Whether the official definition puts it in arcane measurements like terabytes or petabytes, for retailers, big data is seen as this: data sets which are too large, too complex and too disjointed to manage, analyze and use in traditional systems to determine profitable business decisions. The retail landscape is more complex than ever, with consumers expecting a more seamless experience between channels and devices. Furthermore, retailers must contend with giants like Amazon.com that use their size and structure to out-innovate the market at lightening speed.
What retailers must realize is that they have at their fingertips a precious commodity, the oil of modern business. When mined and refined correctly, big data can provide a wealth of customer insight, organizational alignment and — just like oil — a flowing revenue stream.
From search data to point-of-sale data, e-commerce platform data to order management output, the types of data that retailers have at their fingertips can be both plentiful and overwhelming. However, data and operational silos continue to stifle the ability to gain a 360-degree view of business decisions, of customers and ultimately the health of the retail business.
Retailers are increasingly turning to cloud-based data management solutions to synch their data into a cohesive view, due to the speed, agility and reduced cost of set up. IDC predicts that spending on cloud services will reach $107 billion by 2017, with software as a service (SaaS) capturing 59.7 percent of that spend. As retailers shift to SaaS solutions, they'll increasingly be able to manage their data in a less expensive, faster and more cohesive manner.
However, data management goes far beyond the cloud. Most retail businesses are still organized in distinct silos, with marketing, merchandising and operational teams meeting infrequently to review the overarching business. Contrast this with the fact that consumers are shopping 24/7 in-store, from a catalog, online and on mobile devices. In order to close this chasm between operational structure and customer expectations, great retailers will be evaluating their business frequently during the week, looking at one common data analysis and making coordinated decisions as close to real time as possible.
Gartner predicts that 4.4 million jobs will be created around big data by 2015. Consider that right now there are almost 4,000 jobs open in San Francisco alone for data scientists. Retailers must be prepared to shift budgets to compete with the Googles and Amazons of the world to hire these data-focused team members. Most importantly, they must look for the right type of talent. Retailers who are succeeding are those using smart data management tools to empower fewer, higher-level analysts with a keen understanding of correlations between data sets and overarching business applications, not those who have 10 analysts crunching data all day with limited business insight.
Looking as far out as 2015, Gartner predicts that 85 percent of Fortune 500 organizations will be unable to exploit big data for competitive advantage. This means the vast majority of organizations will allow that valuable commodity to sit below the surface and won't be prepared to take action on it to grow their businesses. And unlike big oil pools that can sit silently building value for decades, big data has a shelf life that must be tapped now to uncover its value. With that, innovative retailers will continue to outpace and outsmart their larger competition by using their synced data to take actions that make their customer experiences better and their businesses more profitable.
Big data, just like petabytes or exabytes, can be a nebulous concept to grasp and incorporate into business planning. That said, consider these very specific outcomes that retailers have seen in the past year when they began to sync, correlate and take action on their data sets:
- By taking action on its web analytics and inventory data, a leading department store determined that solving the issue of consumers viewing products that had no stock availability could create $200,000 worth of revenue.
- By matching up order data and CRM data, a high-end retailer discovered that nearly 2,000 VIP customers hadn't made a purchase in the last six months, and by reaching out to them via email, it generated $225,000 in revenue.
By managing, hiring and taking action on this new natural resource, retailers can build the foundation for years of success with the oil that never runs dry — big data.
John Squire is the president of eCommera North America, a retail software company.