Harnessing the power of business information…
In today’s volatile economy, retailers are constantly looking for new ways to reach new customer demographics and sell more products and services to existing customers.
Brendan Moran, EMC data scientist, told Retail Technology that, at the same time, retailers have had to deal with a huge increase in business information, through sales, financial, market, social and customer data, which exists both inside and outside the corporate firewall.
A study from EMC and IDC called The Digital Universe, which measured all of the digital data created, replicated and consumed each year worldwide, found that in Western Europe the ‘digital universe’ is expected to grow tenfold between 2012 and 2020 – at 30% a year. “This data growth is said to be driven by internet usage, social networks, smartphones and the falling costs of the technology that creates, captures, manages, protects, and stores this information,” Moran said.
Information quality, not quantity
“This data growth highlights a massive opportunity for retailers, who need to find increasingly innovative ways to mine it and transform it into valuable, actionable insight that they can use to drive sales,” he added. It could be seen that the retail industry has recently found its answer through a relatively new concept known as ‘big data,’ which is essentially the analysis and interpretation of business information – from multiple sources and in real time – to make better informed decisions.
“Interestingly, research we conducted last year with think tank The Policy Exchange, found that 53% of retailers are either already using Big Data analytics or plan to deploy it within their organisation within the next year. But why should they?” Moran asked.
“Say you’re an online retailer and you want to increase the basket value from each customer. In assessing the potential value of stocking a new category of product or cross selling additional products, you might want to take a variety of insights into account, including conversation topics between your existing customers on social media networks, real-time weather forecasts, and – fundamentally – trend-data relating to customer shopping patterns,” he continued. “For example, if a customer buys a trowel, you need to discern whether it’s for construction or gardening. Past and current browsing history will help but also too will social media if, for example, a celebrity has endorsed one of those activities.”
Moran explained that all of this data needs to be captured, brought together and modelled; sometimes from a retailer’s own data sources, sometimes from external ones. “This is what big data analytics platforms can do – and companies like Amazon are already making full use of them,” he added.
Maximising business agility
Another benefit of this type of insight to retailers is a more sophisticated and agile business, which is able to capitalise on new trends or opportunities in hours or days, instead of months or years. “O’Reilly Media, for example, uses big data analytics to spot consumer trends and insight points, analysing mountains of data to identify the hot topics for their next set of ‘how-to’ books and guides – both from targeted predicted market demands, or data collected themselves,” he said.
He also said there is no reason why retailers cannot adapt this strategy for themselves to gain insights from their own customers and prospects. “Food retailers like Tesco for example, are already using data captured through its Clubcard loyalty scheme to track customer behaviours, especially to link all purchases using a variety of debit/credit cards and cash. This helps the retailer to decide what products to stock at which stores, when to alter prices, offer promotions and discounts and how to target different customer segments Retailers need to adapt their strategy to focus on understanding their customers otherwise they will miss out to the competition. Tesco’s focus on understanding customer requirements at an individual level has contributed to the increase in their share price over the past year; contrast this with Morrisons’ stance of not having a store loyalty card or an online presence and its comparative share price,” he pointed out.
Exploiting endless opportunities
Moran said the opportunities open to retailers though big data analytics are endless, “especially as retailers are able to use it to understand the combination of behavioural patterns of an individual customer that that will ultimately lead to a purchase”. In another example, Moran suggested a retailer could test if a behavioural pattern, such as tweeting about gardening on social media, has an impact on purchases of gardening products. These insights can help retailers change their marketing strategies in order to conquer new customer demographics and expand current ones.
“While the volumes of information continue to explode, each piece holds value, which is waiting to be mined and interpreted,” he concluded. “If retailers equip themselves with the right analytical tools, they can harness big data effectively, to exploit new intelligence, spot emerging consumer trends, and accelerate retail initiatives that may otherwise have been impossible to conceive.”
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Tags: Big Data, Big Data Analytics, Brendan Moran, Business, business information, Business Information Portal, Business News, customers, data, Data scientist, EMC, EMC data scientist, Entrepreneur, IDC, Retail Technology, retailers, SMEs, technology, The BIP, The Digital Universe