Retail is an ever-evolving landscape that loss prevention professionals have had to navigate over the course of time, and it is no different for the way we address analytics. As organizations shift their focus from operationally managing stores to providing custom experiences for consumers, retailers are rethinking their physical spaces. It is not predicted that retail stores will go away entirely, but it is likely that they will dynamically change in a climate of consumers who are looking to explore and educate themselves on items before purchasing.
Rather than trudge through the mix-matched, out-of-style, or out-of-season overstocked shelves with lackluster store clerks, merchants are turning their locations into showroom shops with quaint and comfortable décor that provides a shopping experience, aided by sales consultants and advanced technology to enhance the overall engagement. Additionally, there are more online companies finding the need to create physical venues for consumers to visit their brands beyond just their websites, as this allows customers to touch and feel products and to better understand the offers these companies are promoting.
The Impact on Inventories
With this kind of transition, we have to be aware of how inventory in our current environments will change. It could be significantly reduced in our brick-and-mortar locations, and even the purpose of such locations may shift to a smaller square-footage footprint to serve as pickup locations, drive-thru customer service centers, payment booths, or ultimately showrooms that provide a more service-oriented commerce. We must think about how to bring such new dynamics into our analytics programs.
Technology has shifted with the occurring convergence across all channels: stores, e-commerce, kiosks, pop-up shops, distribution, and localized fulfillment. And the amount of data that is captured by retailers will only continue to increase and be available in the future for more analytics.
Evolving from POS Exceptions to a Holistic Analytics Approach
Traditional LP analytics and even retail analytics have focused more on the physical store activity and specifically point-of-sale (POS) rather than on other key areas within retailers’ organizations. Now with a potential shift from traditional brick-and-mortar stores to showrooms, a need arises for a more holistic analytics platform that looks at more data points within the business: multi-channel or omni-channel POS (mobile devices and shopping apps), supply chain, inventory, customer traffic (virtual and physical), customer insights and wallet share, marketing (social media), and staff-to-customer engagements. And it should all be integrated with the common POS data that is analyzed today.
Loss prevention has had some real success with POS analytics because of the combination of analytics with human intuition and behavior. However, retail analytics will develop a broader scope and look to encompass the entirety of the organization for both understanding and insight that can be leveraged across the whole of the enterprise for value, action-driven performance, and decisions.
Retailers can be working hard to prepare for this shift. It is important for loss prevention teams to get involved in this movement as well. Develop the capabilities to evolve from just POS analysis to a new focus that redefines metrics across channels while still being individual-centric and traversing all business functions. What this means is being able to have cross-functional business process data integration that will allow a single event, consumer, or employee to be seen as a single entity across the entire dataset. This will be the key to effective analytic programs, especially when the concept of a store becomes a merged concept of product sales, showroom, warehouse, and virtual marketplace.
Supporting the Enterprise
Loss prevention groups will increasingly function as connectors of real-time and forensic profit analyses across the enterprise. Retailers already have so much data to manage, and most have all the information they need for conducting analysis for real-time decision-making, product allotment, marketing personalization, process improvements, fraud detection, and profit protection. But often these are in detached systems or applications, which each have their own separate analyst teams.
An important strategy that loss prevention divisions can establish for the future is to start building an analytics program that connects people, processes, and platforms within the organization as a whole and leveraging a team of analysts that can think about your business from this different vantage point. This will not only continue to drive the industry to meet the needs of businesses but also be a significant benefit to retailers who get this right.