February 19, 2015 | Written by: Mark S. Yourek
Categorized: Industry Insights
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It’s a given that the retail industry is always in a state of flux, constantly evolving to keep up with new competitors, new business models, and customer behavior and preferences that are always shifting and changing.
One of the most important of these factors is the impact of technology. At IBM, we’re in the business of helping businesses drive value — and gain competitive advantage — through the innovative use of technology. So the question needs to be asked: what do we see as being the hottest and most important technologies driving new value in the retail industry today?
In this four-part blog series we aim to answer that. The first one we want to highlight is the impact of Big Data and Analytics.
The term ‘big data’ is in pretty wide usage these days, but just to be clear: it refers to the vast and growing collective pool of information that is available to any retailer who decides to tap into it and drive value from it. Big Data includes all forms of enterprise data, but extends far beyond that, to all kinds of publicly-available data, generated from every conceivable source.
Big Data belongs to no single institution or enterprise, follows no single structure or format, and is constantly evolving, growing and changing shape. And, it is rapidly becoming a global ‘natural resource’ that can be mined using advanced analytics so as to give new insight into any number of issues of interest to retailers.
A sampler of the kinds of things Big Data could shed light on might include emerging consumer trends and product trends, the management of operational resources, the maintenance of equipment and physical plant, forecasting short- and long-term demand more accurately, and understanding individual customers much more intimately than ever.
To appreciate the implications here, let’s consider this last item a bit more closely, as a case-study in how big data and analytics can drive value for retail. Everyone’s well aware that consumers are using today’s technologies very aggressively in their shopping: with nearly universal information access, they are researching products, checking reviews, talking to others and comparing prices and offers assiduously. They want pertinent information and offers, delivered in a timely way: the right information, at the right moment, based on the shopping task they have defined for themselves at the time.
In essence, consumers want retailers to treat them as if each were a unique ‘demographic of one’ — a single individual who is, at any given moment, at a specific place in their own personal shopping process, and who should be related to in an informed and timely way by any retailer hoping to capture their business.
It’s no accident why consumer demands are escalating like this, in 2015: it’s because their recent experiences have convinced them that retailers can, in fact, provide this level of service, in a dependable and intelligent way: they know that the data now exists, in the wide realm of Big Data, and that the necessary analytics exist and are within reach.
At any moment, within this universe of information lie all kinds of telltale clues about what individual consumers are shopping for, what their specific preferences are, who they are taking advice from, what their price sensitivity may be, and what they are likely to do next. Using these clues, with the right technology a retailer might readily deduce what kinds of offers could be decisive in persuading them to purchase a given item from a specific source — and at the most profitable price.
Without question, retailers who find ways to interact with their customers like this, in more personal and relevant ways, will gain increasing favor, and will steal market share from their competitors. Right now in 2015, we’re standing at the threshold of untold innovation in this realm. That’s why we’re convinced that big data and analytics is one of today’s hottest retail technology trends.