by Francois Ajenstat
The amount of data available to retailers is growing at a phenomenal rate. Whether it is pulled from stock level analysis information, customer loyalty cards or online shopping trends, it’s clear that there is an ever-expanding sea of information out there. Although some retailers choose to embrace this data and use it, others, unfortunately, are drowning in it.
Perhaps what’s less well known is the extent to which a Business Intelligence (BI) shaped life raft can help to turn this data into information that provides insight and informs major decisions. It’s all too easy for retailers to become intimidated by looking at large, seemingly impregnable data sets and wonder what it all means. Sometimes it can take a leap of faith before they embrace data as a real asset.
What many retailers don’t realise is that using data in the right way can actually help them to see a massive impact on their bottom line. A 2011 McKinsey report found that retailers using big data to its full extent could increase their operating margin by more than 60 per cent. With this in mind, it seems ludicrous that so many choose to turn their backs on data and recoil in horror at the thought of using it to help their business.
Although BI tools are not an entirely new concept to the retail sector, there’s no doubt that some of these more recent trends in the way they are applied are potential game changers. Now, more than ever, BI tools are allowing retailers to stay ahead of the competition by offering insight into customers and their experiences, as well as their concerns, before they impact on the bottom line.
The truth is that few retailers possess the BI tools they need to make the data useful. Historically, retailers have used retrospective data analysis to identify patterns. However, some do seem to be realising that the use of BI tools can be extended to help them to analyse events as they happen, in real-time. In some cases, BI is even being used to predict and anticipate trends before they occur. This allows online retailers to prepare themselves accordingly and provide the best possible customer service at the right time.
A good example of this is Macy’s, one of the most recognisable retail names worldwide, with more than 850 stores across the US and a hugely popular presence online. It decided to harness the power of its customer data to visualise future trends and discovered that it could easily visualise trends in the number of customers visiting the website, track how individual product families are performing and how sales of products track around different marketing events.
Perhaps the main benefit Macy’s sees is the ability to truly understand its own customers. By taking a robust, analytical approach to its data, it uses BI tools to identify how long customers have been with Macy’s and what are their preferred channels for communication. Even elements of the future relationship, including how long they are likely to remain a customer can be predicted. As a result, it is able to modify marketing collateral and use the existing data it has on its customers to add more value.
It’s important to understand that Macy’s use of Tableau to gain insight is not merely a gimmick or a slightly intricate exercise in CRM. Rather, it is the result of a more joined up, holistic approach to enabling data discovery, within the organisation, which has allowed specific departments to visualise data as they go.
In doing so, its employees are able to spot trends and patterns and provide quick, meaningful insight into the data, by creating compelling visual analysis of their data. As a result of being able to visualise data, Macy’s is able to drive discussions across the business about where to set priorities, which actions to take and how to think about the future value that can be offered to customers.
Clearly, BI tools have a significant role to play for retailers, both large and small. In the cut-throat, dog-eat-dog world of retailing, the ability to use data from multiple sources can be the difference between staying afloat and drowning in a sea of information. Instead of fighting against the current, perhaps in the coming years, we’ll see many more retailers climbing aboard the BI life raft, and learning to steer their way through the choppy waters to a new land of prosperity and success?
Francois Ajenstat is director, product management, at Tableau Software