Predictive analytics in retail:
applications, examples & adoption guidelines

Predictive analytics in retail: applications, examples & adoption guidelines

March 12, 2025

The role of predictive analytics in retail

projected global retail analytics market size by 2034

Precedence Research

more revenue is generated by companies that excel at personalization

McKinsey

Top eight use cases of retail predictive analytics

The adoption of predictive analytics enables retailers to overcome key business challenges, from personalizing customer interactions to balancing customer demand with inventory, while securing a competitive advantage.

Optimizing inventory management

Predictive analytics help retailers accurately forecast inventory needs and stock levels by examining past purchase patterns. Insights into future demand and inventory levels allow companies to plan and optimize their supply chain more efficiently.

sales increase when making data-driven decisions around stock and store optimization

McKinsey

Benefit

Streamlined supply chain management leads to quicker delivery times, reduced costs associated with overstocking or under-stocking, and fewer disruptions.

Personalizing customer experiences

By analyzing customer data, predictive analytics systems provide retailers with data-driven insights into customer preferences and buying behaviors. Therefore, businesses can understand their customers, deliver tailored customer experiences, and better personalize their offerings.

of leading retailers consider customer loyalty and LTV as top priorities

Deloitte

Benefit

Predictive analytics helps companies increase customer engagement and retention rates and convert one-time buyers into lifelong customers.

Developing targeted marketing campaigns

Predictive analytics can help retailers create more effective marketing strategies and campaigns by providing valuable insights about future customer preferences and buying behaviors. Intelligent data analytics allows businesses to target their ads more accurately and tailor messages to specific customers.

increase in product sales for retailers that use data-driven targeting

Deloitte

Benefit

As a result, retailers can maximize the effectiveness of ads and promotions by improved targeting, resulting in higher ROI from their strategies.

Optimizing pricing strategies

Predictive analytics help retailers analyze market conditions and customer data for product pricing optimization, helping them increase profits and gain a competitive advantage. Predictive analytics can also identify and analyze customer segments for common e-commerce trends or customer behavior patterns. This allows businesses to tailor their products, services, and their pricing accordingly, increasing future sales.

immediate margin performance improvement due to data-driven pricing management

Deloitte

Benefit

Data-driven dynamic pricing strategies respond to the ever-changing market trends, competitor prices, seasonality, and consumer habits and preferences, maximizing revenues.

Enabling smart upselling & cross-selling

Predictive analytics platforms assist with identifying customer needs and suggesting related or complementary products. For example, by analyzing customer purchase history, a retailer can recommend relevant items to customers when they are shopping on their website and target them with personalized discounts or promotions. With AI-powered predictive models, retailers can detect hidden patterns in their customer data and forecast trends or predict customer preferences.

sales increase for fashion companies that use data-powered product offering

McKinsey

Benefit

Improved awareness leads to smarter marketing and sales decisions, resulting in higher sales and profits.

Automating customer service

Based on past purchase patterns, customer demographics, and real-time sentiment analysis, predictive analytics systems can help customer service agents better tailor their communication strategies and substantially increase customer satisfaction.

acceptance rate of artificial intelligence chatbots in retail (higher than any other industry)

Invesp

Benefit

By leveraging AI-powered chatbots, and automated marketing campaigns, retailers can improve the efficiency of their operations and reduce manual labor costs.

Optimizing merchandising strategies

Predictive analytics solutions, when used alongside computer vision software, assist retail companies in optimizing their merchandising strategies. By analyzing shoppers' in-store movement, historical data on past purchases, and seasonal trends, merchandisers can identify the optimal placement for each product and determine which products should be placed together, enhancing the overall shopping experience and driving sales.

of retailers in Deloitte's study scored themselves as mature or leading in product recommendations

Deloitte

Benefit

Advanced analytics-powered merchandising helps manage product layout to effectively recommend related products and increase the average check size.

Reducing customer churn

By analyzing customer data, audience demographics, and social media sentiment, predictive analytics tools can identify customers likely to abandon a product or service and help develop retention strategies. Predictive analytics software also enables the creation of machine learning models to identify customers most likely to churn, determine the drivers of attrition, and proactively intervene to win them back.
Benefit

As a result, AI-driven data analytics helps retailers retain existing customers and save on customer acquisition costs.

