Recent research by McKinsey and the Massachusetts Institute of
Technology shows that companies that inject big data and analytics into
their operations outperform their peers by 5% in productivity and 6% in
profitability. Our experience suggests that for retail and CPG
companies, the upside is at least as great, if not greater.”
Peter Breuer, director of McKinsey & Co.’s retail practice in Germany
With November half over and 2015 starting to peek at us over the horizon, we decided it was time to take a look at a few examples of what retailers have been using big data for in 2014. Here are three examples of use cases for Big Data in retail that have emerged in the last year, followed by a few InfoTrellis predictions about what will happen next in the new year when it comes to the evolution of how companies are implementing their Big Data strategies.
The main goal for Macy’s CEO, Terry Lundgren, is to offer more localized, personalized and smarter retail customer experience across all channels. They use Big Data among others to create customer-centric assortments. They analyse a large amount of different data points, such as out-of-stock rates, price promotions, sell-through rates etc. and combine these with SKU data from a product at a certain location and time as well as customer data in order to optimize their local assortments to the individual customer segments in those locations.
In addition to that, Macy’s gathers, and of course analyses, a vast amount of customer data ranging from visit frequencies and sales to style preferences and online & offline personal motivations. They use this data to create a personalized customer experience including customized incentives at checkouts. Even more, they are now capable of sending hyper-targeted direct mailings to their customers, including 500,000 unique versions of a single mailing. The results are compelling; Macy’s e-commerce division alone has witnessed a growth of over 10% and an overall annual revenue growth of 4% with the use of Big Data Analytics.
(Macy’s Is Changing The Shopping Experience With Big Data Analytics)
Personalizing the user experience is a ubiquitous use case for big data, so it’s exciting to see a retailer actually implementing the technology to accomplish and prove out the value of this marketing strategy. Four percent growth is nothing to scoff at; this number represents millions of dollars on pure profit they didn’t have before. For companies that still believe they can accurately segment their hundreds of thousands of customers with fewer than a hundred profile archetypes, this is an undeniable piece of proof that they may need to consider getting on the bandwagon if they don’t want those millions of dollars to be coming out of their share of the customer’s spending habits.
What’s more, this is a front-and-center application of big data that is highly visible to the shopper. Whether or not they can articulate the difference in quality of experience they get from a retailer that uses it and a retailer that doesn’t, it’s a difference they can intuitively feel and will definitely react to by rewarding one store with loyalty over the others.
Once companies start pulling social data and combining it with internal customer data, their targeting and micro-segmentation capabilities will enable even more uniquely tailored marketing and customer experiences. So long as companies remember that the purpose of this data-collection is to minimize friction and irrelevant messaging for their customers and never to manipulate them or milk them for money like a mindless herd, the consumer stands only to benefit from the evolution of this practice.
For this reason, my prediction is that this will be a big differentiator in the coming years as the companies that experiment with it first (i.e. the early adopters) get better and better, making the gap increasingly noticeable to the end consumer. There will be a scramble by the companies that lagged behind to try to catch up, and this will represent a big shift for the retail industry’s established best practices in much the same way the idea of the loyalty program and the digital storefront did.
Read More http://www.infotrellis.com/retailers-successes-and-struggles-with-big-data-in-2014/
Peter Breuer, director of McKinsey & Co.’s retail practice in Germany
With November half over and 2015 starting to peek at us over the horizon, we decided it was time to take a look at a few examples of what retailers have been using big data for in 2014. Here are three examples of use cases for Big Data in retail that have emerged in the last year, followed by a few InfoTrellis predictions about what will happen next in the new year when it comes to the evolution of how companies are implementing their Big Data strategies.
Macy’s
Personalized Marketing
The main goal for Macy’s CEO, Terry Lundgren, is to offer more localized, personalized and smarter retail customer experience across all channels. They use Big Data among others to create customer-centric assortments. They analyse a large amount of different data points, such as out-of-stock rates, price promotions, sell-through rates etc. and combine these with SKU data from a product at a certain location and time as well as customer data in order to optimize their local assortments to the individual customer segments in those locations.
In addition to that, Macy’s gathers, and of course analyses, a vast amount of customer data ranging from visit frequencies and sales to style preferences and online & offline personal motivations. They use this data to create a personalized customer experience including customized incentives at checkouts. Even more, they are now capable of sending hyper-targeted direct mailings to their customers, including 500,000 unique versions of a single mailing. The results are compelling; Macy’s e-commerce division alone has witnessed a growth of over 10% and an overall annual revenue growth of 4% with the use of Big Data Analytics.
(Macy’s Is Changing The Shopping Experience With Big Data Analytics)
Personalizing the user experience is a ubiquitous use case for big data, so it’s exciting to see a retailer actually implementing the technology to accomplish and prove out the value of this marketing strategy. Four percent growth is nothing to scoff at; this number represents millions of dollars on pure profit they didn’t have before. For companies that still believe they can accurately segment their hundreds of thousands of customers with fewer than a hundred profile archetypes, this is an undeniable piece of proof that they may need to consider getting on the bandwagon if they don’t want those millions of dollars to be coming out of their share of the customer’s spending habits.
What’s more, this is a front-and-center application of big data that is highly visible to the shopper. Whether or not they can articulate the difference in quality of experience they get from a retailer that uses it and a retailer that doesn’t, it’s a difference they can intuitively feel and will definitely react to by rewarding one store with loyalty over the others.
Once companies start pulling social data and combining it with internal customer data, their targeting and micro-segmentation capabilities will enable even more uniquely tailored marketing and customer experiences. So long as companies remember that the purpose of this data-collection is to minimize friction and irrelevant messaging for their customers and never to manipulate them or milk them for money like a mindless herd, the consumer stands only to benefit from the evolution of this practice.
For this reason, my prediction is that this will be a big differentiator in the coming years as the companies that experiment with it first (i.e. the early adopters) get better and better, making the gap increasingly noticeable to the end consumer. There will be a scramble by the companies that lagged behind to try to catch up, and this will represent a big shift for the retail industry’s established best practices in much the same way the idea of the loyalty program and the digital storefront did.
Read More http://www.infotrellis.com/retailers-successes-and-struggles-with-big-data-in-2014/
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