Big Data and the Future of Retail, Providing a Crystal Ball Solving the equation:
tirsdag, 15 desember 2015
The world has changed and it will never be the same again. There is no going back, the train has left the station and you're either onboard, stood at the platform, rushing to the station, planning to buy tickets or still trying to understand the timetable.
What that train is, where it is going, what are the important stations on that journey and how it will get there, can be unclear or difficult to explain and understand. However there is without a doubt a revolution happening, a revolution that will change the whole landscape of business and redefine the winners. The train and revolution are one and the same thing “Big Data”. Answering a simple but probably most important question: “Are we relevant to our customers?”
“Big Data” is a topic on the minds and lips of leaders and managers in every industry, especially in the Retail branch. I would like to take you on that journey, board the train running along the tracks of revolution. Answering your questions and helping you to not only glimpse but understand what Big Data can and does mean for the Future of Retail.
Before we begin lets answer an important question, why is Retail one of the hottest areas for Big Data? Why are all the excit-ing cases we hear about, game changing solutions with widespread impacts and early wins all emerging out of the retail branch?
Why is every Retailer thinking and talking about “Big Data”?
Well the answer is actually very simple. Retail has challenges and demands that Big Data provides the perfect solution to.
Furthermore Retail is a sector that has always been open to innovation, early adoption, with an experimentation mindset and most importantly is fiercely competitive with a winner takes all approach to business. Retail is willing to embrace the latest trends and equip itself with the full technology arsenal available to win the customers hearts and minds and of course business.
Data Arms Race for Customer Insight!
Powerful words but wether we like it or not there is a Data arms race already started and the winners will be those that take advantage of Big Data to forge a coherent data strategy and red thread between their supply chain management, omni channel contact points and customer insight.
But we get a little ahead of ourselves, first let’s conclusively answer this question: Why Retail? Or perhaps expressed another way, does: Retail + Big Data = Revolution = Advantage = Success = Relevance = Customer Chooses You!?
Even to the least mathematical of us that equation seems a little odd and that is one of the confusing aspects of Big Data, it means many different things to various parts of any business.
So here we recognize for the first time the common red thread that will help us on our journey.
Volume, Velocity, Variety
All aspects of business concerns today share one common thing, data is now at the heart of everything. It’s increasing in volume, the velocity of its creation and actionability. Most importantly data is being created in a variety of systems, platforms and locations.
One Ring To Rule Them All
It has always been the holy grail of technology to have one solution that solves everything. But when something comes along, that actually can for the first time, solve many various aspects of business challenges, especially in a world were we all want simple answers to questions such as “What does it do?” Then it gets a little tricky when the answer is Big Data can solve all of your challenges.
So our promise to answer in a simple way the question, “why does Big Data matter for Retail?”, becomes perhaps a little harder to express.
Lets Gather the Evidence
But not to worry, lets gather together all of the relevant topics that are on the minds of the various people in the departments and business areas, for various Retailers in different branches and start by looking at the big picture.
I researched countless articles and white papers relating to the classic top 10 issues currently facing or going to face the various aspects of Retail both today and in the future. I identified the top 100 topics in each area that appear repeatedly.
Each of these topics could easily fill a case study or white paper or even this article in their own right.
I organized them by relevance based on historical, current or future challenge and then aligned them to the relevant department or business area that they most impact or concern.
Then to express them in an easy manner I gave them some weighting and some classifications from a big data perspective. So that we can better understand as a foundation to our journey into the topic of Big Data and Retail.
The Hot Topics
In the spirit of Big Data and Visualization I have expressed them as a tag cloud so we can easily see them as a single set of challenges.
Refining the Topics
Looking at the topics in this manner we can further reduce them to key areas: Smarter Logistics, Retain and Increase Market share, master customer contact points, address the realtime physical and online retail environments, meet the customer in the moment with relevant products and services.
Mapping the Topics into the Retail Picture
I often think that Big Data would be easier to understand and a much more accessible subject, if it had rather been called “Big Picture” Data. When we start to look at the Big Picture and how all the various topics, concerns and activities interact, it all revolves around data. We can clearly see that data from various sources or “variety”, being created at differing speed´s or “velocity” in varying degree´s of “volume” are the life blood of any business especially Retail. And in a similar manner to blood, carrying oxygen to key parts of the body, data carries information to they key parts of Retail Business.