Itransition offers comprehensive predictive analytics services that help retailers adopt advanced analytics solutions and navigate a highly volatile market with confidence.

  • We provide expert consulting services that enable retailers to effectively identify areas where predictive analytics can bring the most value and develop optimal strategies for leveraging it.
  • We help organizations define their data analytics goals and objectives, build robust data pipelines, and select the right technologies for their needs.
  • We build predictive analytics models and machine-learning algorithms that are tailored to each retailer’s unique needs.
  • We use the latest machine learning techniques to develop advanced solutions that enable retailers to leverage real-time insights for better decision-making.

Looking for a reliable technology partner for your predictive analytics project?

Contact us

Real-life predictive analytics examples in retail

Many retail industry leaders use predictive analytics to improve operational efficiency and customer experience. Some notable examples include:

Farfetch & Talkdesk

    Farfetch & Talkdesk

    Farfetch is one of the leading global platforms for the fashion industry, with a presence in over 190 countries worldwide. However, an internal audit revealed that Farfetch’s contact center faced many service and quality issues due to rapid international expansion. As the company opened offices and contact centers across the globe, new contact center agents were overwhelmed with information in the first 30 days on the job. To tackle this issue, the company needed an efficient solution that would cater to the needs of both veteran employees and newbies.

    Farfetch and Talkdesk

    Image title: Agent Assist in action
    Data source: talkdesk.com — Talkdesk Agent Assist, empowering agents to support customers

    Farfetch turned to Talkdesk, a cloud contact center company, to find much-needed help in the form of AI and predictive analytics. As a result, one of Talkdesk’s signature services, Agent Assist, now provides customer support agents with real-time tips during conversations with customers. For example, with the help of NLP and predictive analytics, Agent Assist can transcribe calls in real time, automatically generate call summaries, suggest the next best actions, and reveal relevant articles from Farfetch’s existing knowledge base to provide customers with quick answers.

    25%

    increase in customer satisfaction

    50%

    decrease in resolution times

    Belk & antuit.ai

      Belk & antuit.ai

      Belk is a California-based fashion retailer that operates nearly 300 retail stores across the US. Belk’s store managers were struggling to understand why some physical stores significantly outperformed others. Basing their sales forecasts on historical buying patterns rather than future trend analysis wasn’t effective. Realizing that a comprehensive data analytics solution is essential to solving such issues, Belk invested $130 million in a technological transformation. Predictive analytics-powered sales forecasting was Belk’s top priority, so the company partnered with antuit.ai to develop a custom end-to-end demand forecasting platform. Antuit’s bespoke platform incorporated AI-enabled analysis of seasonality, promotions, events, and many other factors to produce accurate forecasts. As a result, each store’s manager now has a much deeper insight into inventory management, which drastically increases their chances of accurately predicting product demand.

      DICK’S Sporting Goods & Adobe

        DICK’S Sporting Goods & Adobe

        DICK’S is one of the largest sports goods retail chains with over 150 million customers across 850 US stores. With such a massive number of customers, the ecommerce program manager at DICK’S realized that the only way to deliver personalization at scale is big data analytics. Therefore, DICK’S turned to Adobe to provide customers with tailored experiences across every channel. For example, the Adobe Customer Journey Analytics platform consolidates all the data in one place, allowing DICK’S to determine how exactly certain customer activities at different touchpoints impact their purchase decisions. With the help of Adobe Customer Journey Analytics and a stack of other Adobe tools, DICK’S can quickly decipher customer intent based on myriad factors, including customer interests, location-relevant events, and past purchases, to enable real-time personalization.

        We know within milliseconds if someone is browsing a particular brand’s footwear on the website, that they are an athlete who would benefit from engaging more with that brand while they’re online.

