organization's data can deliver.
This article originally appeared on PCMag.com.