BI in retail: why retailers need business intelligence and how it works
In retail, the one who knows his customer best has always won. But while intuition and experience used to be enough, today they are no longer enough. Competition is growing, demand is unstable, and customer behaviour is influenced by hundreds of factors - from seasonality to foreign policy.
In these conditions, those who can make quick decisions based on accurate and up-to-date data win. That's why more and more retailers are turning their attention to Business Intelligence tools - technologies that allow them to see the picture of their business in real time, rather than guessing at last week's cash register reports.
Business Intelligence (BI) is not just a fancy term, but a working tool that helps you manage your network, checkout, assortment, purchasing and customer experience. In this article, let's look at how BI works, why retailers need it and how it differs from the usual end-to-end analytics.
Business Intelligence (BI) is a data-driven approach to management. To simplify, BI is a set of tools and processes that help to collect, process, analyse and visualise information about a company's performance in order to make more accurate and timely decisions based on it.
What is Business Intelligence in simple terms
Imagine bringing data from cash registers, CRM systems, warehouses, marketing platforms and even weather services into one dashboard. Visual, actionable, and updated in real time. This is the essence of BI: instead of disparate tables, you get a whole picture of what's going on.
BI systems allow you to:
- monitor key performance indicators (KPIs) promptly,
- analyse the reasons for sales growth or decline,
- forecast demand and customer behaviour,
- manage inventory and assortment not blindly, but on the basis of data.
✦ Important: BI is not just one tool. It is an entire ecosystem that includes data collection, cleansing, storage, visualisation and analytics. BI doesn't replace strategy, but it helps make it more accurate and adaptive to change.
The work of a Business Intelligence system is not a magic ‘show all’ button. It is a step-by-step process in which data goes through several stages: from initial collection to a ready-made dashboard on the manager's screen. Let's understand what happens at each stage.
How BI works: the data path from point A to point B
The goal is to gather everything in one place and in one format. This is what distinguishes BI from manual work with spreadsheets.
The first step is to integrate data from different sources. In retail, this can be:
- POS systems (POS),
- accounting programmes (e.g.ERP),
- CRM systems,
- online shop platform,
- marketing services (advertising, email, loyalty),
- external sources: exchange rates, weather, macroeconomics, etc.
1. Data collection
At this stage, the data is ‘cleaned up’: duplicates are removed, errors are corrected, product names are harmonised, dates and amounts are formatted. This is necessary for the subsequent analyses to be correct and comparable. Without this, BI simply won't work - the result will be ‘rubbish in - rubbish out’.
2. Cleaning and normalisation
The cleaned data is loaded into a repository - a specialised database adapted to analytical tasks. In it, the information is organised and ready for quick retrieval. OLAP cubes, data showcases and other architectural solutions are often used at this level.
3. Storage and processing
At this stage, the BI system builds dashboards, charts, tables and reports. The manager can see how revenue varies by region, which products are selling worse than usual, which categories have slipped in margin. Everything is in visual form, without the need to manually process arrays of data.
4. Analysis and visualisation
The bottom line is to enable quick and informed action. BI doesn't just show you ‘what happened’, it helps you understand “why” and ‘what to do next’. For example, if the system shows that sales in a particular category have fallen sharply, you can check the price, stock, promotional activity or visual display - and correct the situation in time.
5. Decision-making
For retailers, Business Intelligence is not a trendy technology, but a practical tool that helps solve specific tasks every day. Below are the main areas where BI is most useful.
How BI is useful for retail business
For example, the system may suggest that sales of chilled beverages traditionally grow by 15-20% from the beginning of May, which means that it is worth adjusting purchases and display in advance.
BI allows you to analyse sales dynamics, seasonal fluctuations, customer behaviour - and on this basis to forecast demand. This is especially important when working with a wide matrix of products, when it is impossible to ‘guess’ purchase volumes without analytics.
Demand forecasting
This is especially important for networks with a distributed structure: BI can show not only what is in stock, but also where - and how to move it quickly to the right point.
Too much product on the shelf - funds are frozen. Too little - sales are lost. BI helps you find a balance: track balances in real time, identify surpluses and shortages, and optimise logistics.
Inventory and stock management
This allows you to make the lay-out more logical and profitable - not just «just to have».
BI shows which products are selling, which are not, which are working in cross-selling and which are just taking up space. Based on this data, you can:
- refine the assortment by point,
- remove inefficient items,
- strengthen the lines that generate revenue.
Optimisation of the assortment matrix
With the help of BI, you can track how effectively promotions are working: which products are really growing in sales, and where promotions have ‘eaten up’ the margin. This allows you to adjust marketing activity on the fly, without waiting weeks for reports.
Monitoring the effectiveness of promotions and promos
The more insight, the higher loyalty and the higher the average cheque.
