We live in an era of data. IBM estimates that we produce around 2.5 exabytes, or 2.5 quintillion bytes, worth of data every single day. Across industries, enterprises are embracing the idea that big data – or, more accurately, the insights data can provide – can redefine the way they do business. Retail is no different, and as stores introduce more retail technology and services, their ability to collect customer, inventory and purchase data is rapidly increasing.
The challenge, however, is not a lack of data. Most retailers have been collecting data for a number of years now. Instead, the issue is often having too much data, to the point that it becomes difficult to turn it into actual information. According to TotalRetail, 60 percent of US retailers say they don’t have data that is reliable enough for executing effective customer acquisition initiatives. With the rush to collect as much data as possible from so many different sources, retailers missed the essential pieces needed to be successful.
A Clear Strategy
Before anything else can be put in place, retailers need to focus their efforts and develop a clearly defined big data strategy. Effective retailers know the outcomes they expect from their investment, what aspects of their organization they want to improve using data, and what they need in order to make this vision a reality. Without this, it’s easy to purchase the wrong equipment or collect the wrong data for your goals. For example, a big data strategy focused around operational and supply chain improvements will look a lot different than a strategy aimed at improving marketing and sending personalized offers to customers. By aligning the big data strategy with the larger business objective, retailers can make the rest of the process much smoother.
The Right Hardware
Retail technology is constantly being developed. With so many options, choosing the right front-end and back-end hardware can be a real challenge. Point-of-sale (POS) systems, beacons, Radio-Frequency Identification (RFID) tags, digital displays, smart cameras and other Internet of Things (IoT) devices are all examples of in-store technology that can collect valuable data on customer shopping patterns. But to be effective, all of it must be integrated to avoid silos and provide a complete, 360-degree view. This in-store technology must also be supported by the right back-end IT infrastructure. And with so much sensitive customer information being collected and stored, security must be considered from the start. To help navigate it all, retailers can bring in a dedicated retail technology services provider to help identify the right equipment, evaluate alternatives and eventually purchase the right amount at the right price.
Powerful Analytics Software
As mentioned, collecting the data isn’t typically the issue for retailers. Retail is naturally full of opportunities to capture data. The challenging part is turning it into something useful. That’s where powerful analytics software can make or break a project. Based in the cloud, this software must be able to sift through vast amounts of data, much of it unstructured, and clearly present insights such as trends, opportunities or process improvements to employees. Without this ability to analyze and extract insights, it’s simply impossible to make sense of what is being collected.
In-house Skills and Expertise
It’s not enough to just have the right tools in place. Big data requires a unique set of skills and expertise, both at the head office and store level, to interpret the data and make meaningful, informed decisions. Knowing that there is a trend is not the same as knowing how to harness it. As the store becomes more data driven, all functional areas, from marketing to operations, need to invest in hiring employees with these skills and training existing employees to understand what the data is actually telling them. Because data is only as good as your ability to act on it.
Don’t Let Your Data Go To Waste
When implemented effectively, big data can be a big opportunity and a powerful tool for retailers. McKinsey Global Institute showed that big data has the potential to increase margins by 60 percent. Most important, customers are starting to embrace this idea as well, with 64 percent saying they’d prefer to get a personalized shopping experience based on their previous purchase behavior. But collecting that data and using it to add real value to customers are two different things. Without the right strategy, hardware, software and in-house expertise, big data simply becomes a big waste of time!
The store of the future is going to collect more data than ever. To learn more about how you can take advantage of new retail, download Point of View – It’s Time To Enter the Store of the Future. Please feel free to ask a question or leave a comment below.