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BRICK MEETS CLICK is a strategic resource for retailers, suppliers, and technology providers who want to make insightful decisions about meeting shoppers needs. Visit us at brickmeetsclick.com.
Overview
When we surveyed retailing professionals on big data in 2012, fewer than 20% indicated that retailers were actively working on big data and better understanding of customers was the most widely perceived benefit. By March 2013, 64% report they are participating in a project that involves Big Data, and the biggest focus is on how to use it to create competitive advantage. Clearly the relationship between big data and retail is evolving rapidly, but its also clear that many retailers still need to answer questions about how much to invest in big data and where to focus efforts initially to produce the best returns. This survey explored: Where and how big data is adding value for retailers on both the demand and supply sides of the business. The type of big data projects that are underway, the stage of development or implementation theyve reached, and whether a business case has been established. The definition of big data and how clarifying this can accelerate progress in using it. Barriers that are limiting its application in retail.
So, how can retailers use these findings to more quickly and confidently decide if big data can help them create competitive advantage? The answer depends on where your particular organization is with big data. For retailers who havent yet made a decision in favor of big data, use these results to build awareness within your organization about how competitors are already working to measure the benefits and validate the business case for the strategic use of big data. For retailers who are committed but looking for a starting place, use these findings to provide guidance on which business problems hold the greatest potential. For retailers who are already moving forward with big data projects, find a second opinion on the direction youve taken by learning more about what others in the business are doing.
ABOUT THE SURVEY AND COMMENTS Brick Meets Clicks second big data survey was conducted during March 2013. 115 retailing professionals responded. 50% identified themselves as consultants or market researchers, 20% as technology/information suppliers, 13% as retailers and wholesalers, 9% as product supplier/manufacturer, and 8% as other. Participants had the option to answer questions related to the demand side of the business or the supply side of the business, or both. 89% chose to answer demand side questions; 60% chose to answer supply side questions; and 44% answered both sets of questions. Survey respondents had an opportunity to comment on the findings. In the text, these are set off by a blue background.
Readers of this paper are invited to comment using this link. Or, go to http://www.brickmeetsclick.com/big-data--surveying-the-future-of-retail-analytics
household via loyalty programs, credit or debit purchases, and other methods. Mobile device data that could be used for geo-tracking and geo-targeting is also seen as having big potential. In-store tracking has been around for some time, but its potential to create value for retailers is increased by new data collection methods and more powerful analytics. Shopper feedback can now be collected on a more continuous basis. Much of todays focus is on translating it into information that can be used quickly and effectively by management. The ranking of social media reflects the challenge many retailers still face in connecting these digital breadcrumbs with existing marketing and merchandising tactics.
1. DOING THE SAME THING BETTER AND FASTER. While the results show no consensus, the emphasis on supporting faster decisions is clearly the most popular option. This comes as no surprise since its easier and probably safer to try to do something better than to take an entirely new approach. 2. EXPLORING NEW DATA SETS. Conversations with big data practitioners (outside of retailing) reveal that they find significant value in incorporating new external sets of data that provide a richer context for the analysis. The survey shows that some retailing professionals see this value as well. We hope this report will encourage exploration of which external data sets can be of most value to retailers. 3. A SINGLE DATA LIBRARY. The idea of creating a single source of data was endorsed by some in the survey, but challenged by others as not a legitimate way for big data to create value. Conversations with those deeply involved in analysis, however, opened our eyes to some truly transformational possibilities. Just think of the time and labor that would be saved if everything from the weekly sales reports to the revenue component of quarterly financials could be extracted from the same database. From survey participants
Its noteworthy shopper feedback appears in the top five. It isnt enough to just know what a shopper purchased (which might have been a substitute for the out-of-stock item they really wanted), how they moved through the store or if they purchased a geo-targeted ad item. Shopper feedback connects all of these elements with the experience behind the purchase, which may be most revealing! -- Brian Numainville, Principal, The Retail Feedback Group Collecting and managing big data in real-time acts as the catalyst to reach shoppers at the moment of truth, and not just tool for planning campaigns. A mobile platform will generate relevant data which can be used to further engage shoppers in a precise and personal way and drive predictable purchases." -- Aaron Roberts, CEO, QThru As a believer in CRM Big Datathe shopper name, address and SKU linked, made into a database and then analyzed to find applications across the retail enterprise, it is heartening to find that the big data concept continues to become embedded as a decision tool and not just the idea du jour. My takeaway: big results from big data. -- Francey Smith, Francey Smith & Associates
Turning to the specific opportunities to drive demand, we asked: Where will big data create the most value in the next two years? There are some strong contenders. (See Figure 4.
Given that strengthening shopper engagement is the highest rated opportunity at 76%, expect retailers to interact even more actively with shoppers along the entire path to purchase. This will change marketing and merchandising practices.
Figure 4 *multiple responses allowed
High interest in personalized promotions (70%) reflects continuing focus on moving aggressively toward one-to-one marketing tactics. The focus on shopper solutions (43%) opens additional opportunities for collaboration with suppliers who can bring shopper insights to power development of highly relevant solutions. The power of implementing store specific assortments (38%) comes from better ensuring that shoppers will find the products theyre looking for and making sure that theyre in stock.
