I “go with my gut” on a lot of things. This is especially true when I don’t have the right information to back up a confident decision. Most of us are wired so that we rely on our instinct, yet balance it with tangible information (data) where possible. In these situations, our minds are aligned with our gut, usually resulting in better overall decisions. But what if there is an imbalance?
The most basic, but also most critical of all retailing concepts is having the right product available, for the right customer, in the right place, at the right time. This holds true for all brick-and-mortar and online retail sales channels. This is a mind-blowing, yet basic concept if you think about it. For the most part, the retailing process has been an art form, based on instinct, formed from years of experience, product knowledge, historical data, and market trends. Experienced merchants have a very keen muscle memory that makes them tremendously effective in their jobs.
The problem with this is that today’s connected customers have access to an abundance of information and options at their fingertips. The stakes have been raised, and retailers need to be equally well equipped to help them make the most optimized decisions for their business. But access to data is not the issue – retailers have more data than they know what to do with.
Consider this example:
You sold 500 blue Under Armour athletic shorts in 2013, 800 in 2014, and 900 in 2015. How do you know how many blue Under Armour athletic shorts to buy and allocate in 2016? Current retailing practices might encourage you to further increase your purchase, however, what if the trend actually reverses and sales of blue Under Armour athletic shorts drop in 2016? Without predictive data, how do you know how much to buy and allocate?
This example suggests that decisions really shouldn't be made purely on historical data and intuition. Doing so can lead to over or under spending on the wrong brands and products because future customer intent is not accounted for accurately. Everyone is talking about “big data” these days, but the retailers succeeding today are figuring out how to harness “smart data” – data that actually delivers forward-looking insights, ready to complement your already carefully honed intuition.
How do you leverage this data to predict future customer intent? That’s a story for another day.