Report: Big Data Trickling Into Retail
The holiday season is on us, so what better time to look at the impact that the big data trend is making into the retail segment. Research firm EKN released its second annual report detailing the uptake of big data in retail, and found that retailers aren’t necessarily in a hurry to spend their IT dollars on big data solutions.
The firm, which surveyed over 70 retail industry executives on challenges they face in deriving insight from their massive data streams, found that while the organizations find big data to be relevant to their businesses, their investments in the related technologies have plodded along in 2013.
According to the firm, a billion dollar retailer will spent an average of $75,000 on big data in 2013, and allocated less than half a percent of their total IT budget on big data investments. The firm says that the investment is expected to increase to 1.2% by 2016, which they say signifies a move toward an experimental phase to help retailers determine the value of big data applications to their business operations.
“Big data is one of the most exciting opportunities in retail, but retailers are taking a pragmatic, realistic approach to making big data investments,” said Gaurav Pant, a research director with EKN. “Big data is still several years away from moving into the mainstream of retail.”
In the firm’s 2012 report, 46% of retailers said that managing the volume of data was their biggest challenge, a number which has fallen to 24%. Where previously volume was seen as the biggest challenge that retailers face, it’s now ranked towards the bottom with data variety being pointed to as the primary challenge, particularly with unstructured data. According to the firm, 68% of retailers rate data organization as the biggest challenge in managing unstructured data.
The firm says that it found that there is no difference between the analytics maturity of large (over $1 billion in annual sales) retailers, and smaller (less than $1 billion in annual sales) ones.
“The largest retailers with deep pockets and a culture of innovation, such as Target and Wal-Mart, will continue to make oversized investments in bigdData,” said the study. “In some cases, such as Sears, they may even approach it as an opportunity to monetize investments in technology by offering services to smaller retailers or even other industries.”
The firm says that this provides an opportunity for the smaller retailers, who they say can take advantage of the lack of difference between how strategically they leverage analytics as compared to their larger rivals, by making smart, strategic choices and investments of their own.
EKN says that its findings show that retailers are starting small with its move into big data, and growing their strategies from the ground up. “The one consistent theme across EKN’s 2013 research has been the importance retailers have attached to improving analytics maturity across the enterprise and the consistently low levels of current maturity they have reported,” said the report. “EKN believes retailers will first move from basic to advanced on the analytics maturity curve (reporting, basic analytics, predictive analytics, investigative analytics) before taking on large scale big data initiatives.”
While uptake is slow, the firm found that 32% of its respondents are planning on making investments in data visualization in the next 12-24 months, with 24% spending on specialized big data BI tools. According to the firm, in-memory platforms such as SAP HANA will see uptake in the next two years, as 22% of the surveyed retailers indicated that they would be making investments in this area.
“The reality is that other than a few large retailers such as Target, Wal-Mart and Nordstrom who have made and are making big investments in building big data capabilities, retailers have adopted a wait and watch approach,” said the report.
For those interested in getting a first-hand look, the report can be found here.