The following is a guest post by Andrew Mackay, Digital Transformation Director at Teambase.
So, What Exactly is Market Basket Analysis?
Without having to make any investments, retailers already have a magnitude of data available at their disposal. The question is, how can they make use of this data and transform it into actionable and profitable insights? Market basket analysis is one way, but what exactly is it? To put it in simple terms, it's a data mining technique where an algorithm is run to mine your data set and the output creates patterns based on what consumers are buying. Retailers can then leverage that information to predict how and what consumers will buy in the future. Additionally, it helps retailers identify customers' purchasing habits by recording shopping trips over time. Most of all, it's a great way for a retailer to benefit from their own data and get predictive information from it.
How is it Done?
A traditional point-of-sale (POS) system captures all transactions, which includes data such as the item, unit price, quantity, and total. While this information is normally considered sensitive for a retailer, Teambase only uses the item code to run basket analysis, which protects the sensitivity of the data as there is no description included. The data runs through the Microsoft Azure Machine Learning service, which processes and analyzes the data and outputs a knowledge base that is visualized using Microsoft Power BI. This enables retailers to understand how consumers purchase.
5 Ways Retailers Can Benefit from Market Basket Analysis
- Understand consumer spending patterns
- Create relevant promotions and merchandising strategies
- Make profit correlations
- Monitor promo impact on revenue and profit margin
- Adjust store layout and make adaptations
Other Useful Scenarios You Can Run as a Retailer
As mentioned, retailers capture large volumes of business data that can be used to effectively understand the performance of their business. In addition to market basket analysis, there are a number of other basic and advanced analytics capabilities that cover various retail sub-categories such as grocery, fashion, healthcare, leisure and entertainment, leasing retail and more. Some of the other useful offerings include:
- Advanced Forecasting
- Fraud Detection
- Inventory Optimization
- Customer Behavior Patterns
- Product Price Point Analysis and Optimization
Who Can Help
Teambase is a multi-disciplinary services company, and one of the areas that we specialize in is helping retailers with various basic and advanced analytics. As retailers are facing real challenges related to making informed decisions, we have recognized that there is an area of opportunity to help make sense of their data by leveraging the functionality of the Microsoft Azure stack, Power BI and Teambase industry expertise. Essentially, Teambase can help retailers crunch their data and create highly customized reports that help drive business. Market basket analysis is only one of many services Teambase provides, but it's increasingly relevant and in demand.
For further information about market basket analysis and our other services, please visit our website. If you would like to request a demo please contact us via phone (+971 04 368 4944) or email (firstname.lastname@example.org).