Merchandising, marketing, store operations and eCommerce channels can best leverage Big Data in the retail sector
NEW YORK, NY – March 19, 2014 – 1010data, Inc., a market leader in the analyzing, managing and sharing of Big Data, today announced the results of its 2014 Big Data in Retail Study. The study conducted by uSAMP, provides insights on the state of adoption of Big Data in the retail industry and how retailers envision Big Data will overcome the top business challenges retailers face. The study shows that while retailers are facing challenges in delivering the reporting functionality that business users need to enable data-driven decision-making, they are optimistic about Big Data’s ability to provide breakthroughs in analysis capabilities across a number of retail processes. In fact, almost all surveyed executives (96%) agreed that Big Data initiatives are important in helping retailers stay competitive. They said Big Data insights are most beneficial for merchandising (53%) and marketing (48%), followed by store operations (42%), e-commerce (42%), supply chain (27%), finance (23%), and loss prevention (21%). The full report can be accessed at http://info.1010data.com/Whitepaper-2014-Big-Data-in-Retail-Study.html.
“This study shows that while the retail sector is being impacted by Big Data today, there are still many more opportunities for retailers to use Big Data analytics to optimize demand forecasting, merchandising, promotions, and loyalty program management,” said Sandy Steier, co-founder and CEO of 1010data. “When retailers truly embrace data discovery, they quickly move beyond intuition and guesswork and instead rely on data-driven decision.”
For the Study, 201 U.S. retail executives were interviewed across a range of retail sub-segments including grocery, drug, specialty, discount, department store, restaurant, and hospitality. Most retail executives (62%) believe leading retailers will capitalize on Big Data’s competitive advantage in the next five years. This was followed by 18% of executives who believe retail is already there, and 15% who said that Big Data will reach its potential by the end of 2014.
Question: When do you believe leading retailers will capitalize on Big Data to deliver a competitive advantage?
While executives are starting to acknowledge the competitive advantages of Big Data, nearly half of the respondents (46%) agreed that retailers require a better understanding of how Big Data can advance their business. In addition, all but a few (7%) respondents indicated that they perceive retailers as holding out on using Big Data. Key reasons why retailers are holding out include:
- The cost and/or complexity of implementing Big Data needs to come down (42%)
- Need simplified Big Data solutions that are intuitive to business users (30%)
- Retailers are still challenged with basic business reporting and not ready for Big Data (22%)
- Need Big Data solutions to better address the needs of retailers (21%)
- Need better time to value for Big Data (17%)
Executives further elaborated on retailers’ biggest obstacles to getting the reporting and analytics tools which retailers need to make better data driven business decisions, with 41% admitting that different users and departments have different ways of measuring the business. This was followed by:
- Can’t analyse data at low enough level of detail (e.g., store-SKU day-transaction-customer) (38%)
- Difficulty accessing and integrating the enterprise or third-party data users need to analyze (34%)
- Queries take too long to run (16%)
- Reporting tools can’t handle the level of sophistication of retailers’ business questions (15%)
- Lack of service and long queues in reporting requests to IT (13%)
Despite the retail industry’s perception of obstacles, executives believe that Big Data can have a positive impact on business processes, with targeted offers and promotions receiving the greatest benefit (50%), followed by demand forecasting and supply chain modelling (49%), customer-centric marketing (43%), loyalty program management (35%), workforce management (28%), store design (18%), and loss prevention (16%).
Question: On which of these retail business processes do you think Big Data technology can have the greatest impact?
Additionally, with on-shelf availability representing an $800 billion-plus problem for retailers across the globe, two thirds (66%) responded that Big Data can help retailers do a better job of managing product availability for consumers by reducing out-of-stock situations, which can lead to lost sales and dissatisfied customers. Other essential areas of improvement include predicting future demand to inform supply chain decisions (50%); reducing overstocks that negatively impact turns and could lead to margin erosion (47%); ensuring product assortments are finely tuned to store and channel-based demand (41%); and enabling alternative fulfilment means such as ship-to-store and ship-from store (29%).
Executives also understand that Big Data’s benefits extend beyond a business’ internal processes, including sharing data, such as POS, inventory, and customer loyalty with suppliers. The areas of greatest benefit include:
- Suppliers can better forecast and meet consumer demand (67%)
- Retailers can strengthen partnerships with their suppliers (52%)
- Retailers’ merchandising strategies can benefit from suppliers products and category knowledge (52%)
- Sharing data with suppliers can help retailers increase sales (41%)
Only 2% of respondents said that there are not any benefits to sharing data with suppliers.
Although nearly all executives believe that using Big Data is important if retailers want to remain competitive (38% said important, followed by 35% very important and 23% moderately important), many retailers do not conduct more tests to introduce a new product assortment, promotion, store format, or other initiative because their resources are stretched too thin to dedicate time to testing (45%). Other key reasons include: retailers require better tools and processed to set up tests and analyse results (43%); tests are too expensive or cumbersome to execute with all of the data involved (38%); and gathering and organizing data from test results is too difficult (18%).
To download the full report, go to:
About 1010data’s 2014 NRF Study:
The study was commissioned by 1010data and fielded by uSamp. uSamp’s online market research panel consists of 12 million highly responsive and diverse panelists worldwide with 12,000 new registrants per day, including mobile survey panelists. They are able to reach niche panelists across any demographic from 90+ countries in North, Central and South America, Europe, Africa and Asia Pacific.
The 201 participating executives represented a range of retail sub-segments including grocery, drug, specialty, discount, department store, restaurant, hospitality, and more. Respondents represent nearly every department across the retail enterprise from businesses of all sizes, including more than 50 respondents from retailers with annual revenues great than $1 billion.