| Before getting started on the topic let me put across a | | | | analytics which is the science concerned with the |
| question. What is the core idea of a retail business? | | | | prediction of future probabilities and trends with an |
| After discussing with many retail managers, I was able | | | | acceptable level of reliability. |
| to make an inference on what they do think about | | | | Some of the utilities of predictive analytics discovered |
| always. It is, guaranteed good returns. But all business | | | | in retail are: |
| comes with an inherent risk being associated with it. So | | | | 1. Ability to analyze various strategies surrounding |
| how does a retailer ensure that he is investing his | | | | merchandizing, pricing, promotion and markdown to be |
| money in the interest of guarantee of good returns | | | | able to make the right decision. |
| with minimum risk? | | | | 2. Ability to measure the impact of various options of |
| Also, retail is not just about buying and selling of goods | | | | planned promotions |
| with the idea of earning some margin upon the | | | | 3. Ability to measure the impact of planned price |
| investment made. It includes various other aspects like | | | | changes (with/without promotions) |
| understanding customer purchasing behaviours, tastes, | | | | 4. Ability to Predict the impact of a planned markdown |
| preferences, complimentary products, substitutable | | | | plan |
| products, pricing, promotions, markdown etc. Today | | | | 5. Ability to try different what-if scenarios to develop a |
| Indian retail market is increasing as never before with | | | | suitable pricing/ promotion plan |
| tough competition from every player to survive in the | | | | 6. Ability to understand purchase patterns to cross-sell |
| market. Having understood the situation, how does a | | | | and up sell products to identified customers |
| retailer deal in this complicated environment without | | | | With the advancement of technology it is possible to |
| losing the idea of guaranteed good returns? | | | | have an interactive playground where the retailer is |
| With the discovery on utility of statistics and | | | | able to see the impact of various retail strategies on |
| sophisticated mathematics in retail it is possible to | | | | sales units and profits even before making changes in |
| handle the typical situation explained above. Predictive | | | | real life. |