Putting the emphasis on business value (what problem(s) does the retailer need to solve?) is the best and most practical way to go about conquering big data. It ensures value, investment, and outcomes are aligned. If executed well, the results should be easy to quantify. Taking a build it and they will come approach to big data is too risky from a time, opportunity cost, and financial standpoint. -- Jim Butera, FusionPoint The ability to quickly analyze transaction data down to the SKU level will open a gateway to understanding how consumers are shopping each product in the store and how those specific items are inter-related. Retailers that adapt this level of basket analytics will certainly have a competitive advantange in the marketplace by partnering with vendors/CPG to develop and create very unique customer-centric promotions that will resonate with their targeted shopper segments. -- Victor Andedo, Principal, Linque Marketing Inc.
POS has been a key source of data since the inception of checkout scanning and its clear that the growth of big data will not change this any time soon. POS data drives replenishment, maps labor requirements, and provides a unique operational signature for each store. The growing importance of sensors has been evident at recent trade shows where they were used for cold chain and energy management, as well as, workforce management. Shopper feedback is used mainly to identify opportunities for improved employee engagement with customers. Automated product recognition, the technology at the core of tools for monitoring plan-o-gram compliance on the shelf, was identified by 8% even though it was unfamiliar to many.
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Attention on inventory management focused mainly on optimization rather than reduction. Customer service management is becoming a more important competitive dimension. Labor management -- both scheduling and sales conversion are both related to shopper engagement.
Figure 7
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Figure 8
About 20% related to improving product availability: assortment optimization and getting the right product to the right place, and reducing out-of-stock. Four unique business problems being addressed stood out from the rest: Leveraging insight from social media to drive product display with specific markets in a way that intersects with natural events (like flu outbreaks). Maximizing customer retention while minimizing incentive spending. Monitoring risk in the environment. Analyzing the shopping behavior of millions of insurance customers.
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The fact that 58% of those responding report that they have already been able to measure the benefits indicates that confidence is building in the value of this approach.
WHATS HAPPENING TODAY?
Having business case for big data projects is no longer the exception, 65% of the projects had established one (Figure 11). This shows that nearly two-thirds of those working with big data now see how it will solve important business problems. These people are no longer groping to figure out how to use a new tool.
Figure 11
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Big Data: The Frontier for Innovation, Competition, and Productivity McKinsey Global Institute 2011
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Nearly half said a better definition would make it easier to gain agreement on the scope of projects and help to build justification for projects. Better agreement on scope would help in minimizing costs and coordinating project support across business functions. In other comments, participants said a stronger definition would: Help focus on the real value speeding up innovation, fine-tuning customer focused offers, providing competitive context for analysis, and emphasizing important business questions Clarify ambiguity. The term big data feels too ambitious for many people. Said one participant: We need to replace it with more focused definitions . . . since often the data we are talking about is closer to mid-sized or even small sized.
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From survey participants I believe we are all just talking about input, because that's what data (big, medium, or small) is. It may be more productive from a leadership perspective to talk of Testing (big, medium, or small - although I like the idea of Big Testing), and focus on continually learning through tests that can now be fully analyzed and acted upon because of the masses of data that we can now gain access to and the speed at which it can be crunched. -- Craig Elston, SVP Insight and Strategy, The Integer Group
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The low concern for privacy and security was perhaps the only surprise among the other barriers identified (Figure 15). While shoppers are showing less concern about privacy, the incidence of security breaches indicates that this is an area of risk warranting careful management.
Figure 15
The issue companies face is not the technology to amass the data but the analytical skill to understand the insights from the data to take the proper marketing action. We must invest in people with those skill sets to be competitive. As an industry we have never really invested in staff to do the analytical work necessary to build the right targeted programs. Kroger clearly figured it out when they began working with Dunnhumby. Technology has moved quickly and at a lower cost than before. We need to harness the information to make businesses successful. -- Ann Raider, President and CEO, inStream The report shows a glimpse of the future. We will forget todays clunky user-intensive big data and mobility platform interaction model one day. Background-processed realtime prescriptive analytics will ultimately get big data out of the way. Retailers and consumers alike with engage truly seamless Brick Meets Click shopping experiences. Supply chains, markets, and buyers will integrate without regard to location. I cant wait for this new future. -- Andrew John Stein, Pervasive Strategy Group
2013 Brick Meets Click It seems clear that senior management needs to adjust as failure to could lead to 19
disaster. Just ask Blockbuster, Borders, and on the ropes retailers: Best Buy, JC Penney, Radio Shack, Sears and Abercrombie & Fitch. All have in common a failure to
It seems clear that senior management needs to adjust as failure to could lead to disaster. Just ask Blockbuster, Borders, and on the ropes retailers: Best Buy, JC Penney, Radio Shack, Sears and Abercrombie & Fitch. All have in common a failure to adjust to changing conditions. Perhaps this is the real promise of Big Data. Used correctly it offers the ability to not only adjust but to lead the way to realizing the holy grail of creating a truly multi-channel shopping environment. -- Tom Van Aman, Marketing Strategy, Allstate!
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