        Steve Miller

        Steve Miller

        Senior Vice President, Strategy, eCommerce & Analytics, DICK’S Sporting Goods

        2X

        more homepage visitors get a personalized experience

        10%

        more spent by visitors receiving a personalized experience than those who do not

        Skullcandy & Sisense

          Skullcandy & Sisense

          Skullcandy is a US-based company that produces consumer-grade audio equipment, including headphones, earbuds, and speakers. The company’s product development team required a more detailed understanding of their customers’ needs and sentiments about existing products to come up with better-performing new products. By feeding Sisense’s bespoke predictive analytics engine with historical warranty costs, claims, product attributes, and attributes of potential new products, Skullcandy developed a reliable predictive data model to detect what impacts the warranty costs of a new product before it hits the market. On top of that, Sisense helped Skullcandy to leverage its BI platform, custom NLP engine, and Amazon Comprehend to granularly understand customer sentiment. Currently, Skullcandy can seamlessly correlate positive and negative sentiments to a particular product performance, which yields compelling insights for future product development.

          Here at Skullcandy, we’re happy to report that “dropping in” to the predictive and sentiment analytics game was worth the initial uncertainty.

          Mark Hopkins

          Mark Hopkins

          Chief Information Officer, Skullcandy

          Predictive analytics implementation roadmap

          Here’s how you can start leveraging predictive analytics for your retail business:

          1

          Problem definition

          In the first stage, you have to define key business objectives, assess your technical readiness, conceptualize a predictive analytics solution, and outline a detailed roadmap for its implementation.

          2

          Data analysis

          The next step involves data discovery and analysis, which includes a detailed examination of your current data management workflows and an assessment of the viability of your internal and external data sources for predictive analysis purposes.

          3

          Design

          During this phase, you will design the solution architecture, establish the project timeline and budget, and define the implementation methodology along with the optimal technology stack.

          4

          Implementation

          The implementation process begins with dataset cleaning, labeling, and transformation. Once the solution’s evaluation criteria are defined, the development team can proceed with building the back-end and front-end components.

          5

          Deployment

          At the deployment stage, the solution is launched into operation, and all necessary integrations with the existing IT environment are configured.

          6

          Support & maintenance

          Once the solution is up and running, the support team uses user feedback and new data to continuously fine-tune the predictive analytics system.

          Top 5 predictive analytics platforms for retail

          Microsoft BI is one of the most recognizable business intelligence platforms. Users can create their own predictive models, validate them, and make them a part of their day-to-day operations. Power BI’s AI visualizations can help surface insights and understand how various factors influence a particular metric.
          Pros
          • Highly customizable
          • Built-in data cleaning capabilities
          Cons
          • Expensive for small businesses
          • Steep learning curve
          Pricing

          Pro and Premium versions
          are available at a per-user per-month price

          Free version
          available

          Tableau can fit retailers that want to get insights from their data quickly. It provides a wide range of visualization options, AI-driven recommendations, and a user-friendly drag-and-drop interface, which makes it easy to find hidden patterns in your customer and sales data.
          Pros
          • Drag and drop interface
          • Mobile-friendly
          • Supports many data sources
          Cons
          • Inflexible pricing
          • Poor versioning
          • Requires SQL knowledge in many cases
          Pricing

          Tableau, Enterprise & Tableau+ pricing is available upon request

          Qlik Sense

          Qlik Sense is suitable for users who want to get high-value insights from big data. Its unique associative engine lets users quickly and easily access the real-time data they need, while its AI-driven natural language query capabilities make it easy to create sophisticated reports.
          Pros
          • Allows for complex data analysis
          • Supports self-service
          Cons
          • Computationally expensive
          • Poor integration with other software
          Pricing

          Quote-based

          TIBCO Data Science

          TIBCO Data Science incorporates various tools that optimize machine learning model deployment and monitoring. It empowers retailers to make data-driven business decisions and maximize customer engagement, profitability, and sales.
          Pros
          • Highly secure
          • Comprehensive analytics capabilities
          • Seamless integration with other services
          Cons
          • Steep learning curve
          • Lack of documentation
          Pricing

          Upon request

          Alteryx

          Alteryx is a unified solution built to cover companies’ data science needs. From data preparation to extensive predictive analytics, Alteryx provides a reliable workflow to make the most out of your data daily.
          Pros
          • Intuitive drag-and-drop interface
          • Supports various data types
          • Excellent data cleansing capabilities
          Cons
          • Limited visualization
          • Limited data storage options
          Pricing

