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June 29, 2016

Big Data Analytics and the Future of Retail

Mark Campbell

Did you know that the two top-sellers right before a hurricane hits are beer and Strawberry Pop-Tarts? Or that demand for books increases when the weather starts to get colder?

We know these things because retailers of all shapes and sizes are now using Big Data analytics to better understand customer behavior and uncover insight that will help them drive sales and increase satisfaction.

Analyzing Big Data has become a tremendous part of modern retail, so much so that it’s no longer viewed as optional for companies who wish to survive and compete. Getting to know your customer is less about face-to-face interactions and more about advanced algorithms that pore over sales, demographic, and social data looking for patterns that might provide an understanding into buying behavior and upcoming trends.

Big Data insights enable retailers to make accurate, data-driven decisions that are based on a 360-degree view of their customers to personalize and improve the shopping experience across all channels. Customer analytics can also help retailers better forecast demand, tailor offers to individual customers, and test the uptake of coupons and special promotions.

Big Data’s benefits have been proven in the world of retail. A Strategy&/INSEAD survey found that organizations with above-average performance using customer data and analytics outpace competitors by 2-3 times on sales, margins, profits, and shareholder return.

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As Big Data continues to evolve, it will shape a future of retail where intelligent, connected, and automated technologies will become the new norm in customer satisfaction. Here are a few more predictions:

Retailers Fine-Tune Social Media Data Usage

Analyzing customer data from social media platforms can be a lot like finding a needle in a haystack – there’s a lot of chatter to sift through to uncover every nugget of valuable information. However, Big Data analytics are making it possible to gather and interpret vast quantities of unstructured data, as well as merge it with other data sources to provide a more complete view of the customer across a variety of channels. As these capabilities improve, retailers will get better at filtering out the useless information and pinpointing data that provides insight into their customer’s needs and preferences, as well as how they feel about certain brands and products.

Better Omnichannel Experiences

The popularity of mobile technologies and social media are evolving how today’s customers interact with brands, and the ability to deliver the same experience across a multitude of channels has become a key challenge. But as retailers increasingly diversify and optimize their channels, it also means there are greater amounts of pertinent customer data flowing in from multiple sources. Big Data analytics will help retailers harness this data so that all channels have the same customer information to draw from at all times. This will allow retailers to deliver better omnichannel customer experiences, improve supply chain management, and test the effectiveness of advertising.

Internet of Things (IoT) Comes to Retail

A recent point of view paper from Accenture states that the IoT movement will offer retailers significant opportunities to improve the customer experience, supply chain, and new channels and revenue streams. As consumers increasingly adopt connected devices and wearable technologies, retailers will be able to leverage data from these devices to optimize interactions with customers, enhance the in-store experience, and deliver personalized offers to individual customers. From a business perspective, IoT technologies can also help retailers drive operational efficiencies by employing a myriad of connected devices to do things like track inventory or adjust pricing in real-time.

To survive in the age of data, retailers will need a best-in-class Big Data strategy which effectively manages of all of this customer data. New approaches in computing and storage will be key enablers of the ability to support that strategy, which will ultimately ensure retailers are prepared to handle the growing volumes of customer data both now and in the future.

Big Data changes everything and will continue to transform the retail landscape. Retailers have an unprecedented opportunity to put their customer data to work for them and become more efficient, create new revenue streams, and uncover better ways of doing business.

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