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Predictive Analytics in Retail: How Your Organization Can Forecast Success

Whether brick and mortar or e-commerce, retail is continuously changing. This article is your guide to defining predictive analytics in retail and outlining how it can impact your sales.

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What's Inside

Whether brick and mortar or e-commerce, retail is continuously changing. It can be hard to keep up with what customers demand from any channel. Fortunately, predictive analytics is one way to stay profitable and competitive. Predictive analytics isn’t a crystal ball, but it can reveal otherwise hard-to-discern data insights, such as how customers interact with your products and make buying decisions. Despite its benefits, many retailers still do not know the full scope of retail insights that predictive analytics can provide them on demand. This article is your guide to defining predictive analytics in retail and outlining how it can impact your sales.

What is Predictive Analytics?

Predictive analytics is a modeling system that combines data mining, machine learning and statistics, taking both old and real-time information to better determine future business activity. A few years ago, predictive analytics simply used sales data to determine future success. Today, predictive analytics is much more complex, involving a plethora of other factors including inventory management, store size(s), consumer demographics and much more.  With all these factors to consider, retailers are looking for easier ways to understand their target markets and differentiate their offerings from the competition. Fortunately, predictive analytics technology makes it easier for retailers to monitor and weigh all these factors for business optimization.  

How Does Predictive Analytics Benefit Retailers?

With many retail technologies and tools out there, why should retailers consider implementing predictive analytics in their operations? Below are a few common benefits of applying predictive analytics technology to every aspect of your retail operations.

  • Forecast Trends: Predictive analytics can anticipate upcoming patterns with solid accuracy. It looks at what has happened and what is currently happening to better guess what will happen in the future, which is a major advantage to have in today’s retail landscape.
  • Augmentation of ERP Systems: Retailers and vendors can leverage their current ERP systems and augment them with built-in predictive analytics capabilities. That way, as soon as data is received, you have accessible, real-time data updates to make quicker, more informed decision-making about your purchasing patterns.
  • Better Inventory Management: Retailers need a balanced inventory management system. They need just enough products to meet customer demand while not keeping any costly excess left on the shelves. Predictive analytics technology can help determine where the highest product demand lies for your store(s) and can help you optimize the delivery and logistics process to only equip stores with the exact inventory required.
  • Improved Shopping Experiences: If retailers do not offer a personalized shopping experience, your customers will look elsewhere. Ingrained with the technology to assess buyer history and relevant shopper data, predictive analytics can give you the upper hand and the ability to offer personalized experiences -- in-store and online -- that are tailored to each shopper and increase the likelihood of a purchase.

How Retailers Can Capture Their Data

When it comes to using effective predictive analytics strategies to obtain data, retailers can capture their relevant data in several ways. For brick-and-mortar retail, this includes measuring foot traffic in real-time to see how customers are moving throughout the entire store and forecasting product demand through historical sales data to help determine which products to feature in prominent store display areas. Predictive analytics can also deliver price optimization, which can tell you the right time to increase or reduce your prices, offer promotional discounts for new products, or have a sale to maximize shopper engagement.

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How Your Organization Can Get Started

As the retail industry is bouncing back to a new normal, it needs new ways to innovate, maximize the customer shopping experience, and still set brand names apart from the rest. Unfortunately, many existing retailers are dealing with antiquated ERP systems that cannot keep up with the status quo, lack the analytics capability to do anything effective with their data, or do not have the in-house expertise to gain greater agility and make faster, forward-thinking decisions.

From your data warehouse to your ERP system, there are plenty of prerequisites that you need in order to implement predictive analytics. If you are an organization looking to scale up and want to adopt a statistical modeling system that can store and organize your historical business data to predict future shopping behavior, do not underestimate the power that lies in predictive analytics. If you are looking for a dedicated team of experts that can help you better predict shopper behavior and retain customers, CDW has you covered. 


The retail landscape can be a competitive one. However, the brands that are winning in today’s retail landscape are taking their business journeys to the next level with predictive analytics technology. Predictive analytics is a game changer for forward-thinking retailers that want to optimize every aspect of their organization. The insight that predictive analytics can bring can allow you to do what you do best: sell products, but in a smart way that your customers will love and increase your bottom line. If you’ve ever wished that you could tap into the minds of your customers to see what products they are looking to buy next or what they’re really thinking, predictive analytics is your answer.