A recent family trip to a fairground gave me a different perspective on the challenges of retail and hospitality professionals dealing with customers: where all is never as it seems.
In the ‘fun house’ I was staring at the special mirrors where no matter the viewing angle, what was in front of me had little resemblance to what my mind expected to see. Staring back was something that looked vaguely recognisable, yet when I acted in a familiar way, it behaved in an unexpected manner.
Remove the flashing lights and over-sugared kids, and this experience struck me as a great analogy of what it’s like for retail and hospitality professionals trying to understand and meet customers’ ever-changing demands. The unexpected shifting of sentiment and expectations, coupled with the fact that the only thing that’s certain is uncertainty, means it’s very difficult to make good business-critical decisions with confidence.
Until now, retail and hospitality professionals’ decision making has been supported by business intelligence and retrospective data analytics capabilities. What’s lacking from these capabilities are clear, undistorted, short and long-term future views and knowing what to do about them.
Many of these solutions are constrained as they rely on historic data and insights describing something that has already happened. Why is this no longer good enough? It’s because of ever-changing customer expectations and a two-year gap in historical data due to Covid. It’s why you can no longer afford to look back to move forward.
Internal, rear-facing insight isn’t enough, you must examine how customers are behaving in the wider world, or why they’re not shopping, eating or staying with you. Brands must start utilising much broader external data sources to understand the impacts of social economic and environmental changes have on customer behaviour in general. Those brands that do, will better understand the value of their actions, compared to the results of inaction.
With ad spend increasing, the competitor landscape so high and margins so thin; not being certain of your decisions can be very expensive and you’ll miss big opportunities.
Moving forward with clarity and certainty
The good news is a relatively new, sophisticated capability, called prescriptive analytics promises to solve these challenges by looking into the future and then recommending the most profitable course of action.
We’re talking about prescriptive analytics as a managed service blending descriptive, diagnostic and predictive insights, with cutting-edge artificial intelligence, machine learning, automation, genuine data science and in-sector consultancy expertise. Everything is custom built, with each step creating prescription models precisely choreographed to meet an individual organisation’s needs.
This involves enhancing internal data with much wider external insights including global & local trends: weather, travel, localised demand spikes, and more. Using this high-quality data, data scientists build and optimise prescription models which identify previously elusive, connected, patterns to deliver the most accurate foresight fuelled prescriptions.
Data scientists also continually find new insights to keep models relevant, while learning from the data so they keep delivering value. By uniquely aggregating data from a wider range of external sector sources, models are further enriched to provide greater accuracy and depth to foresight.
Ultimately, this means the prescription models keep getting better – so retail and hospitality professionals keep making the most profitable business decisions.
Use case – demand forecasting
Prescriptive analytics can help better forecast demand. Every retail and hospitality professional understands the importance of having the right product, in the right place, at the right time. But how do they make profitable decisions through the lens of regional demand?
It means digging deeper than just price, as customers’ expectations are also driven by availability, experience, and ethical considerations. It’s important for retail and hospitality professionals to ask the right questions. What you do? Who are your customers? Do you have stores? Where are they located?
This baseline information is then enriched with global data including how stores, hotels or restaurants are affected by seasonality, bank holidays, days of the week and more. Individual stores hotels or restaurants are isolated and modelled independently: answering how customers in these areas are behaving. Is it an area of growth? Will it be impacted by reduced disposable income?
Next up, more dynamic effects are considered, such as weather, tourism, travel disruptions, proximity to transport and event hubs. All this information is combined with advanced models to reveal what regional demand could look like.
Imagine a scenario where you could utilise external data that tells you the volume of people expected to attend an event near your venue or store. How about understanding the demographics of those attending and the types of products and services they would be interested in. Then imagine layering further insight on what’s driving this increased footfall past your door: such as local traffic disruptions, or weather conditions at this specific time and day.
Equipped with this foresight, means more profitable localised decisions can be made on staffing, inventory, promotions, and pricing.
Expect these gains
There’s so much value that can be generated with prescriptive analytics as a service, how about achieving these outcomes for starters:
- Accurately forecast future demand
- Enhance customer experiences
- Boost sales and profits
- Increase satisfaction and loyalty
Expect a return on investment in months not years. McKinsey’s research asserts that prescriptive analytics is poised to continue to deliver strong return on investment and become an increasingly important tool for businesses.
Whatever your size, whatever your uncertainty, Predyktable delivers fully managed prescriptive analytics as a service. We generate actionable foresight faster to address your specific needs, without complexity and compromise. We’d love to hear how we can help your retail or hospitality brand make more profitable decisions.