Data analysis allows you to understand how customers behave: what they are looking for, what time they come in, what they put in their basket. These insights can be used to:
- changing checkout,
- targeting communication,
- developing personalised offers.
Improving the customer experience
In retail practice, there is often confusion between two concepts - Business Intelligence and end-to-end analytics. Both work with data, build reports, and help make decisions. But the approaches, goals and scale of application are different.
How BI differs from end-to-end analytics
Let's find out what the difference is.
BI - about business management. Cross-cutting analytics - about marketing
BI is used to analyse all operational activities of a company:
It is a tool that touches several departments at once and allows you to look at the business as a whole.
- purchasing and sales,
- logistics and warehouses,
- finance and planning,
- assortment and display.
- which channel brought in the customer,
- how much it cost to attract him (CPA),
- how much profit he brought in (LTV),
- at what stage of the funnel he «fell ff».
Cross-cutting analytics is primarily focused on assessing the effectiveness of marketing:
Data sources are different
BI collects data from internal business systems:
- ERP, 1C, CRM, WMS, POS terminals,
- accounting databases, product balances, cheques.
- from advertising cabinets,
- web analytics,
- CRM and marketing automation platforms.
Cross-cutting analytics uses data:
Both systems can use CRM, but for different purposes:
- BI - to analyse sales by segment;
- end-to-end analytics - to assess engagement channels and lead behaviour.
Tasks - different levels
BI helps you understand:
- where sales are falling and why?
- how margins are changing by category?
- where are the surpluses in stock and how to redistribute them?
- which points are not fulfilling the plan and what to do about it?
- where did the customer come from?
- how much did we spend on advertising?
- how did the traffic convert?
Cross-cutting analytics answers the questions:
It's not really an either/or, but an and. Cross-cutting analytics is good for evaluating marketing activities. BI is for strategic retail management.
If you want to see the whole picture - from traffic to shelf - you need both tools, but each should fulfil its own task. And ideally, they should be integrated with each other.
If you want to see the whole picture - from traffic to shelf - you need both tools, but each should fulfil its own task. And ideally, they should be integrated with each other.
What should retailers choose?
Choosing a Business Intelligence system is a strategic decision. There is no one-size-fits-all solution that will work equally well for everyone. That's why it's important not just to look at platform rankings, but to assess the specific needs of your network before implementation: scale, goals, data type, employee qualifications and IT infrastructure.
How to choose a BI system for a retail chain
- Only sales? Or also balances, logistics, finance?
- Only retail? Or also online shop, marketing, loyalty?
- Do you need a forecast? Or are reports and dashboards enough?
Step 1. Assess what exactly you want to analyse
The more precise the task, the easier it is to choose the right tool.
A BI system should be able to ‘make friends’ with what you already have: cash registers, ERP, CRM, WMS, e-commerce platforms. The simpler the integration, the lower the implementation and support costs.
Step 2. Check integrations
BI should not be complicated and require specialised knowledge. A good system is one that can be used by a category manager, shop director or marketer without resorting to analysts. The simpler the interface, the higher the chance that BI will actually be used.
Step 3. Evaluate the usability of the interface
Pay attention to:
- level of report detail,
- speed of data updates,
- visualisation capabilities (charts, filters, drill-down),
- availability of predictive analytics and AI models (if needed),
- access rights and teamwork management.
Step 4. Compare the functionality of
It is the combination of simplicity + flexibility that is important for retail.
BI should fit into your current architecture:
- support the right data formats (SQL, Excel, APIs, etc.),
- work with your servers or in the cloud (if critical),
- meet security requirements.
Step 5. Ensure compatibility with your infrastructure
If the platform conflicts with your IT infrastructure, it will result in additional costs and difficulties in scaling.
Even if BI is only needed by the sales department now, tomorrow logisticians, marketers or the CFO will want to use it. A good solution should be ready for expansion: in terms of the number of users, the number of data sources, and the complexity of reports.
Step 6. Check scalability and flexibility
✦ Tip: don't choose BI ‘with a future in mind’ if it makes life more difficult today. It's better to choose a system that you can quickly learn and use in real-world tasks - and scale over time.
Business Intelligence has long ceased to be the privilege of large corporations with analytics departments and complex IT systems. Today, BI is the standard for effective management in retail. It helps to make decisions not on ‘feelings’ but on real figures, to see weaknesses and points of growth, to manage assortment, stocks and lay-out with maximum accuracy.
Conclusion
Yes, BI implementation requires effort: preparation, customisation and training of the team. But retailers who know how to work with data gain a competitive advantage - both in the speed of decision-making and in its quality.
In an environment where the one who adapts faster wins, Business Intelligence becomes not just useful - it becomes essential.
Tilda Publishing