March - 2015 - issue > CIO Insights

Retail Highs in the Time of Big Data

By Vinod Bidarkoppa, Director (Group IT) & CIO, Tesco HSC & Member of the Board (Tesco HSC, Bangalor
Thursday, February 26, 2015
By Vinod Bidarkoppa, Director (Group IT) & CIO, Tesco HSC & Member of the Board (Tesco HSC, Bangalor
Tesco Hindustan Service Centre (HSC) is the technology centre of Tesco Worldwide (LSE: TSCO) engaged in building world class technology products and platforms, design stores and manage finance and retail operations.

Today's shoppers have increased access to technology. Not surprisingly, they place convenience and a rich experience above everything else; and want to be able to break free from limitations of time and place. The increased adoption of digital models has spurred the need to re-imagine people, processes and technology in order to strengthen the multi-channel retail business. With greater penetration of smart devices and the increasing importance of Social, Mobile, Analytics and Big Data (SMAC) along with expectation of speed and agility, CIOs need a better understanding of new digital business models. They need to re-jig the way they hire people, as well as develop and implement digitization effectively. This will in turn able retailers to reap the benefits of this technology, stay abreast of shopping trends and build an emotional connect with customers.

By mining the tidal wave of newer and better operational data flooding their retail enterprise, marketers can segment customers better, create new products, bring back lost customers, convert non-buyers and, importantly, keep track of the ebb and flow in customer preferences. This includes data from the online business, loyalty cards, social media posts as well as data trigged by sensors on goods bought and sold. Retailers stand at the threshold of opportunity to process this data develop a deep and accurate understanding of their customers and of their own business. Such high-volumes of largely unstructured data storming enterprise datacenters at unprecedented speed from across communication channels goes by the name - "big data" - in popular terminology. A recent Gartner report suggests that the volume of this data is set to grow 800 percent over the next 5 years; and 80 percent of this is going to be unstructured data. Big data has the potential to help retailers get better knowledge of customers, including their buying trends, location, age, preferences and thereby target better campaigns.

Targeting niche groups of like-minded individuals, based on insights culled from big data, is the new rage. Last year, for instance, as part of a micro targeting initiative, a multinational grocery sent a £5 discount offer to women aged 25 to 54 living in the catchment areas of its stores. Nearly 40,000 women clicked on a single day to redeem the coupon from the store. The same retailer targeted its private brand 18.5 inch widescreen TV at individuals in UK and 13 other countries who are interested in better price points and convenient shopping. The target segments included low and middle income groups, working classes, single individuals, nuclear families who look for a cost advantage and the results were very encouraging.

While big data is a blessing, there are challenges in its adoption and use. For the most part, the data needs to be collated from disparate sources which are tedious, time-consuming and expensive. Additionally, analysis of this deluge of data at the speed of collection has become a necessity not a nicety at big retail chains. Forward-looking retail organizations now employ technology frameworks like Hadoop to unlock the rich potential presented by social media data. The framework can take in any category, product, promotion, or service and uncover hidden insights around customer sentiment from unstructured data. This framework can also "stitch" structured and unstructured data together, thus providing a more detailed analysis that will significantly benefit decision makers in retail. Based on this powerful analytic, retailers have already taken steps to delight customers, no matter what platform they are on, by attaching RFID (radio frequency identification) tags to clothing, making digital club card mobile apps widely available, and improving their online merchandise overall.

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