Lets begin our Journey
The illustration on the next page breaks down some important and fundamental Retail areas and activities in a sequential manner starting at 1-Enterprise Data then moving into 2-Marketing and Commerce followed by 3-Communication and Interaction finishing with X-combining those ingredients via Big Data and Analytics to answer the 3 questions in the title of this article, which when combined together gives the answer to the ultimate question: How can Retail achieve “Increased Market Share and Increased Profit”?
Todays Retail actors have well established technology solutions, sat in what is usually known as the Enterprise, or for our purposes “traditional IT”. Here we find some common systems and data sets that represent a record of business activities and transactions. They contain data that is historical in nature, reveal a basic current status along with a limited view of the future in terms of payments due or orders as yet unfulfilled seen as yet to be enacted income or outcome.
There are four main systems most often found in Retail, there may be several of each but they can be defined as:
CRM (Customer Relationship Management) - often used for customer management, loyalty and customer service. However I have seen many Retailers that do not operate a CRM solution and very recently, I have heard many start to talk about moving away from traditional CRM thinking, and rather seeing the data itself and the transactions and customer interactions as the new CRM.
Payment Solutions (nets/point/payex…) - providing customers with the ability to perform purchase transactions.
ERP (Enterprise Resource Procurement) - provides three main functions, sales management and reporting, Stock and Inventory management and General Ledger or Accounting.
POS (Point Of Sale) - found in all bricks and mortar locations or as an integrated part of online commerce solution. POS provides a customer facing ordering system and contact point which can both handle shopping basket operations against the ERP platform and customer interaction.
There are also, though not mentioned in our illustration, HR (Human Resource) solutions, such as salary applications and company intranets. These last two are increasing in relevance as staff talent becomes an important factor in business.
Each system solves a specific area of business and although enacted usually via various technologies and vendors, all contain valuable business data. However this data is not connected together or combined in any meaningful manner, it effectively lives in isolated silos. Also the technology simply cannot handle the sheer volume of historical data, making it impossible to perform any analytic insights without a great deal of work, especially not at the speed and avail-ability the ever accelerating world of Retail now demands. These various datasets are the fuel needed to facilitate the simple but core goal of Retail, if they can be converted into smart data and operationalized.
The basic goal of Retail
All of these applications are intended to support the core goal of any Retail business. Simply put there are two types of customers, group A, existing that need to be secured and developed. The second group B, usually much larger, are prospects or potential customers not yet conducting transactions. The main goal is therefore to continuously convert as many potential customers from group B to group A thus growing market share and as a result income and profits.
Enter Big Data and Analytics
Big Data allows large amounts of data from various sources to be easily and rapidly assembled together in real time. Making it the perfect solution to release Enterprise data from its silo´s, combining internal data together and then introducing external data such as market research and insights, then converting it into smart business data.
CRM can then be performed with deeper richer client insights. ERP can become analytic driven with smart logistics, real time prices advanced predictive inventory management. Payments and POS can start to offer personalized options, interactions.
The results of this, Relationship, Events and History realized as sales can then be used as data insights, powering the next part of our journey, Marketing & Commerce, which are key mechanisms used to convert Group B to Group A and then keep them in Group A.
Into the World of Marketing / Commerce
Marketing and Commerce has two main drivers used to realize activities in both spaces. Marketing is driven by profiles that are used to fuel processes and campaigns across the new generation of channels available to Retail. These channels are very different and diverse based upon different technologies and vendors. Each channel is unique with its own vocabulary and events.
Most importantly, these channels are relevant and valid on an ever changing and continuous basis, driven by the moments we now live our lives in today. These moments occur throughout each day influenced by our location, needs and our identity, either professional mode or private mode or even a combination. Traditional channels like Post/TV/Radio along with email, are now supplemented with next generation interaction channels such as Social Media, Web, iBeacon. The collective term for these contact points is know as “Omni Channel”.
