Retail Is Alive and Thinking
Good news from the world of retail: Researchers have found that retailers are beginning to shows signs of intelligence--business intelligence. According to the new Aberdeen Group study, "Business Intelligence in Retail Customer Management: Bringing Information Together to Build the Accurate Customer Profile," top-performing retailers are accelerating their efforts to establish tighter control of customer data.
The report highlights some of the top uses of BI for customer management, with seventy percent of survey respondents reporting that they use BI to track new product adoption; 100 percent said they use BI to track promotion participation; and 91 percent said they track product preferences/affinity using analytics. In addition, the report points out current measurements of traditional customer buying patterns such as conversion, retention, and acquisition.
The report also finds that there are many areas of opportunity retailers have yet to address. For example, 82 percent of respondents are using BI on an enterprisewide basis. However, only 16 percent of survey respondents, and 33 percent of best-in-class respondents, use real- or near-real-time BI tools for data measuring techniques. "Retailers surveyed revealed that there are great benefits to increased data management when it comes to their customers," said Greg Belkin, report author and Aberdeen retail research analyst, in the report. "On the flipside, the report finds that nearly half of retailers surveyed believe their data is not reliable enough for analysis. The big challenge for retailers, therefore, is to get their internal data management processes in order to attract more business and grow revenue."
Belkin says that many retailers are still siloed in terms of their data, so enterprisewide business intelligence is impossible until enterprisewide views of data are available. Belkin adds that traditional merchandising processes are in need of a serious overhaul to add more in terms of predictive analytics "to ensure last year's results don't become this year's self-fulfilling prophecies."
Breaking down the silos is no simple matter. "Smaller companies have as many as 10 different data marts, while firms over $1 billion will have as many as 50 data marts within the company," says Leslie Ament, Aberdeen channel director for the customer intelligence practice. Large retailers tend to be near the upper end of this range due to the array of different suppliers.
Supply chain complexities are a big part of the challenge in breaking down these silos, Ament says. Because different retailers have different supply chain intricacies for discounts, billings, item names and other data records, there's no simple way for a business intelligence vendor to meet the needs of the market.
Belkin recommends that customer centricity should drive any further investments in business intelligence. Those retailers who are "best in class" are already using business intelligence across the enterprise, but these retailers must avoid stalling at current levels by continuing to invest in the technology.
The first step for any retailer looking to implement business intelligence, according to Belkin and Ament, is to "get the house in order"; in other words, to understand the value proposition of business intelligence and to determine where it can provide immediate return on investment. "Getting one's house in order [using more enterprisewide business intelligence] is something that should be approached in stages," Ament says. "Every retailer is different. The good news is that they're moving in that direction."
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