Western Digital

How Big Data can drive digital transformation in the retail industry

By Gerry Yeo, SAP and Jayant Chhallani, Atos
Authors

With the barriers of e-Commerce, m-Commerce and brick & mortar diminishing in today’s Indian Retail market space, Retailers and consumer facing businesses have always had to deal with a big data problem as “retail is detail.” This problem is only getting worse due to a number of major trends including mobility and the Internet of Things.

While Big Data is an enabling technology, retailers need to identify how it can be used to drive real business value.  Accordingly to recent research, a quarter of the retail CIOs say while they are actively collecting big data they are not yet leveraging it to actually improve customer service. Making Big Data real must begin with a strategic business discussion. Big data represents an opportunity to change how retailers source sell and service their customers by tracking new signals, finding new patterns and listening to the voice of the customer within the digital noise. Although this may seem like something that would only be possible in the distant future, there are already several real world examples of how retailers are leveraging big data and mobility to engage shoppers in innovative ways anytime, anywhere.

In this article, we will try to identify the major trends driving big data, provide some success stories of global retailers that are innovating & leading the way, and recommend what retailers should do to leverage the value of big data and mobility as first step to digital transformation.

Retail is detail

Even before the advent of the term “Big data”, retailers have always struggled with large amounts of data.  By definition, retailing involves stocking a broad assortment of merchandise at multiple, high traffic locations and selling small quantities of articles to numerous individual customers for personal or household consumption. For a 1,000 store chain with 10,000 SKUs, keeping seven years of weekly history would result in over 3.5 trillion data points. In the past, retailers did not usually collect customer data but this would have added to the number of data points they would have had to maintain.

Retail1

To deal with this problem, retailers have historically summarized their point of sale data by product/location/time and discarded the detailed transaction log data after processing it for sales audit, loss prevention and market basket analysis. Another work around was the retail method of accounting as attempting to keep track of the moving average cost of thousands of SKUs at multiple locations in the days before electronic computing was a herculean task. Today, to compound the problem, retailers increasingly have to deal with an exponentially growing volume of data driven by a number of mega trends – most notably mobility and the Internet of Things.

The impact of mobility and the Internet of Things
Mobile devices have armed consumers with the power of unlimited purchase options at every stage of their purchase journey. Most importantly for retailers, customers begin their shopping journey before they enter a store and can be influenced right up to the point of sale. Mobility has accelerated the evolution from multi-channel to omni-channel retailing to provide a unified customer experience. Consumers are always on and, if they opt in, can be tracked geo-spatially and engaged wherever they are. Mobility has also amplified the power of social networks to influence purchase decisions – from friends boasting about their latest purchase to flaming about a particularly bad store or customer service experience.

We are now however not only connecting people but also things. The mobile phone was the first device which was tracked which giving retailer’s insight into a consumer’s whereabouts. Now we have wearables – watches, jewelry, glasses, apparel and footwear – that are smart but also machines such as cars, kitchens and store robotic assistants. Imagine your watch calling for help if it senses you are having a medical emergency, or your car booking a space at parking meter so you can arrive at your meeting at precisely the right time.  Both mobility and the Internet of Things has added to the vast amount of data that retailers not only have to deal with but also, with the right tools, leverage to their advantage.

What should retailers do?
While big data is an enabling technology, retailers need to identify how it can be used to drive real business value. Making big data real must begin with a strategic business discussion. Big data represents an opportunity to change how retailers source sell and service their customers by tracking new signals, finding new patterns and listening to the voice of the customer within the digital noise.

 

Big Data Maturity Model

Exhibit: Big Data Maturity Model

Unfortunately, roadblocks keep many retailers from realizing their big data goals. Many retailers lack the expertise to connect big data projects with the business imperative. Complex IT infrastructure can inhibit retailers from tracking new signals cost effectively and at the pace of business. If that weren’t enough, retailers often lack a way to apply those signals within their daily business operations.

Retailers need to achieve tangible results for their top business priorities by accelerating how they acquire, analyze, and act on insights and applying those insights continuously through their people and processes. A real-time data platform can simplify their technology architecture and help them become a real-time business. They can mine massive volumes of data on low-cost storage to uncover deeper insight into customers, channels, products, prices, and promotions at speeds that are typically thousands of times faster than traditional databases.

By analyzing a billion transactions a day a leading online marketplace provides timely intelligence to sellers, improving predictability and communicating areas of opportunity. To do this the company needed a better way to sift through its massive 100 petabytes of data to separate the signals from the noise. With an early detection system powered by predictive analytics on a real-time platform, they were able to get real-time insight into the health of their marketplace. In this way, the company focused on what it does best: connecting buyers with things they need and love.

Mobile solutions simplify business and drive innovation where it matters most by changing how people learn, work and shop. Mobility enables retailers to personalize their interactions with customers and frees and empowers mobile workers to interact more intimately with shoppers. Marketers can support their campaigns with more personalized promotions to foster loyalty and drive sales. Store operations can gain on-the-go visibility into sales, inventory and staffing to support strategic decisions. Store associates and managers can access inventory visibility and perform price lookups to better support customer needs.

