Retailers could have perhaps the most to gain from successfully corralling the massive amounts of data customers are sharing about themselves via transactions as well as by sharing their opinions about products via social media and other online forums.
But ironically – though the retail industry is under tremendous pressure to stay competitive – the industry as a whole lags behind other industries in its use of data analysis and big data analytics.
A report from Ventana Research suggests that only 34% of retail companies are satisfied with the processes they use to create analytics. Perhaps fueling that angst is the fact that 71% of retailers are still using spreadsheets as their primary data analysis tools, the research notes.
Many retailers are finding themselves paralyzed by the reams of data streaming into their networks. For example, according to a recent infographic from marketing optimization company Monetate, 32% of retailers don’t know how much data their companies store. And more than 75% don’t know how much of their data is unstructured data like call center notes, online forum comments and other information-rich customer data that can’t be analyzed in a database.
Monetate also finds that lack of data sharing is the largest obstacle – affecting more than 51% of retailers – to the effective use of big data. Other hurdles include not using data effectively to personalize marketing communications (a hurdle for 45%) and not being able to link data together at the individual customer level (a challenge for 42%).
But several factors are dramatically altering the retail landscape that will require companies to overcome these challenges and make broader, deeper investments in big data analytics and data analysis, Ventana notes.
Here’s why:
- Manufacturers have begun bypassing retailers and forming direct relationships with consumers via online sales and social communities. Before this growing trend, the retailer alone owned the relationship with the consumer, Ventana notes. But now the relationship is now shared between the retailer and its suppliers. “Given the new coopitition environment with suppliers, retailers must use analytics to compete,” according to Ventana’s research. “Their decreasing brand equity means that they need analytics not just for brand strategy and planning, but more in tactical areas such as merchandising and promotional management.”
- Offline and online consumer behavior is merging with online retailers like Amazon, threatening the business models of traditional brick-and-mortar companies. Consumers are increasingly visiting physical stores but using smartphones and tablet computers to search the web to find the best prices for the products they go into the store to investigate. “There has historically been a wall between the .com area of a company and the rest of the organization,” according to Ventana’s research. “Now, companies such as Sears are investing heavily to gain full digital transparency into the supply chain so that they can change pricing on the fly. Eventually the entire industry, including midtier retailers, will have to focus on how analytics can improve their business.”
- Retailers have shifted away from focusing on customer acquisition to customer retention. “As data proliferates, businesses gain the ability to look closely at how individuals contribute to a company’s revenue and profit,” according to the research. “Analytics can help pinpoint changes in behavior that matter, and more importantly, indicate what organizations can do to retain desired customers or expand share of wallet.
Next Steps:
- Subscribe to our blog to stay up to date on the latest insights and trends in data analysis, and big data analytics.
- Please join us on Tuesday, December 18th at 1 p.m. EST for our complimentary webcast, “TIBCO Spotfire Delivers Game-Changer – Brings The Power Of Discovery To Big Data,” presented by Lou Jordano, Director of Product Marketing, TIBCO Spotfire. In this webcast we will demonstrate the generally available version of Spotfire 5, the next generation of data discovery and business analytics, offering breakthrough capabilities to speed analysis of big data.
