The days are shorter, the weather is colder but the shopping… well that’s just starting to heat up. As retailers hit us with their best Black Friday campaigns and in-store promotions, who were the ones that stood out?
More and more the retailers with the competitive edge during this festive season are those that are using big data analytics to help them refine and sharpen their strategies.
Here are the top ways that retailers today are using Big Data to help them this holiday.
1. Personalization – Some of the clearest data will be purchasing history collected from loyalty cards, which big retailers like Tesco, Kroger, Macy’s and more are already using to create personalized offers and coupons. In fact, one of the most common ways we see big data being used in retail environments will be to offer more personalized pitches and communication with customers across multiple channels in a way that is personalized, localized and real-time. We definitely see emerging trend in retailers shifting away from “thinking about Big Data” to “implementing Big Data” by embedding it within their mobile and digital channels in order to drive desired customer behavior. Big Data Intelligence will drive this type of personalization.
2. Next best product – Recommendation analytics and predictive analytics can be seen a lot in the e-commerce space. The early online forerunner was Amazon.com which used filtering to generate “you might also want” or “next best offers” prompts for each product bought or page visited. This may also be useful for our holiday shoppers who may have a less clear idea of what they are shopping for. For example, it could provide a recommendation for a sweater that is three-quarter sleeved instead of wrist length, but is in the right size, color and style. These options could be particularly advantageous during the holiday season, where gift-buyers may not know exactly what they want and don’t have the time to shop around. In fact, 35 percent of what consumers purchase on Amazon and 75 percent of what they watch on Netflix come from product recommendations based on such algorithms.
3. Inventory preparations – Having the right products on hand will also be essential during the holidays. With time being a factor, customers won’t wait for out-of-stock goods to be restocked, but will quickly go somewhere else to find what they are looking for. Therefore, using big data tools to forecast demand and ensure the most popular items are on hand will be crucial. With the technology available today, business can gather data points on weather, traffic patterns, trending topics, and campaign measurement to determine and predict the most cost efficient and profitable ways to stock and sell their inventories. According to McKinsey, retailers using big data analytics can increase their operating margins by more than 60 percent.
4. Analyze in-store traffic pattern data to help anticipate staffing needs during busy seasons like the winter holidays. We helped one of our clients do this by analyzing the influencing metrics of store traffic in order to anticipate a large majority of influx and in result helped them to properly staff locations according to the higher store traffic and times to increase profit. With this type of traffic insight, operations and management can recognize peak times during a single day or when seasonal traffic patterns occur. Evaluating those levels can enhance customer service/experience as an appropriate number of staff can be planned in advance.
Additionally, while today’s holiday shoppers are ready to spend, retailers must remember that it is personalized messaging that cuts through the snowstorm of promotional clutter. The easiest way to build personalized messaging is to collect, mine, and implement insights from your big data. It is a safe and useful way to give holiday promotions more impact and close out 2014 on a fiscal high note.
If you are interested, please see our white paper “Beating Amazon – Traditional retailers are well positioned to win against online-only retailers. Most just don’t know it yet.” Or feel free to contact us.
– Thiag Loganathan, President, Big Data Insights Division