Rise of Big Data Analytics Dramatically Changing Retail Landscape

Published on March 5, 2014

Big data and analytics (BDA) are driving conversations in the retail industry these days as results of successful use cases turn the heads of decision makers who ponder its value in their own companies’ operations.

When they heard of Macy’s investment in BDA yielding a 10 percent increase in store sales last year, those decision-makers envision salvation for their own troubled brick-and-mortar investments. In the era of online shopping, this may be the most important time to pay attention to any tactic that can boost physical store sales.

When, at the National Retail Federation’s “Big Show” in New York in January, they learned about Kohl’s five-store geospatial data experiment in which a customer might receive a coupon on his/her mobile device for a discount on shoes simply because she is standing in the shoe department, imaginations soared.

The Macy’s and Kohl’s of the retail world are in a “big data analytics haves” segment, as outlined in the “Business Strategy: IDC Maturity Model Benchmark – Big Data and Analytics in Retail in North America” report released in February. That report says 20 percent of the industry are “BDA haves,” while 20 percent are “BDA have nots.” The remaining 60 percent are in a middle group on a bell-shaped curve that will help drive the future of big data and analytics in retail.

According to IDC, that future will be enhanced when companies realize that BDA competencies become optimum only if five dimensions mature together: intent, people, process, technology and data.

Bill Franks, author of “Taming the Big Data Tidal Wave,” adds that spurring that maturity is dependent on “having a strategic vision for how you will analyze the data, and how it will support your organizational mission and goals before you get started.”

Without that vision, big data is just that: data that grows at a rate of 2.5 billion gigabytes every day and that doubles every two years when you consider both structured (numbers, results) and unstructured (social media, video, etc.) categories, said Ginni Rometty, IBM’s chairman and CEO, in her keynote speech at the National Retail Federation’s “Big Show.”

In a nod toward increased mobility, she added, “more people have cell phones than running water and 25 percent of the world will (soon) be on a social network.” When you understand that 80 percent of the world’s data has been created in the last two years, then you have an idea of the scope of the issue.

Harnessing all this and turning it into an advantage in the retail industry requires “mature BDA process management, executive leadership, line-of-business utilization of BDA insights, collaborative cultures among lines-of-business analytics groups, and skills in advanced analytics, data and content management and management of BDA IT hardware,” according to a recent Integrated Solutions for Retailers story.

All of that is inhibited by “the plethora of technology choices; the range of analytics, technology and management skills; and the amount of hype,” the story added.

An important understanding about the use of big data and analytics is that it isn’t just for big companies, Rometty said at the “Big Show.” Smaller, “more nimble companies may have an easier time in changing culture to accept big data analytics.”

Decision makers in the highly competitive retail world are coming to understand that they are falling behind companies using BDA to their advantage. Results like those of Macy’s and others, and experiments like that of Kohl’s and others, are driving not only conversations, but culture change.

We look forward to seeing the retail landscape be further changed by BDA. In addition, when combined with the right geospatial and location-based intelligence, the sky is the limit with regards to how this information can be leveraged to advance businesses goals.

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