Professor: Business Analytics Transforms Shopping During Holidays and Beyond
You may think you scored a great Black Friday or Cyber Monday deal—and perhaps you did. But you’ve also told retailers a lot about your shopping habits and how they can get your future business.
The booming world of business analytics—using data and modeling to achieve a competitive edge—is boosting profits for online and brick-and-mortar retailers. But the same tools are also helping consumers as they research and seek to make smarter purchases, said Robert Mee, a professor at UT.
“Shopping is changing because of the ability to share information,” said Mee, a professor in the Department of Statistics, Operations and Management Science in the UT College of Business Administration.
As consumers, he said, technology helps us “know what the best price is—and through online reviews, we have the benefit of others’ experience with an item before we make a purchase.”
Business analytics allows consumers to comparison shop through different websites like www.decide.com or smartphone apps. A shopper can scan the on-shelf price of an item and then search the Web for cheaper prices.
“Consumers can buy from one store while standing in the aisle of another,” Mee said.
Businesses also get an edge from data.
Online retailers like Amazon are experts at tracking how consumers browse their websites, what products they buy or just view, and how they reach their site, Mee said.
This allows them to aggregate consumers’ interests, their string of purchases, and shopping habits, and then market specific items to them.
Brick-and-mortar stores like Kroger track consumers’ purchase histories through loyalty programs and cards. Through its partnership with the business analytics company dunnhumbyUSA, Kroger has transformed itself into the second-largest retailer in the country behind Wal-Mart, Mee said.
By mining shopping history, companies learn what items sold best, what drew in their best customers, and what products might encourage consumers to buy more from the store.
“They’ll use past shopping history to select what items to put on sale,” Mee said. “After the fact, they’ll say, ‘Who bought that flat-screen TV and what else did they buy?’”
Business analytics provides companies tools that enables them to adjust their prices based on competition, supply, and demand. Online retailers have the most flexibility for experimenting with price changes.
“Retailers may lose money on door-buster specials, but if they keep you coming back in the next weeks and months it was a good investment on their part,” Mee said.
Lola Alapo (865-974-3993, email@example.com)