Retail shopping is part of the routine of modern life. This is reflected in the numbers; in 2022 total global retail sales exceeded $27.3tn. Whether motivated by necessity, impulse, status or tradition, the myriad of decisions made within the global retail sector reveal a wealth of information about the microeconomic preferences of billions of individuals and households. This information can in turn provide penetrative insight into the supply and demand dynamics underpinning, the global macroeconomy, particular brands or specific products. Yet, it is only now, following a consistent, decades long process of digitization, that the information gleaned from the global retail sector can be collected, traded, and analyzed to reveal its valuable secrets for investors and corporates.
Retail data is a form of alternative data generated by the day-to-day operations of retail businesses around the world. It is a large piece of the wider $4.4bn alternative data market. With the rise of ecommerce and smartphones and the steady creation of a digital retail infrastructure, the range of data now emanating from the sector is extensive. This is providing insight into:
- Consumer spending patterns and preferences
- Brand performance and comparison analyses
- Retail analytics
- Economic indicators
Alternative data can be used to gain an insight into corporate and economic performance that would be unavailable from more traditional financial data. For instance, consumer spending insights can help investors identify investment opportunities by revealing consumption patterns and growth indicators. They also aid in the monitoring of investment performance, prompting possible reallocation opportunities or risk mitigation for a portfolio. Retail analytics data allows for the calculation of inventory levels, the monitoring of supply chain movements, and the modelling of consumer demand. Such information is valuable when seeking to discern sentiment of the wider economy. As such, the suite of alternative retail data now available can be a valuable tool for investors who are looking for an edge in the market.
Separate from the investment management industry, these datasets can be utilized by retailers themselves. Aggregated retail data can be used to analyze the effectiveness of price changes, on and offline marketing, and promotions to reveal brand and communication preferences, as well as opportunities for price discrimination. These insights allow for more educated commercial experiments and provide greater reassurance when implementing new retail strategies.
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