Every purchase you make is a treasure trove of data. (Illustration: James Boast)

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What You Leave Behind While Shopping Online

As our shopping sends off more and more data, retailers are starting to find the signal in the noise.

“Big Data Saves...”

Go ahead. Fill in the blank. Put in anything you want. Because regardless of what you choose, there’s likely to be a news article supporting your claim. This is especially true when it comes to retail. If headlines are to be believed, then big data has saved the British pubs, it’s pumped life back into the practice of in-store promotions, and it’s brought Ford Motors (and, therefore, all of Detroit) back from the dead.

There is only one problem with big data. It’s so mind-bogglingly big. And it keeps getting bigger all the time. Public archives are getting loaded online. New forms of social media are constantly emerging and old ones continue to recruit new users. Satellites observe and report minute changes in weather patterns while cameras here on Earth seem to capture every newsworthy thing we do.

Retailers, like everyone, are awash in big data. But it will only save them if they can find a way to make the data relevant to the specific businesses they are running.

“Retailers are trying to get smarter by anticipating their customers' needs,” says Karen Lowe, the global general manager for IBM’s retail industry. “This requires predictive analytics. They are having to tap into external sources of data. And that's not always easy.”

Lowe leads an effort to take the extraordinary amounts of data that IBM collects and package it into analytical tools that can be easily customized by the client. The products offered through IBM’s Smart Retail Solutions services are designed to help retailers make decisions about their own individual businesses while filtering out the noise that inevitably accompanies large datasets.

Part of the strategy involves observing what people are saying on social media outlets and using that to gauge customer sentiment about particular brands. This may sound easy. After all, most people don’t exactly hide their true feelings from the audiences of Twitter and Facebook. But then again, one person’s incensed review of a product, however passionately it was written, may not reflect the average customer’s opinion. Similarly, even a brief, understated comment can have serious consequences for a company if the person who made it is influential in the digital community.

“Can tweets about your brand, especially from a social influencer, actually change sales?” asks Lowe. The challenge is to answer only this question, sifting thru the noise. Doing so requires a system that understands all the connections and reputations in a given social network. “Knowing who’s influencing who and what they’re saying is becoming more and more important over time," she said.

But making data relevant to specific clients isn’t always a matter of filtering out the noise. Sometimes it requires actually hunting down unconventional sources of data that can offer some rare insight into your specific business.

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The Rise of E-Commerce

Online sales are growing steadily year over year, showing no signs of slowing down.

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E-Commerce Growth Outpaces Retail

The number of online retail outlets is growing dramatically as brick-and-mortar stores drop slightly.

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The Brick-and-Mortar Data Gap Part I

Brick-and-mortar retailers struggle to translate the personalized online shopping experience to their stores…

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The Brick-and-Mortar Data Gap Part II

…even as the industry recognizes how it can help their business.

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The Brick-and-Mortar Data Gap Part III

But in recent years, retailers have made strides to catch up with big data adoption across all industries.

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The Brick-and-Mortar Data Gap Part IV

Still, for the time being, retailers lag behind other industries when it comes to taking realizing the value of big data.

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According to Vish Ganapathy, IBM’s chief retail technologist, IBM helps its clients find significance in datasets that would not normally pertain to them.

“One of our clients, which is an automobile parts retailer—they did something very, very clever,” says Ganapathy. “They took department of motor vehicles data to figure out who was living in what area, what kind of cars, what model, what make, et cetera. And used that to influence the assortments in their store. It’s very, very clever, extremely relevant to their business, and we are seeing lots of anecdotal examples like that.”

One of the most relevant measurements business owners can have is an indication of how their shops are faring in comparison to all others like them. Brick-and-mortar retailers have the benefit of being able to look out the shop window and see where the crowds are forming. Performance comparison is especially challenging for online businesses that see their own analytics in real time, but rarely get a glimpse at the competition's.

Then again, even if you could inspect the innards of every individual e-commerce company, it wouldn’t necessarily be helpful as only a sliver of them would be relevant to your business profile.

Through agreements with online retailers, IBM has access to performance data in real time, and it uses it to make comparative analyses of how its retail clients are doing in their specific sector of the market. For example, a department store can log in and look at how their competitors are performing in every category of sales, whether it be women’s apparel or home goods.

“And so they can see—what’s going on with me? What are they saying about my competitors? Why am I getting less traffic right now than my peers in the marketplace?” says Lowe. “Analytics that converts data into actionable insight...these are the analytics that are happening right now."

But most importantly, they are analytics that pertain only to them—insights pulled from the tsunami of big data and delivered to companies as life vests tailored only to them.