American Apparel recently hired its first chief information officer, and implementing analytics is among his top mandates. Analytics is a major trend in retail. According to Retail Info Systems News’ 25th Annual Retail Technology Study, four of the top ten technology investment priorities for retailers in 2015 were forms of analytics. Analytics tools also showed up in three of the top ten retailer strategies between 2015-2016. RIS quotes Gartner senior VP Peter Sondergaard as saying, “Information is the oil of the 21st century, and analytics is the combustion engine.”

 The reason for this investment can be found in retailers’ top challenge for the next three years: increasing customer engagement.  

Retailers spend massive sums to attract new customers. But winning and keeping a customer today is harder than ever because customers can easily compare value across competitors and take their business elsewhere.  

The retailer that understands what their customers’ value is most likely to earn their loyalty. They use data analytics to find patterns and trends within customer activities to shape promotions, merchandise assortment, supply chain strategies, and more.  

Tracking customer purchases is one of the ways to gain those insights. Returns are another source. Using data and root cause analysis to identify trends in returns, like an above-average return rate for a green shirt, retailers can take corrective action. Perhaps those customers all wanted blue shirts, but a pallet of green shirts was mistakenly placed in its slot at the distribution center. Fixing that problem will prevent more returns in the future. It will also ensure future customers are satisfied. 

Applying analytics to the widening variety of consumer data is a smart way to boost retail sales. Too often, though, those analytics are focused only on driving initial purchases. Mining data about returns is an equally important strategy to understand customers and keep them coming back. 

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