More Data, But Where's The Profit?
September 2012 Integrated Solutions For Retailers
By Matt Pillar, editor in chief
A new report from a survey conducted by Oracle tells us that 90% of retailers are collecting 98% more data than they were two years ago, but struggling to transform it into profit-enabling intelligence. Only 3% of you give your organization an “A” when asked about your preparedness for the data deluge that’s come from new retail touch points, which includes traditional POS T-log and inventory data, information collected from mobile interaction, e-commerce sites, and unstructured data from social mediums. A solid 57% gave their companies a “C” while 30% reported to be in the “D” or “F” range. These self-ascribed grades lead to the punch line stat; a full 93% of you believe you’re losing as much as 10% of revenue per year — or $50.5 million based on the average revenue of retailers surveyed — as a result of not being able to fully leverage the information you collect. Many experts, including Oracle VP and GM Mike Webster, think that estimate is low. A recent study from the McKinsey Global Institute found that retailers could realize a 60% improvement in operating margin if they could fully exploit their troves of big data.
I talked with Webster on the heels of the company’s release of the report. He acknowledged that cross-channel growth is fueling investment in platforms that make good use of the information retailers are generating. “Despite these petabytes of information retailers can easily collect, there’s a breakdown at the execution level. We as consumers remain anonymous. Personalization is the exception. Channels remain siloed, right down to pricing. This need to connect with the consumer in both virtual and physical environments by creating a connected, cross-channel experience hinges on the exploitation of big data,” said Webster.
To that point, the survey asked retailers, “How would you rate your ability to gain insight from customer data you gather across multiple channels?” Nearly half said they “have multiple views of each customer and can piece them together effectively.” Only 17% said they have a single 360-degree view of the customer across channels. This tells us that most retailers are still in the early stages of the first phase of the three-part approach Webster advises. “First, the technology infrastructure must be in place to allow the retailer to integrate channel-specific data and produce a single view of customer, inventory, and operational data,” he says. Most are clearly not yet there. Next, with the data collection and connection mechanics in place, employees need roles-based interface tools and know-how that gives them access to said data. Webster says the last phase is turning that data into actionable insight. “Some retailers have the infrastructure in place but haven’t gotten to the delivery part yet,” says Webster. “They’re collecting, butunprepared for execution.”
The retailers who claim to effectively piece multiple views of each customer together are straining their IT departments. The burden of building custom tools and queries and patching infrastructure together to connect channel-specific data sources falls squarely on the IT department, and it’s a heavy, often futile burden to bear. “I can be a customer in several different ways,” says Webster. “You can identify me by my credit numbers, my mobile phone, my loyalty cards, my e-commerce profile, and so on. You can go ahead and stitch all that together, and try to keep it stitched together, but the picture you paint of me will be so far behind my points of purchase or purchase interest that it will be perpetually outdated and irrelevant,” he says. “Knowing me — the consumer — behind my purchase and shopping behavior is knowing me too late.”