Nearly all of the retailers recently surveyed by the Economist Intelligence Unit (EIU) for WIPRO said they had seen a positive economic return from their investments in strategic data analysis, despite the fact that half said the single biggest barrier to making effective use of data was working out what was actually useful amid the sheer 'information overload'.
The survey report, entitled 'The Data Storm: Retail and the Big Data Revolution', was based on a survey of C-Suite executives from the retail sector in North America and Europe, and examined how retailers are reacting to - and how the market leaders are benefiting from - increasing volumes of data.
Some 78% of all respondents' businesses reported a positive economic return from investment in data analysis for the strategy area. However, only 46% are confident that their firm's analytical abilities are keeping up with data volumes. Tied for the second-biggest barrier to using large volumes of data is concern over whether doing so would really help improve decisions (32%).
Nevertheless, respondents all say their firms are prioritizing data collection, but still only 36% of respondents believe that they have a well-defined policy for analysing the most valuable information.
"While retailers realise the value of maximizing their use of big data and analytics, many are still unable to utilize the data they are collecting in full," said Srini Pallia, senior VP of retail, consumer goods, transportation and government for WIPRO. "To get the full value from the data they are collecting, retailers need to explore new avenues to apply data analytics throughout the organisation that will improve decision making, efficiency and interaction with customers."
Among the report's key findings:
- Marketing is still the main focus
Marketing is the most common priority for data analysis spending by retailers in recent year, as 46% of respondents put this spending amongst their top three areas of focus. Marketing also remains one of the core areas of big data spend in future, cited by 40%.
- Using data to improve strategy is increasingly important
For the past two years, data analysis has been used more often in marketing than in strategy, which is on par with store operations. But in the next two years, strategy is set to take the lead, with 62% expecting to see relevant investment in data analysis to support strategy. Some 78% of all respondents' businesses have seen a positive economic return from investment in data analysis for the strategy area, the highest figure for any function or process.
- Data analysis is helping to drive brand loyalty
64% of respondents reported increased brand loyalty as a general gain from data analysis and 52% say big data has enabled them to expand their sales by offering the next logical item. Yet respondents remain uncertain that they reaping the full benefit of their data. Only 30% are confident that big data is delivering the sales increases that they had hoped, and half (52%) are not sure.
- Many retailers are still in the early stages of Big Data
Only 46% of retail CXOs are confident that their firm's analytical abilities are keeping up with data volumes. Meanwhile just 36% believe that they have a well-defined policy for analysing the most valuable information and 30% admit that they are not consistently obtaining value from it.
- Data helps coordinate omni-channel commerce
Over half of respondents say that big data has brought gains in multi-channel sales (54%) and has made multi-channel customer tracking and management more profitable (52%). But 38% agree that managing differing pricing and margin strategies over varying channels is a major headache.
- Legal restrictions on data usage are a big concern
Two-thirds of retail CXOs say that they have increased the amount of stored information on individual customers in the past year; 64% of them cite legal problems with data collection as a major barrier in its effective use. Data protection laws are tied for the second-biggest impediment to making effective use of use of large amounts of data in strategic planning and decision making in general, cited by 32%.