So we’ve been crunching the data and compiling the findings from Parker Avery’s latest research study, “The Big Deal About Big Data,” and it’s become evident that, while the whole idea of using Big Data is very appealing, most retailers are really not ready to take on the challenge.
This is not a value statement.
Rather, it’s an understanding that many retailers are still operating on legacy systems that don’t even support their existing transactional data very well, added to the fact that they are trying to quickly evolve their business models from very silo’d organizations (meaning, separate business units operating brick-and-mortar, ecommerce, catalog, etc.) to this new world of retailing now known as “omnichannel.”
Retailers have to adapt to consumers who possess more knowledge about their products than do most of the sales staff and management on the front lines. They have to create “exceptional customer experiences” to ensure their own survival. They have to anticipate the latest trends and customize their assortments – online and offline – to meet dramatically changing lifestyles and local needs. They have to staff stores in manners that keep both their customers and associates happy while reduce ever-increasing operating and labor costs.
It’s a lot to handle.
Given that, it’s really not surprising that many of the retailers that participated in our study admitted that they’re at the most only minimally prepared to handle Big Data opportunities – and many don’t think they’re at all prepared. This comes from a number of different angles: business skills, IT skills, business process, roles and responsibilities, as well as IT applications and infrastructure. It’s also not surprising that close to ¾ of study participants say that they are at most only in the very initial stages of investigating how they should handle Big Data, and close to 65% are at least 2 to 3 years out from commencing any Big Data initiatives.
Some of this is due to the fact that the ROI on Big Data is still highly unknown. There have been some success stories, certainly. Macy’s is one example – they’ve been able to increase same-store sales by about 10% using Big Data analytics. But many retailers are concerned about investing in data and analytics because the environment is changing so quickly. Nobody wants to invest a bunch of (scarce) capital into an emerging technology that might not reap the benefits the technology providers proclaim it will. Especially when there are so many other technologies and initiatives competing for investment funds. Mobile would be a great example.
Over a third of retailers admitted that their own internal data issues are keeping them from investigating Big Data opportunities. Just considering the feat of combining cross-channel transactional data has created issues that need to be resolved for that data to be useful and actionable. As quoted in the remake of the movie “Sabrina” (1995), “More isn’t always better. Sometimes it’s just more.” That is likely the case for many retailers when considering adding Big Data into their existing data environment.
At Parker Avery, we are excited to share more of our findings from our Big Data study later this summer. Big Data certainly holds tremendous opportunities, but it is wise to move very carefully into this brave new world of information.