Big Data for Retailers: Why Your POS Is More Valuable Than You Think
“Big Data” is a term that, in general, describes the high volume and speed of information that is now available for analysis and decision-making. In the context of a retail establishment, big data encompasses sales, inventory, customer, economic, and shopping trends information collected from a wide variety of sources and amassed in various locations (CRM software, point of sale, sales software, social networks, the cloud, etc). Here are several examples of big data:
- Every second, nearly 40,000 credit card transactions are made in the US alone.
- Every hour, Wal-Mart processes 1 million customer transactions (The Economist).
Your business is already acquiring large amounts of data. The difficulty in utilizing your data lies in understanding what to do with it, how to separate important and unimportant data, and harnessing its value in your decisions.
Collecting Big Data with Your POS
The goal of any organization is to parse out the most relevant data available and use it to improve the decision making process. Your business deals with a large quantity of data every day, and much of that comes from your point-of-sale system.
If you are basing your marketing and production decisions on sales forecasts instead of your immediate sales data, you could be making decisions based on faulty, out-of-date, or irrelevant information.
Your POS system collects a wide variety of data about your:
- Customers. Who shops at your store? How often do they shop? What do they buy, what day and time do they buy it, how often do they buy it, what do they buy with it, and how do they pay for it?
- Sales volume. What’s selling? How much is it selling for? What is it being sold with? When is sales volume the highest, and when is it lowest?
- Inventory. What do you have on the shelves? What do you have in-stock? What are you running out of, how quickly are you running out of it, how often do you run out of it, and how long does it take to come back in stock?
Imagine what you could do with the answers to all of these questions – answers that can be found right in your POS system.
How to Use Your POS Data
The data collected by your POS can provide insight into your business’s daily functions and needs that can have far-reaching consequences when utilized effectively. With this information, you can determine optimal production volumes, redesign your distribution network to be more effective, and adjust prices and promotions to result in the highest possible sales and profit. You can also:
- Utilize customer information in order to improve your strategies for new customer acquisition and retention.
- Fine-tune your marketing campaigns to appeal to the demographic that is most likely to respond positively to your appeal. Identify which segment of your target market is the most valuable, and find new markets that are as-yet unexplored.
- Use current sales and inventory information to increase product production, divert resources more effectively, and shorten or eliminate out-of-stock periods.
- Sales and volume data can help you determine which of your prices have been set too high and, alternatively, which prices can be raised without negatively affecting sales volume or profit margins.
New methods for collecting, transmitting, and analyzing big data have enabled retailers to base their business decisions on up-to-the-minute sales information – rather than weeks- or months-old sales forecasts or quarterly reports. Your POS is a valuable element of your big data toolkit. Use the customer, inventory and sales data that your POS system collects to best inform your decision-making process.