          Upon request

          Streamline your retail operations with a tailored predictive analytics solution

          Get in touch

          Adoption challenges

          Some of the most common challenges associated with the implementation of predictive analytics in retail include the following:

          Challenge/Description

          Challenge

          Solution

          Description

          Solution

          Poor collaboration between IT & business teams
          Poor collaboration between IT & business teams
          When data science teams operate in isolation from business users, they may lack a full understanding of the business context and focus more on technical implementation rather than addressing real-world challenges. This misalignment can hinder solution adoption and reduce its ROI.
          Establish cross-functional teams that include data scientists, business analysts, and key business stakeholders to foster collaboration and ensure predictive analytics solutions align with overall business objectives and drive actionable insights.
          Lack of talent
          Lack of talent
          Inability to use predictive analytics tools effectively because of the lack of relevant expertise and skills.
          Include initiatives such as establishing data labs that give employees hands-on experience with cutting-edge analytics tools and platforms, training programs to upskill staff in machine learning and artificial intelligence areas, and hiring specialists from outside organizations who can provide advice when needed.
          Inflexible legacy systems
          Inflexible legacy systems
          Legacy IT systems can hinder retail organizations from fully utilizing modern data-driven technologies.
          Invest in upgrading your outdated IT infrastructure with scalable and flexible systems that support the integration of modern data analytics tools. Prioritize cloud-based solutions and ensure seamless data integration across departments to enable real-time insights and decision-making.
          Siloed data
          Siloed data
          Retail companies employ a large range of services and systems that host corporate data in different formats and volumes. Disjointed systems can lead to inefficiencies in data management, making it difficult to consolidate and analyze data across the organization.
          Implement a company-wide data governance program aimed at establishing standardized processes for data management, ensuring data quality, and promoting consistency across all systems. This structured approach ensures that accurate, reliable data is available for analysis, enabling the maximum utilization of data and enhancing the effectiveness of predictive analytics.

          Join the retail leaders with predictive analytics

          Predictive analytics has become essential for retail companies looking to strengthen their competitive edge, improve customer experience, and increase efficiency. By leveraging advanced data-driven technologies such as machine learning and artificial intelligence, retailers can gain actionable insights and unlock new market opportunities. With over two decades of expertise in cloud technologies and advanced data analytics solutions, Itransition provides full-cycle predictive analytics services tailored to the retail sector’s needs and specifics. Start your journey today and join the leaders in the industry.

          Ecommerce personalization:
tactics, examples, and adoption guide

          Insights

          Ecommerce personalization: tactics, examples, and adoption guide

          Personalization in ecommerce is indispensable today. Explore powerful tactics for creating unique customer experiences and get practical implementation tips.

          Business intelligence in the retail sector:
main use cases, benefits & platforms

          Insights

          Business intelligence in the retail sector: main use cases, benefits & platforms

          Discover how your retail company can benefit from business intelligence software by exploring its key features, common integrations, and best platforms.

          How voice commerce transforms online retail

          Insights

          How voice commerce transforms online retail

          This article explains the concept of voice commerce, covers its use cases and implementation challenges, and provides some adoption tips.

          Virtual reality in retail:
11 use cases, benefits, and adoption practices

          Insights

          Virtual reality in retail: 11 use cases, benefits, and adoption practices

          Explore the concept of virtual reality in retail, its benefits, use cases, and the best VR adoption practices

          Ecommerce architecture: which one should you choose?

          Insights

          Ecommerce architecture: which one should you choose?

          Selecting a suitable ecommerce architecture isn’t easy, so in this article we cover main ecommerce architecture types and provide tips on choosing between them.

          Machine learning in retail: 10 ways to upgrade your store

          Insights

          Machine learning in retail: 10 ways to upgrade your store

          Explore the top use cases of machine learning in retail and find out what benefits this technology can bring to your business.

          MACH architecture: components, benefits, and implementation tips

          Insights

          MACH architecture: components, benefits, and implementation tips

          Explore the concept of MACH architecture, its advantages, pitfalls, examples of successful adoption, and implementation best practices.

          A guide to making your supply chain smart

          Insights

          A guide to making your supply chain smart

          Learn what a smart supply chain is and what its key components are and discover how it can transform modern businesses.