A new survey by The Economist Intelligence Unit finds that nearly all respondents’ businesses have seen a positive economic return from investment in data analysis for the strategy area. Also, the single biggest barrier to retailers making effective use of data is figuring out what is useful amidst the overload—a problem cited by half of the respondents. These are among some of the major findings of The Data Storm: Retail and the Big Data Revolution, a new report from the Economist Intelligence Unit, commissioned by Wipro Ltd. (NYSE:WIT), a leading global Information Technology, Consulting and Outsourcing company. The report, based on a survey of C suite executives from the retail sector in North America and Europe, examines how retailers are reacting to, and how leaders are benefiting from, increasing volumes of data. It examines the role of data in customer experience, the benefits it is delivering in omni-channel commerce and corporate strategy and the regulatory challenges facing retailers, as they accrue greater and greater quantities of information. Seventy-eight percent of all respondents’ businesses have seen a positive economic return from investment in data analysis for the strategy area. However, only 46 percent 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 percent). Nevertheless, respondents all say their firms are prioritizing data collection, but still only 36 percent of respondents believe that they have a well-defined policy for analysing the most valuable information. “This research shows that while retailers realize 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 Vice President and Global Head, RCTG (Retail, Consumer Goods, Transportation and Government) Business Unit, Wipro. “To get the full value from the data they are collecting, retailers need to explore new avenues to apply data analytics throughout the organization that will improve decision making, efficiency and interaction with customers.”
Key findings of the report include:
- Marketing is still the main focus: Marketing is the most common priority for data analysis spending by retailers in recent years: 46 percent of respondents put this spend amongst their top three areas of focus. Marketing also remains one of the core areas of big data spend in the future, cited by 40 percent.
- 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 percent expecting to see relevant investment in data analysis to support strategy. Some 78 percent 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 drive brand loyalty, but respondents think it can do more: Sixty-four percent of respondents report increased brand loyalty as a general gain from data analysis and 52 percent say big data has enabled them to expand their sales by offering the next logical item. Yet respondents remain uncertain that they are reaping the full benefit of their data. Only 30 percent are confident that big data is delivering the sales increases that they had hoped, and most respondents (52 percent) simply are not sure.
- Many retailers are still at the early stages of using big data: Only 46 percent of retail CXOs are confident that their firm’s analytical abilities are keeping up with data volumes. Meanwhile just 36 percent believe that they have a well-defined policy for analysing the most valuable information and 30 percent admit that they are not consistently obtaining value from it.
- Data delivers in coordinating omni-channel commerce: Over half of respondents say that big data has brought gains in multi-channel sales (54 percent) and has made multi-channel customer tracking and management more profitable (52 percent). But 38 percent agree that managing differing pricing and margin strategies over varying channels is a major headache.
- Legal restrictions on data usage are a major concern: Two-thirds of retail CXOs say that they have increased the amount of stored information on individual customers in the past year; 64 percent 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 large amounts of data in strategic planning and decision making in general, cited by 32 percent.
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