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Retailers ‘must improve maturity’ to benefit from big data
Organizations in the retail sector have been steadily improving how they invest in big data analytics over the last 12 months, but may still need to do more in order to reach full maturity and make the most of this technology.
This is according to a new study by EKN Research, which found that while overall investment in data analytics is comparatively small, it is growing. In 2013, retailers are set to spend less than 0.5 percent of their total IT budget on data, but this will more than triple by 2016. EKN said this signifies a move into an experimental phase as retailers seek to determine the value of big data to their business operations.
Companies’ priorities when it comes to managing their information are also changing as the technology evolves. Last year, respondents to the State of the Industry Research Series: Big Data in Retail report stated their number one focus was to take control of their data volume management, but in 2013’s study, this was displaced by better organization of data. Some 68 percent of respondents rated managing their unstructured data as their top challenge.
Coping with the variety of data available will be the focus for firms, which is another change since last year, when half of respondents were more concerned about volumes of information.
Gaurav Pant, research director for EKN, observed that big data analytics will be one of the most exciting opportunities for retailers, but these firms are taking a “realistic, pragmatic approach” to their investments in this area.
He added: “Big data is still several years away from moving into the mainstream of retail. However, by taking the right steps now, retailers can position themselves to gain competitive advantage through the power of big data and advanced analytics.”
The survey also noted, however, that big data should not be seen as solely for large companies, as less-sizeable enterprises can also gain great results from the technology.
It noted while large chains such as Target and WalMart are showing what is possible with large-scale investment in big data, smaller firms can also take advantage of solutions such as cloud computing, as tools like Software-as-a-Service can give firms on smaller budgets access to advanced technologies.
EKN stated that in order for companies to make the most of their data analytics, they will need to develop a higher level of maturity than they currently have. The company’s research revealed 60 percent of firms say they only have basic analytics and reporting processes in place while four out of five retailers are only on par with, or behind, their competitors in terms of their use of analytics.
Another essential aspect of analytics for retailers in not just being able to collect or process data, but ensure the results are presented in a format that is clear and easy to understand, so employees can gain real insight from their data.
“Delivering the right insight to the right person at the right time is retailers’ number one analytics challenge, as more business users (not data scientists or statisticians) begin acting upon the information gleaned from Big Data,” EKN said. “Data visualization will make insights easier to understand and comprehend.”
Separately, a new survey by IMTS US probed executives at 200 retail and consumer packaged goods companies about their use of data analytics. It found that many of them still rely on outdated reporting systems in order to gain insight into store segmentation, demand and inventory planning, stock reports and other activities. just one percent of those surveyed rated the level of actionable insights they currently derive from their reports as ‘world class,’ while just 29 percent described their performance as ‘better than average.’ More information on the survey can be found online at www.kognitio.com/survey. Businesses are encouraged to contact the firm to receive a presentation with the details of the survey.