When a retailer sets a new strategy or modifies an existing one, gathering and analysing information is crucial because it reduces the chances of wrong decisions. The firm can study the attributes and buying behaviour of current and potential customers, alternative store and non-store sites, store management and operations, product offerings, prices, and store image and promotion to prepare the best plan. See the following Figure.
Be informed but not overloaded
Today, more information is available – for both large and small retailers – than ever before. So, even though it is imperative to gather and analyse sufficient data to make the best decisions, retailers also must be careful not to become overwhelmed by the data.
Research activity should, to a large degree, be determined by the risk involved. Although it may be risky for a department store to open a new branch store, there is much less risk if that retailer is deciding whether to carry a new line of sweaters. In the branch store situation, thousands of research dollars and months of study may be necessary. In the case of the new sweaters, limited research may be sufficient.
Information gathering and processing should be conducted in an ongoing manner, yielding enough data for planning and analysis. Consider this example: More and more, retailers are gathering in-store geofencing and mobile beacon data, and then merging these data with information from their more traditional sources. With geofencing technology, retailers can track customers away from the store. iBeacon technology enables retailers to track customers inside the store.
They are also studying clickstream data which track behaviour from Web sites, E-mail interactions, and point-of-sale data to integrate online and offline behavioural information to obtain customer insights and personalise shopper experience across multiple channels.
This section first looks at the information flows in a retail distribution channel and notes the ramifications of inadequate research. It then describes the retail information system, database management and data warehousing, and the marketing research process in detail.