Omni Channel Communication
A common misconception with Omni channel, is that they are common channels that can be used to spray the same content at customers. They are far from this, in fact each channel in the Omni Channel spectrum are entrances through which clients meet your organizations, its value proposition, brand, mission, products and services.
The channel used and the experiences expected are driven very much by the customer. It is therefore important to see the interactions on these channels as a series of ongoing conversations rather than isolated events. Most importantly, they are two way mechanisms, that not only convey messages to the customer but return valuable insight and response data back to the Retailer. Greatly enhancing the understanding of the customers behavior and ultimately allowing for a more personalized communication and interaction. Big Data is a key enabler to realize a common red thread across these channels, regardless of technology. Big Data also allows for these various interactions to be handled, organized and analyzed in realtime, steering the timing and nature of content expressed to customers. We will talk a little more about content later in this article.
Store Commerce Activities
The customer experience in the commerce setting is critical to understand and master. Wether it is online in a web setting or in a bricks and mortar environment, there are common activities occurring generating valuable data and insights.
Customers search and browse products and services, this is a key indicator revealing the interests and needs and eventually relevance of a Retailer to the customer. This behavior can be captured today using technologies such as web logs and in the real world via iBeacon, footfall sensors or heat map cameras in store. Analyzing this data reveals much about the customer before they even perform any transaction and at the very least indicates that the customer is starting to seek the Retailer.
A secondary activity relating to this is the discovery or researching of products and services, either online or in store. This behavior reveals much about existing offerings and potential new offerings. A customer discovering products with a retailer that are relevant and interesting yet unexpected, has a very powerful effect helping to build loyalty and relevance.
Two key actives that follow are typically price comparison then sales transactions. These are clear indications and confirmations that the customer has successfully entered into Group A and a relationship has begun that can then be developed. This takes us back to the marketing activity. A conversation has begun that must be kept alive to meet the core goals of Retail as described earlier.
The final key activity in this view of store activity, but often overlooked, forgotten or disconnected, is customer service. This could be argued as one of the most critical aspects of the conversation during which the customer relationship is reinforced and strengthened. So much so it can become more important than other factors such as pricing or product variety that are often seen as major differentiators.
Big Data is Fundamental
Marketing and Commerce generate extensive and varied datasets that are critical to capturing the customer interaction and experience. Big Data allows for the first time, these elements to be combined in a single place. A major effect can then be realized which has been demonstrated clearly to have immediate and dramatic effects in Retail. This is the act of moving via Big Data from campaign driven activities based on stomach feeling and relatively few facts, along with product and price selection performed in a similar manner. To a Data and Analytic driven approach utilizing a rich range of data insights and observations gathered and collected in real time. This is not just a nice to have but a key distinguisher between the market leaders and losers.
Content is King
Before we finally assemble things together at the end of our journey, I think it is important to look at what happens in the channels to the customers and why do we need to succeed here.
We use these Omni Channels to deliver content that expresses to the customer, services, product awareness, survey insights, loyalty behavior. The content of these channels needs to be coherent, personalized and delivered at exactly the right time.
This all serves to make the customers see the Retail organization as en entity that is personalized and relevant towards them with offerings delivered at the right product, right price and right moment.
The communication and interaction can, if successful, build customer groups, members, fans, loyalty and ultimately creating real Brand awareness. All of these are triggers towards the primary objective of all of these efforts, which is for the customer to “Choose You!” your products, your services and your value proposition.
Putting it all together
Using Big Data across all of these areas effectively, gathering diverse and valuable data. Enriching it with both external and internal Data Sources such as weather, social media, trends, customer insights. Performing realtime analytics and then operationalizing these insights, allows Retailers to answer the fundamental question: “What product + Where to sell it + When to offer it” in order to satisfy customers and meet the core object-ive of business “increasing market share and profit”. This is why Big Data is important and the single most important factor in the future of Retail.
What I would like to leave with you is that Big Data does not need to be scary and taken as a Big Bang approach. All of the things discussed above can be achieved step by step in an experimental approach and format.
The important thing is get started and realize immediate benefits. Building on these will take you to the future quicker than you can imagine.