With the growth of technology, consumer data has emerged as a rich resource of insights for retailers. It gives actionable insight into how products are purchased and who is purchasing them, which in turn leads to more sales and valuable profits for your business.
Data can (and does) make a difference in retail. Having actionable information about your customers–and using it the right way–can establish trust in your business. That means loyal customers who are impressed with your attentive service and return again and again to honor that.
But for many, the question isn’t about the importance of data: it’s about how data can be used to increase sales, margins and foot traffic.
How was data collected in the past?
Before POS systems, retailers had only cash registers to keep track of money coming in and going out. But when POS systems hit the market in the early 2000s, store owners gained the ability to track inventory, pricing and profit margins. Retailers could now see how much of a product they had in stock, how much was sold and how much was made per bottle—but they learned nothing about the end customer. There was no way to understand how valuable the person buying those products was to the store’s bottom line.
So, why does that matter?
If a retailer can see that a customer who comes in to buy Tito’s vodka, for example, and also buys three other high-margin items, that retailer can promote discounts on Tito’s to attract similar buyers and build larger baskets. Similarly, if a retailer sees that those buying Grey Goose come in once a quarter for only that vodka, they could increase the price on that product minimally to secure extra margin.
How is data collected today?
In today’s modern day alcohol market, everything is connected. A consumer’s social media profile is linked to their mobile phone which connects them to online shopping and loyalty apps, leaving a trail of important behavioral data.
Retailers use the insightful data from receipt technology companies, like Ibotta and Catalina, to gain a deeper understanding of consumer purchasing behavior. They also look at loyalty programs, which drive frequency to specific retailers and also show purchase patterns on products and brands. All of this goes a step beyond POS systems, which are heavily focused on depletions and inventory, but could go further.
So, What’s missing?
Retailers don’t have an easy way to access real-time data that shows consumer behaviors, trends and demographic breakdowns for purchased products. This in addition to the transactional data that online and mobile connectivity offers would give retailers a deeper view of how customers shop. It would allow stores to optimize for higher margins and more sales.
Why Should Retailers Start Loving Data?
Data can seem out of reach, scientific and impersonable. While POS-level data has progressed, it doesn’t provide insights on customer behaviour that a retailer can act on. That is to say, POS data doesn’t show room for improvement beyond “sell more”. Adding a layer of consumer data can show you how to sell more, and open up other paths to grow. Instead of seeing just revenue for the day, week or month broken down into transactions, a retailer with data can see basket size and individualized purchasing patterns to better understand why their revenue was what it was. From there, that retailer can pursue the bottom-line goal of selling more using actionable “clues” as to how it can be done.
Currently, many business owners guess when trying to explain, for example, a decline in monthly sales. Without an in-depth view of the in-store, local and national markets, there isn’t a viable way to answer why.
By incorporating data into your business, however, retailers can quickly check in to see the specifics. Maybe sales for a specific liquor brand have dropped, causing the revenue decline. Did regulars switch to a different brand? Are other stores in the market offering lower prices on that brand? Is the drop regional or nationwide, pointing to a PR mishap or new emerging brand gaining market share? Understanding these deeper nuances help you adjust inventory and promotions to bring sales back up.
In the same vein, data can allow business owners to be proactive about revenue fluctuations. Rather than waiting to see what happened over time and responding, retailers can watch market trends in near real-time and make adjustments before revenue is majorly affected.
Data is especially important as a competitive advantage in a changing market. The growth of accessibility to alcohol through online delivery services and the growth of marketplaces like Amazon are pushing customers away from brick-and-mortar stores in multiple verticles. Fighting this change with stubbornness or acceptance doesn’t work. Instead, learn from these new trends. These booming companies are using data to target new shoppers, understand customers and make sales on the back of convenience. Why shouldn’t you?
So how does this data work into the store experience? How can retailers gather it, and use it to see results?
Adding technology to your already established POS system can make a huge difference, making data gathering simple and automated. As information collects, you’ll be able to identify patterns and behaviors, as well as drivers of new and incremental sales that can influence how you stock and stage your store. Small changes, like placing a brand of wine that is commonly bought with a category of liquor next to one another, can show big opportunities to narrow your margins and increase your profits.