The data that retailers can gather using modern tools and technical capabilities enable firms like Walmart, Target, Wet Seal, and Elie Tahari to make well-informed, strongly supported decisions about critical topics such as stocking schedules, product introductions, and pricing. That old gut feeling thus may be a thing of the past for retailers.

For example, Walmart analyzes each of its store’s sales and demographic information to determine which specific products will be suitable for each market. After it determines the product allocation, it also addresses how often it will ship these items to stores and the price level at which it will offer them.

Wet Seal uses the information it gathers on its Web site to create a database of information. For example, its online “Outfitter” features enables users to create and post outfits online—up to 300,000 of them thus far. Other users comment on the posts, which gives Wet Seal valuable information about consumer demand and preferences. Its new iPhone application, iRunway, also lets customers type in an item’s ticket number to cross-reference how other users have created an outfit with that particular item.

The algorithm that 1-800-Flowers uses relies on consumers’ previous browsing and purchase history to send them offers that seems appropriate. This tactic has improved the online retailer’s conversion rate, from browsers into buyers, by 20 percent.

It may seem like firms have reached extraordinary capabilities, but the ways in which data support intelligent decisions by retailers and manufacturers continue to improve and expand. From Internet to mobile phone data to point-of-sales information, retailers still have a lot of room to gain greater insights into their customers.

Discussion Questions:

1. Why are data important for marketing decisions?
2. Can data provide all the answers for marketing decisions?

Steve Lohr, “A Data Explosion Remakes Retailing,” The New York Times, January 3, 2010.