HOW THE GAME IS CHANGING: BIG DATA IN RETAIL

BIG DATA CAN IMPROVE EXECUTION, SOMETHING RETAILERS UNDERSTAND VERY WELL.

ANY SIZE RETAILER, SMALL OR LARGE, CAN LEVERAGE IT IF THEY’RE WILLING TO TAKE THE PLUNGE.

BIG DATA CAN CREATE NEW, PERFORMANCE- IMPROVING CAPABILITIES.

Brick Meets Click delivers the strategic insight and guidance that retailers, supplliers, and technology providers need to drive growth by meeting shopper BRICK MEETS CLICK

BIG DATA UPDATE, 4Q 2013

HOW THE GAME IS CHANGING:

BIG DATA IN RETAIL

We’ve been tracking retailing professionals’ experiences and attitudes toward big data regularly over the past two years. The March 2013 survey made it clear that big data had the potential to change the way retailers compete. More than 100 profes-sionals participated in the October 2013 survey. The results confirm the increasingly important role big data is playing in “changing the game” of retailing, and they point to what we should be watching for in the next 12 to 24 months.

Overall, big data and retail analytics may be only one of the new challenges retailers are wrestling with, but it stands out because it can do so much — specifically:

3

A must-have capability?

73% SAY IT’S NECESSARY FOR OMNICHANNEL EXECUTION.

4

Biggest competitive advantages?

73% CITE ITS PREDICTIVE ANALYSIS CAPABILITIES.

Speed and agility.

72% SAY IT WILL SUPPORT FASTER DECISIONS.

5

Most common focus for projects?

31% FOCUS ON OPTIMIZING DELIVERY OF SHOPPER MESSAGES.

Customers.

28% ARE MINING FOR SHOPPER INSIGHTS.

6

How will it surprise and delight

91% SAY IT WILL MAKE GREATER PERSONALIZATION POSSIBLE.

shoppers?

7

Which digital breadcrumbs are

FOR THE FIRST TIME, SOCIAL MEDIA AND WEBSITE DATA RANK

retailers tracking?

AS HIGHLY AS ITEM-LEVEL SALES DATA.

7

Will access to customer data

MANY SEE LIMITS IN THE FUTURE, BUT WILL RESTRICTIONS BE

be restricted?

DRIVEN BY GOVERNMENT REGULATIONS OR SHOPPER CONTROL?

8

Where’s the supply-side focus?

INVENTORY OPTIMIZATION AND SUPPLIER COLLABORATION

GET THE HIGHEST RANKINGS ON THE SUPPLY SIDE.

10

The ROI is taking shape.

HALF THE COMPANIES RUNNING BIG DATA PROJECTS HAVE

ESTABLISHED THE BUSINESS CASE AND BEGUN TO MEASURE BENEFITS.

10

Who sponsors the majority

MARKETING LEADS AT 55%, FOLLOWED BY MERCHANDISING AT 14%.

of projects?

BIG DATA SCORECARD, 4Q 2013

Big Data is creating the capabilities retailers

need to compete in a changed marketplace.

73

%

AGREE BIG DATA IS NECESSARY TO EXECUTE A

SUCCESSFUL OMNICHANNEL STRATEGY.

Traditional competitive tactics will no longer generate the necessary sales growth in a marketplace that’s been changed by ecommerce and the challenge of connecting with digitally empowered shoppers. Among retailing professionals, nearly 3 out of 4 believe that big data will play an important role in creating the capabilities needed to execute competitive omnichannel strategies, from managing assets across channels to radically improving customer service and conducting social media dialogs with shoppers.

63

%

SAY BIG DATA APPLICATIONS MAKE IT EASY TO

INNOVATE IN WAYS THAT DISRUPT THE MARKET.

Bringing disruptive change to the market isn’t for all retailers, but big data is likely to be a part of the process for those who want to play in this space.

A MUST-HAVE

Increased speed and agility.

Those who can make and execute decisions confidently and quickly will have the advantage in today’s fast-moving marketplace, and big d ata is expected to deliver increased confidence, speed, and agility.

PREDICTIVE ANALYTICS WILL HELP “SHOW WHERE THE BUSINESS IS GOING.”

RAPID EXECUTION WILL CAPTURE MORE BENEFITS.

Big data is also making it possible to find out what works and doesn’t work faster than ever before by including new data sources, and making it possible to move beyond traditional statistical tools like sampling to direct experimentation.

THE BIGGEST COMPETITIVE ADVANTAGES?

>

73

%

USING PREDICTIVE ANALYSIS

72

%

SUPPORTING FASTER DECISIONS

49

%

INCLUDING NEW DATA SOURCES

33

%

EXPANDING BEYOND SAMPLING

33

%

CREATING SINGLE DATA SOURCE

25

%

CONDUCTING LARGE-SCALE EXPERIMENTS WHAT’S THE MOST IMPORTANT

WAY BIG DATA CAN BE USED TO CREATE VALUE FOR RETAILERS?

Customer messages and

shopper insights.

Omnichannel shoppers offer retailers more opportunities for communication, but the process is more complicated.

TOP BUSINESS FOCUS: MORE EFFECTIVE CUSTOMER COMMUNICATIONS.

Almost a third of current big data projects involve efforts to “optimize the delivery of messages to shoppers.” Projects range from targeting offers and price optimization on a local level to improving the timing of display advertising and leveraging two-way dialog with shoppers.

