How Retailers Can Use Big Data to Their Advantage

Despite the negative perception Big Data received from the
NSA spying scandal, it continues to be a powerful technology which gives a
competitive advantage in a retail arena. After all, at the heart of the NSA’s
Prism program is successful utilization of Big Data, which includes recording,
sorting and analyzing large quantities of data to gather specific insights. Whether
it’s identifying potential threats or potential customer opportunities Big Data
is here to stay, and retailers need to take notice.

How we got here

As technology improved we got better at tracking and recording information.  In case of NSA, its giant data centers that
store all the conversations, emails and phone call records.  On the other hand, retailers record large
quantities of data as well:  customer
transaction data, video footage from the store, data from the website,
inventory and other. Recording and storing was the easy part, in addition to
data someone needs to analyze it and gather insights and provide leadership in
identifying which opportunities to pursue.

Big Data Applied

Retailers can use Big Data to look inward to optimize in-store performance and
build on their success. For instance, Walmart was one of the first retailers to
use Big Data to improve their supply chain and lower inventory costs. Big Data
is now part of Walmart’s DNA and is used to recommend suitable products to
Facebook users based on their interests, which is helping drive in-store
traffic. Big Data helps improve countless marketing efforts with in-store data
collection. The data collected continues to generate valuable customer
information as well as determine the effectiveness of current campaigns.

Retailers who are experiencing rapid growth can identify
“zombie stores,” stores that are draining money because they are in the wrong
locations or financially under-performing, by using Big Data. Retailers can use video
to optimize store layouts by analyzing thousands of hours of customers shopping
footage. This strategy helps optimize floor plans and gave important insights
about in-store customer behavior.

At Yaffe, we analyze retailers’ transactional data to determine
which customers are most likely to buy again soon and even what they’re most
likely to buy next. This information is used to build more effective direct
marketing programs that drive store traffic and sales.

Potential problems

Technology and innovation has been a double edged sword; the opportunities grow
exponentially along with the mistakes that can be made on your journey to
figure out how to use the technology. So you’ve collected all this data and now
what? The sheer amount of data that retailers collect presents a big challenge.
Analyzing data for the sake of analyzing is a strategy that will create a black
hole to throw your time in.  With so much
data, there needs to be a clear focus on the bottom line of what you are trying
to achieve and clear questions you want to answer.  Data by itself doesn’t produce insights; the data
is useless unless you have a strong team of statisticians and programmers to
analyze it.


Conclusion

Like it or not, technology is making our lives transparent. Our actions are
recorded through video, mobile and web. Smart retailers will capitalize on
these evolving technologies and gain competitive edge by generating insights
and taking advantage of the opportunities Big Data offers.

Dmitri Pivtorak, Swimming in a deep pool of data  

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