Big Data - Helping Retailers Move From Operational To Strategic Wipro Leaders
Traditionally, retailers have been customer focused. This is evident in the commitment and enthusiasm that retail employees show when attending to customers. They know what their customers want. Employees are trained to be attentive and polite. They are encouraged to acquire deep product knowledge so that they can serve customer needs. Feedback from customers helps define future marketing strategies and store operations. In turn, it impacts supply chain management. But that is set to change.
The Economist Intelligence Unit (EIU) study commissioned by Wipro called The Data Storm: Retail and the big data revolution showed that the most common priority for data analysis spending by retailers in recent years has been marketing: 46% of respondents put this amongst their top three areas of focus. Marketing also remains one of the most likely projected areas of big data spend in future, cited by 40%. The irony is that only 30% were confident that Big Data is delivering the sales increases that they had hoped; most (52%) were simply not sure. The question is: should retailers move from leveraging Big Data for operational gains to seeking strategic gains? The EIU study provides some early pointers into what the retail industry thinks (see Table 1). It shows that retailers are raring to use Big Data to build corporate strategy (60% over the next two years as opposed to 40% in the past two years).
The shift in focus is nothing short of dramatic. This is because investments in Big Data to define and determine corporate strategy have shown significant ROI. About 78% of respondents in the study said that they have seen a positive economic return from investment in data analysis for the strategy area, the highest figure for any function or process. Richard Baker, Chairman of DFS, a UK furniture retailer, notes that “leading companies are using data to run their whole business thinking, not just promotional activities.”
This means retailers will use Big Data and analytics to answer questions such as:
Growth: Where are we today? What should our roadmap be so that we reach our 5-year target? What are the changes we need to make within the organization to reach our goal?
Financials: How can we use data to balance risk with our vision for growth? How can we improve promotional spends by leveraging data to target hidden opportunities?
Customer: How can we deploy data and intelligence to enrich customer experience? How can we deliver an omni channel experience that results in improved sales, service and higher loyalty?
Store: What can be done to optimize store operations using data in order to improve inventory, reduce shrinkage, and manage returns – simultaneously with labor optimization and a memorable in-store experience?
Merchandize: How can we innovate around products, markdowns, replenishment accuracy and seasonal volumes to meet customer demands?
Supply Chain: How can we extract more value from suppliers/ distributors and channel partners?
Technology: What technologies are best suited to forecast business needs so that we reach our growth targets?
Big Data is slated to gain center stage in retail once it begins to shape financial decisions, risk management, diversification, people and resource management and conformance to legal and regulatory requirements.