Retail Analytics: How Direct-to-Consumer Brands Use Data in Brick & Mortar Stores
Online and direct-to-consumer (D2C) brands are bigger than ever. While they haven’t become household names overnight, 81% of consumers now say they have plans to purchase from a D2C brand like Untuckit, Casper, or Warby Parker within the next five years. There are a lot of reasons for this, such as convenience, product quality, and fast or free shipping.
However, online shopping still only makes up about 11% of all retail sales. So if online, direct-to-consumer brands want to expand, they have to create an omnichannel retail strategy that includes brick and mortar stores. Because they got their start online where they could easily collect customer data points, many of these brands have used this data to inform their business decisions and improve customer experience. And now that they’re moving into brick and mortar, direct-to-consumer brands are looking for better ways to collect customer data and use retail analytics in-store.
Why D2C Brands are Investing in Brick & Mortar Stores
With the omnipresence of the internet and the continued growth of giant ecommerce platforms like Amazon, you may not think brick and mortar stores are a crucial avenue for revenue growth. However, step into any mall across America and you’re likely to find brick and mortar locations for the world’s biggest brands, including Tesla, Lululemon, and even Amazon itself.
Knowing the benefits of a continuous physical presence, these brands smartly invested in omnichannel approaches to their sales and marketing strategies. When you pair your online store with a brick and mortar one, you make it easy for consumers to confidently buy from your brand while also associating your brand with others targeting the same audience.
While the online shopping experience offers a wider variety of products and makes it easy to compare prices, 49% of consumers agree their least favorite part of buying online is the inability to see, feel, or try on a product before purchase. Your brick and mortar location, however, gives consumers the ability to physically see and feel items before they buy.
Having a physical location also allows your customers to make quick and easy returns. Plus, it gives them the opportunity to pick something else up while they’re there.
The Growing Importance of Retail Analytics
Today, we’re creating more data than ever. In fact, 90% of the world’s data was created within the last two years. Big Data is also a rapidly growing industry with analytics companies projected to generate $103 billion in revenue by 2023.
A large section of this new data is devoted to retail analytics, which tells you about buyer trends and behaviors. Through its analysis, you’ll discover basic information like the times of day people are the most likely to visit your store—but you can also dive deeper into the numbers and pull out more specific information. For instance, by analyzing demographics, buyer actions, and returns data, you’ll be able to create a buyer profile for those who have the highest likelihood of making a return and try to improve their experience or serve them better offers.
Retail analytics are snapshots of different aspects of your business told through data. They go beyond standard statistics like revenue generated versus profit created. They provide granular information on shopper behavior, such as conversions by age group, engagement by the time of day, and revenue gained per promotion.
When used correctly, retail analytics can unlock evidenced-based decision-making possibilities, ensuring you’re setting your business up for success.
The following are a few key retail analytics metrics that successful direct-to-consumer brands use to gain valuable insights into consumers and products.
Foot traffic catalogs the number of people who enter your store and the times they do so.
In the past, this has been done through on-site observation and utilizing an electric eye. However, now direct-to-consumer brands can use advanced foot traffic technology like RetailNext to gain reliable and instant tracking statistics in their brick and mortar stores. Their Aurora sensor records your store traffic, visit time, repeat versus new visitors, and more. Plus, you can exclude your store employees to increase the accuracy of your traffic counts.
Traffic patterns detail the routes your customers take inside your store.
Typically, traffic patterns are anonymous since customers don’t tell you where they went once they get to the checkout counter. Technology like Scanalytics, though, aims to uncover these traffic pattern insights so you can see the most popular sections of your store. This data is recorded through inconspicuous sensors being placed on your store’s floor. The sensors log each footstep taken within your store and outputs a real-time traffic pattern map.
This helps you decide the best placement of the products you’re trying to sell the most of as well as reduce traffic bottlenecks.
If you’re not sure how to layout your store for optimal sales, you can purchase data from a company like SafeGraph and see the layouts and traffic patterns of the most popular brands in your vertical.
Demographics information records specific information about your individual buyers to then analyze them as a group.
With modern camera technology like RetailNext or Doorstat you can get accurate accounts of who’s shopping in your store. For example, Doorstat uses proprietary software to collect demographic information such as gender, age, and ethnicity, while also using its facial analysis technology to determine the mood of the customer.
Having this demographic information lets you cater your store and your brand to your actual customers and not just the customers you created in your ideal customer profiles.
Dwell time displays the amount of time people spend inside your store as well as how long they spend at each part of your store.
It’s an important measure to keep track of because according to Retail Sensing, “The longer a person stands looking at a display, the more likely they are to buy something.”
Traffic pattern technology is able to keep track of the dwell time of your customers. However, if you want to see what your customers are doing during the time they spend at these displays, you’ll also want to set up cameras at your store’s most popular points of interest.
The Benefits of Retail Analytics for Direct-to-Consumer Brands
Knowing your retail analytics is only half the battle. Once you’ve obtained this knowledge, your job is to put what you’ve learned into practice and optimize your brick and mortar location for sales.
The following are the benefits of using and applying retail analytics:
Consumers are comfortable being marketed to as long as your brand is relevant to their interests. This bears out in the numbers as 80% of consumers are more likely to make a purchase from a brand who engages in personalization over brands who don’t.
Using demographic retail analytics, you can use the buying histories of past customers to make product suggestions since members of specific demographics usually make the same purchases.
Out-of-stock situations in brick and mortar stores could be costing retailers upwards of $1 trillion in lost revenue.
Direct-to-consumer brands use inventory retail analytics to ensure their physical locations stay in stock. With this data, you’re able to forecast how popular products will be in your store and order accordingly while ensuring you’re not over-ordering and creating a significant surplus in inventory.
You can also use this information to keep track of your inventory across your online and in-store products. As more sales are being completed online, an inventory analytics system helps you stay on top of how much you’re sending out versus how much is being returned to you.
Improved Marketing ROI
For digital marketing, demographic retail analytics will assist you in choosing the proper channels to reach your target audiences. For instance, if your in-store buyers are mostly Baby Boomers, your buyers are more likely to be on Facebook than Instagram. Therefore, you would want to use your ad spend on Facebook display ads rather than Instagram video ads.
You can also use dwell time and foot traffic analytics to improve your in-store marketing. If you know your customers spend a significant amount of time at a certain display, you can post sale advertisements for your other products near that display. This also works in highly trafficked areas as you can place advertisements in the eyesight of your shoppers and invite them to purchase more.
Once inside your D2C brick and mortar location, the layout of your store will contribute significantly to what’s being purchased by your customers. After integrating your data tracking systems (i.e. door cameras, footstep sensors, machine learning algorithms) and analyzing the data output, you’ll be able to see the sales numbers not only by product, but by store placement as well.
This allows you extra agility with the store flow of your customers as you can shift the layout to enhance the prominence of one product that needs help with sales over another that’s more popular.
Also, if you run experiential campaigns and switch up your store layout every three months, the traffic pattern and dwell time analytics will help you create floor plans to get the most out of the space for the experience while maximizing sales through proper product placement.
In 2021, 2.21 billion people are expected to make a purchase online. As that number rises, so will the number of direct-to-consumer brands vying for their attention.
For your brand to continue getting noticed, you need to stick out in the minds of consumers. By investing in a retail analytics-backed, omnichannel approach with a brick and mortar location, you’re ensuring your brand has all the tools to grow and meet your customers where they’re at.