What if you could have real-time information about your customers – their buying history, social media use, and fashion trends – at your fingertips the moment they walk in the door? A leading fashion retailer and renowned global luxury brand, transformed each client experience through personalized fashion advice generated through an in-memory analytics platform. With a few clicks on an iPad, sales people can call up customer information, consolidate transactional, social, and RFID data, and quickly generate spot on recommendations, on the spot.

More than 50 billion devices will be connected to the Internet by 2020. Not just phones and tablets, but almost anything with a sensor on it – coffee makers, cars, cattle, plants, jet engines, oil drills, wearable devices, and more. To gain value from the Internet of Things and to start their journey, retailers need to connect to the new generation of Internet-enabled devices in the cloud. They can then transform their existing business processes by harnessing the machine data generated by their connected devices and re-imagine customer experiences from the ground up.

Real Life Examples

Digitization is a step change that will have a bigger impact on business than even the Internet. To win in the digital economy, companies must act now, or be left behind wondering what happened! Let us take a few news making examples where retailers are pioneering seamless customer experience in their own micro vertical.

adidas Virtual Footwear Wall

A solution deployed in more than 12 countries, adiVerse has helped improve store sales by 10-12% by putting the ultimate aisle of shoes at the fingertips of the consumer while they are in-store and ready to buy.

This solution is an extension of the real product displays where products (shoes) would be shown on a shelf, but virtually. adiVerse Virtual Footwear Wall potentially puts as many as 8,000 shoes at shoppers’ fingertips in a futuristic mash-up of e-commerce and the mall. It taps into the rich interaction possibilities in the digital world and combines it with the real product interactions that are only possible in physical world to create a unique shopping experience. Built-in anonymous video analytics provides metrics on shopper trends, demographics, and shopping patterns, enabling adidas to provide personalized experiences and relevant value-add services to shoppers. Finally, shoppers can also buy products via tablet based checkout.

Smart Vending Machine (SVM)

Identified as one of the “five forward-thinking pieces of tech that could shape our tomorrow”, by CNN. The new digital world will see highly efficient back-office processes elements triggered by real-time integration with flexible, personalized customer interaction solutions.

Consider a maintenance trip to a vending machine – when you reach the machine:  (1)to re-stock and find that the machine is not working or you don’t have the right product to refill; (2) to repair and have to make return trip just because you don’t know what part is to be replaced and don’t have it handy

Let us do the math, $20 per trip (cost of labor, fuel cost, vehicle maintenance, etc.), 10 lost trips per month per machine, 10,000 machines, converts to $2,000,000 / month i.e. $24 million per year, which is a substantial saving. And this even doesn’t consider the other benefits such as reduced lost sales because of stock-outs, improved margins due to demand driven dynamic pricing, etc.

The SMV covers both customer experience as well as operational excellence.  Based on the real-time data platform, Smart Vending solution provides brands the opportunity to engage with their customers in highly personalized ways in the digitized world. Consumers can identify themselves with their smartphones, build profiles, connect to their friends, play social games, and receive promotions and offers tailored specifically to them—transforming the vending machine into an unparalleled retail experience.

Smart Vending’s predictive analytics capabilities power deep, actionable insights that increase sales by optimizing the product mix for each machine based on a host of dynamic factors such as hyper-local preferences, temperature, and even new product promotions. Furthermore, predictive maintenance and mobile workforce automation makes replenishment and service runs more efficient by forecasting machine downtime and automatically generating service and replenishment tickets.

Connected Kitchen

The Internet of Everything and Big data are the new technology domains that are having a disruptive impact. The key to sustainable success for businesses that rely on customers’ personal data, is to regain the trust of the individuals by demonstrating control over the usage of their data.

Today, Atos offers retailers to get installed inside a consumer’s home to offer them innovative digital services. At any time, via a fridge magnet Wi-Fi connected at home, Connected Kitchen allows consumers to scan and add everyday products to their shopping list in real-time, in a simple, fast and fun way. Connected Kitchen will be available for on-line players in the retail industry including e-commerce, and is particularly interesting for the ‘store pickups’ that are increasingly present for daily errands and with which consumers expect to save time.

Interactive Digital Signage
Businesses changes, customer demands change, then why solutions should remain same. An interactive digital signage serves the purpose, invest once and reap benefits in multiple scenarios.

Let us look at few scenarios:

Promotional Wall

Promotional Wall

Dynamic and personalized content

Personalized Content

Retailers can leverage these interactive digital signage’s to not only drive traffic to the store but also to build intimate customer experience. These signage’s has multiple uses when either placed at different locations or during different time of the day at the same location. These can act as navigation maps to route to retailers store in a mall or a product in a store. These can be used to vend promotional coupons via QR codes or use them as trial room mirrors using augmented reality, without actually stocking the product in store.

 

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