Mar 20 2014
Many large and medium-sized retail companies rightly take pride in their down-to-earth, traditional operations. However, while the idea of “driving business outcomes with big data” seems like anything but a down-to-earth practice, retailers who use big data are better able to stay committed to their customers and their business.
There are innumerable benefits for retailers who use big data. In fact, studies show 62% of retailers report that using big data gives them a competitive advantage in their business.
While, the advantages gained can be endless, specifically, there are 3 key ways big data changes the game for retailers.
1. Big Data Gets Retailers Happier Customers and More In-Demand Products
Big data provides customer insight that allows retailers to learn about their customer’s favourite products and buying habits. In McKinsey’s February report, they discuss Starbucks’ sister site, frappacino.com, that allows users to create their own virtual Frappuccino. Through this website, Starbucks not only encourages meaningful customer engagement with its product, but also cultivates insights regarding most popular drinks and combinations.
Retailers who utilize big data can drive these same outcomes and make informed product selection decisions from increased information regarding customers’ wants and needs.
2. Big Data Empowers Retailers to Take Control of Their Supply-Chain
Big data puts the ‘manage’ back in supply chain management by curating information that helps retailers keep a bird’s eye view on the supply chain. Data gleaned from supply chain operations can help reduce store out-of-stocks, improve logistics, and optimize operational procedures.
Transparent data about the whereabouts and distribution of product inventory at the hands of a retailer allows for an accurate account of what products are needed, and for when is the best time to buy them. This data reduces overstock and out-of-stock situations that take a hit on the overall revenue of a business.
3. Big Data Helps Retailers Make Better Business Decisions
Big data unlocks information that allows retailers to understand what drives their sales, equipping them with the tools they need to make better business decisions. Retailers can eliminate the guess work from business decisions by basing their next steps on data, not intuition.
Big data quantifies the effect of promotional ads and price changes to help retailers understand what is driving business and what is crashing it. The Pareto Principle suggests that 20% of actions are accounting for 80% of a result. Big data exposes the 20% of actions that retailers should focus 80% of their time on, allowing for more productive and effective use of resources.
Overall, utilizing data helps retailer make better business decisions, increase revenue, and strengthen customer engagement. So, while using big data can seem like a big change for some retailers, it is certainly a change in the right direction.