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Retail is the most basic and global commercial activity so, not surprisingly, Big Data is having a dynamic impact on this industry. The retail value chain is impacted by Big Data in many profound ways: retailers use Big Data to collect data on their customers so that they can better serve them and market themselves to them; they interact with payment systems whose information must be secured against sophisticated threats; and their logistics and operations can be markedly improved by using Big Data effectively. Here are some important ways that Big Data is changing the retail industry:
All Retailers Are Big Data Firms
Since understanding your customer is the most critical advantage in retail, the ability to leverage Big Data tools to facilitate that process is essential to retailer competitiveness. The ability to consistently extract, analyze, and protect data about your consumers while respecting their privacy is more important than ever. Since consumers are constantly online and utilizing information devices that paint a detailed picture of their preferences, a tsunami of data is available for retailers but they must be organized to absorb and act on that data. In other words, retailers must be as adept at managing data as much as they are at managing product. Indeed, their ability to do the latter will be shaped by their ability to do the former.
Customer Demographics is About Individuals Not Groups
The era of focussing on demographic groups will soon be over. While individual behaviors, influences and motivations are undoubtedly influenced by group affiliations, Big Data is making it possible to focus in on individuals. We have entered an era of personalized marketing where generalizations about population groups are becoming obsolete as we can discern from a person’s digital trail exactly what they want as an individual. This will impact how retailers market to consumers, how they store products, and how they deliver customer service. In the era of Big Data, everything is personal.
Data Security is Brand Security
Customers know that they live with Big Brother, that every electronic transaction and online interaction is being monitored. The key for retailers is to make Big Brother a Good Brother by not abusing this data access and using it to enhance the customer experience. As Google used to say: “Don’t be evil.” Retailers that fail to respect customer privacy or do not take robust steps to protect the data that they collect will suffer severe financial consequences as their most important long term asset–their brand equity–is destroyed in a highly competitive marketplace where profit margins are already low. Target and other retailers that have been subjected to well-publicized data breaches have discovered this firsthand. Big Data is a powerful tool but all power must be respected and used responsibly or consumers will vote with their wallets and go to a retailer that can competently protect the private information that they have been entrusted with.
Experfy’s Big Data Readiness Index for Retail can help you to learn about the best practices in retail and how to use Big Data most effectively. For more in-depth perspectives, see Experfy's Retail Analytics Use Cases and Retail Analytics Training offering.