Retail Highs in the Time of Big Data
Date: Thursday , February 26, 2015
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.
With more and more players embracing online channels to broaden their customer base and drive revenue, the art of personalization has become all the more important. Making greater engagement offers to entice customers across devices and platforms has is indispensable for the retailer. Recent reports also suggest mega trends like big data, Internet of Things (IoT), and analytics are significantly shaping the retail landscape. By planting IoT tools and tracking the movement of food all the way from the source to the waste bin, a retailer, for instance, can reduce food wastage and streamline the food value chain. The day is not far when a consumer\'s intelligent fridge will message the consumer when she is running out of supplies, so she can order online from a store and fill up stocks just in time. Or perhaps the fridge could be programmed to message the retail store directly bypassing the consumer herself – who knows!
The technology arms of big retail keeps listening in for clues as to what\'s trending in the area of retail technology and customer experience. This in mind, retailers continue to make the right investments that would bring significant returns to customers. Tesco Hindustan Service Centre, continues to explore up-and-coming possibilities like adoption of robotics at stores, wearable like Google Glass, besides RFID. Technology will continue to be a key differentiator for any large and complex multi geography Retail business and Tesco is at the forefront of doing and adopting technology to create core competency.