If you’ve spent all this time thinking that big data can’t make an impact, you’re missing out. Big data has been boosting the efficiency and capabilities of a variety of industries, but most recently its influence has become apparent for retailers.
According to the National Retail Federation, overall retail sales only rose by 3 percent over the past year, as many companies struggled with overstock, profitability, customer experience and revenue. The year wasn’t slow for everyone, though. The retailers that embraced big data technology found themselves in a significantly lucrative year, particularly over the 2015 holiday shopping season.
A recent report by Dynamic Action, a prescriptive analytics solution company that aids big name retailers such as Neiman Marcus and Brooks Brothers, found that revenue increased by 11 percent for its retail clients that used analytics to improve merchandising, marketing, operations and finance. The report also found that companies that balanced merchandising and marketing efforts increased their profit per view by 16.7 percent in one holiday season compared to all of 2014. Those same clients were also able to increase their return on capital by 12 percent since the week of Black Friday.
Big data analytics has found usage at every level in the retail process, from predicting trends and demand to helping companies select the right price and strategic approach to customers. A recent feature in Forbes magazine explained how modern retailers using data-first strategies in the process are gaining a better understanding of customers and their behavior, thus helping them increase their profits.
For example, retailers that apply forecasting algorithms are able to go through social media posts, web browsing patterns and ad-buying data to identify rising trends in both the products themselves and how they are marketed. This information, alongside demographic and economic data, is then used to understand demand.
Data analytics also plays an important role in pricing. Forbes reported that Walmart is in the process of building a large, private cloud to track transactions at their stores in real-time, an insight that helps retailers understand when prices are working and when they need to be dropped, or what’s called “markdown optimization.” More retailers are beginning to form an interest in real-time data tracking applications that can allow them to respond quickly to change.
One of the concerns about using big data analytics and other such applications is that it can only benefit bigger corporations, thus edging out small-time competition, but this isn’t true. There continue to be more big data services available to smaller businesses, providing an opportunity for anyone to improve their retail process with the insight of analytics. In fact, now more than ever, big data can benefit anyone.