A STRONG SECOND: MINING DATA FOR SHOPPER INSIGHTS.

More than a quarter of active projects are mining different data sources for shopper insights. This was the top project focus in our March big data survey.

MOST COMMON FOCUS FOR CURRENT

PROJECTS?

>

0 10 20 30 40 50

31

%

28

%

22

%

8

%

11

% optimizing delivery of messages to shoppers mining for shopper insights demand and assortment planning collecting/analyzing

market basket transactions all other

BUSINESS FOCUS ON CURRENT BIG DATA PROJECTS

Better personalization and

more shopper solutions.

Improving the shopping experience remains a consistent emphasis, but meaningful differentiation turns on how well retailers can “surprise and delight” their customers.

91% say big data will help retailers personalize their appeal to shoppers. 79% say it will help retailers offer more solutions to customers

(i.e. bundle together products that solve a shopper problem).

These assessments line up with the top sources of value big data can generate for shoppers. The top two were “receiving more customized offers” and “enabling discovery of more choices.”

HOW WILL BIG DATA “SURPRISE AND DELIGHT”

SHOPPERS?

>

91

%

PERSONALIZING OFFERS

79

%

OFFERING MORE “SHOPPER SOLUTIONS”

70

%

IMPROVING PRODUCT AVAILABILITY

65

%

INTRODUCING NEW PRODUCTS

65

%

AUTOMATING ROUTINE REPLENISHMENT

TOP 5 WAYS BIG DATA WILL HELP RETAILERS SURPRISE AND DELIGHT SHOPPERS:

>

RESTRICTED BY INDIVIDUAL CUSTOMER ACTIONS RESTRICTED BY GOVERNMENT REGULATION

New sources are becoming important.

For the first time since we’ve been tracking big data attitudes among retailing professionals, social media and website data have gained parity with item-level sales and shopper transaction data as a source of customer insights.

WHICH “DIGITAL BREADCRUMBS” ARE RETAILERS FOLLOWING TODAY?

Access may be limited.

There’s concern that access to at least some of this data may be restricted in the future by either government regulation or individual actions.

Almost half of those surveyed thought this was likely, but a large percentage was skeptical that individual action would have much impact.

WILL ACCESS TO SHOPPER DATA BE RESTRICTED?

>

38

%

SOCIAL MEDIA

35

%

WESITE VISITS

35

%

ITEM-LEVEL SALES

35

%

SHOPPER- IDENTIFIED TRANSACTION DATA

28

%

SHOPPER FEEDBACK

25

%

MOBILE DEVICES

24

%

MARKET BASKET DATA

16

%

IN-STORE TRACKING

Inventory optimization and supplier collaboration

get top attention.

The supply side of retailing is tailor-made to benefit from big data analytics, because the work processes generate a lot of information. Data sharing – both within and across/be-tween organizations – will be one of the keys to capturing this value.

On inventory optimization, the ability to bring together sources of data that could not

previously be combined will improve forecasting and make it possible to localize invento-ry to store-specific requirements.

On supplier collaboration, big data is expected to help integrate ordering and

replen-ishment data across organizations.

WHERE’S THE

SUPPLY SIDE FOCUS?

>

RATING BIG DATA’S POTENTIAL FOR IMPROVING THE SUPPLY SIDE OF RETAILING 1 = LOW, 5 = HIGH

4.4

INVENTORY OPTIMIZATION

4.2

SUPPLIER COLLABORATION

3.9

CUSTOMER SERVICE MANAGEMENT

3.5

WORKFORCE/ LABOR MANAGEMENT

Shopper data joins item data.

Item-level movement data — POS data and market basket data — is still recognized most broadly as the type of big data that will improve supply-side performance, but tracking in-store shopper behavior and shopper feedback are not far behind.

WHAT DATA HAS VALUE FOR IMPROVING SUPPLY-SIDE PERFORMANCE?

>

0 20 40 60 80 100

86

%

75

%

73

% item movement tracking in-store

Adoption is progressing and ROI is taking shape.

62

%

OF COMPANIES RESPONDING WERE INVOLVED

IN BIG DATA PROJECTS.

50

% OF THEM HAVE ESTABLISHED THE BUSINESS

CASE & 48% ARE MEASURING BENEFITS.

WHAT’S THE STATUS OF

BIG DATA PROJECTS?

>

MARKETING SPONSORS THE MAJORITY OF BIG DATA PROJECTS.

55

%

MARKETING

14

%

MERCHANDISING

9

%

OPERATIONS

7

%

IT

25

%

START UP

18

%

ASSEMBLING DATA

11

%

PROTOTYPING

18

%

IN PILOT

27

%

PRODUCTION

ALMOST HALF OF PROJECTS ARE AT OR NEAR COMPLETION.

Lack of organizational readiness.

Among the top four barriers cited, none stood out dramatically, but they all represented different dimensions of the same thing: a lack of organizational readiness to take advantage of big data.

THE BIGGEST BARRIER

TO ADOPTION?

>

WHAT ARE THE MOST IMPORTANT BARRIERS TO PROGRESS IN USING BIG DATA AMONG THE COMPANIES YOU WORK WITH?

8 = MOST IMPORTANT 1 = LEAST IMPORTANT

5.5

INADEQUATE INFRASTRUCTURE/ STAFF

5.4

BUDGET LIMITATIONS

5.1

SHORTAGE OF DATA SCIENTISTS

4.8

ORGANIZATIONS AREN’T NOW USING AVAILABLE DATA

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