“This study shows that while the retail sector is being impacted by Big Data today, there are still many more opportunities for retailers to use Big Data analytics to optimize demand forecasting, merchandising, promotions, and loyalty program management,” said Sandy Steier, co-founder and CEO of 1010data. “When retailers truly embrace data discovery, they quickly move beyond intuition and guesswork and instead rely on data-driven decision.”
For the study, 201 U.S. retail executives were interviewed across a range of retail sub-segments including grocery, drug, specialty, discount, department store, restaurant, and hospitality. Most retail executives (62 percent) believe leading retailers will capitalize on Big Data’s competitive advantage in the next five years. This was followed by 18 percent of executives who believe retail is already there, and 15 percent who said that Big Data will reach its potential by the end of 2014.
While executives are starting to acknowledge the competitive advantages of Big Data, nearly half of the respondents (46 percent) agreed that retailers require a better understanding of how Big Data can advance their business. In addition, all but a few (7 percent) respondents indicated that they perceive retailers as holding out on using Big Data. Key reasons why retailers are holding out include:
• The cost and/or complexity of implementing Big Data needs to come down (42 percent)
• Need simplified Big Data solutions that are intuitive to business users (30 percent)
• Retailers are still challenged with basic business reporting and not ready for Big Data (22 percent)
• Need Big Data solutions to better address the needs of retailers (21 percent)
• Need better time to value for Big Data (17 percent)
Executives further elaborated on retailers’ biggest obstacles to getting the reporting and analytics tools which retailers need to make better data driven business decisions, with 41 percent admitting that different users and departments have different ways of measuring the business. This was followed by:
• Can’t analyse data at low enough level of detail (e.g., store-SKU day-transaction-customer) (38 percent)
• Difficulty accessing and integrating the enterprise or third-party data users need to analyze (34 percent)
• Queries take too long to run (16 percent)
• Reporting tools can’t handle the level of sophistication of retailers’ business questions (15 percent)
• Lack of service and long queues in reporting requests to IT (13 percent)
Despite the retail industry’s perception of obstacles, executives believe that Big Data can have a positive impact on business processes, with targeted offers and promotions receiving the greatest benefit (50 percent), followed by demand forecasting and supply chain modeling (49 percent), customer-centric marketing (43 percent), loyalty program management (35 percent), workforce management (28 percent), store design (18 percent), and loss prevention (16 percent).
Additionally, with on-shelf availability representing an $800bn problem for retailers across the globe, two thirds (66 percent) responded that Big Data can help retailers do a better job of managing product availability for consumers by reducing out-of-stock situations, which can lead to lost sales and dissatisfied customers. Other essential areas of improvement include predicting future demand to inform supply chain decisions (50 percent); reducing overstocks that negatively impact turns and could lead to margin erosion (47 percent); ensuring product assortments are finely tuned to store and channel-based demand (41 percent); and enabling alternative fulfillment means such as ship-to-store and ship-from store (29 percent).
Executives also understand that Big Data’s benefits extend beyond a business’ internal processes, including sharing data, such as POS, inventory, and customer loyalty with suppliers. The areas of greatest benefit include:
• Suppliers can better forecast and meet consumer demand (67 percent)
• Retailers can strengthen partnerships with their suppliers (52 percent)
• Retailers’ merchandising strategies can benefit from suppliers products and category knowledge (52 percent)
• Sharing data with suppliers can help retailers increase sales (41 percent)
Only 2 percent of respondents said that there are not any benefits to sharing data with suppliers.
Although nearly all executives believe that using Big Data is important if retailers want to remain competitive (38 percent said important, followed by 35 percent very important and 23 percent moderately important), many retailers do not conduct more tests to introduce a new product assortment, promotion, store format, or other initiative because their resources are stretched too thin to dedicate time to testing (45 percent). Other key reasons include: retailers require better tools and processed to set up tests and analyse results (43 percent); tests are too expensive or cumbersome to execute with all of the data involved (38 percent); and gathering and organizing data from test results is too difficult (18 percent).
Source: 1010data Inc.