PatelMiller"Spotlight"
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Retail'Analytics'
The"Untapped"Opportunity"for"Retailers"
By#Kevin#Blackmore#and#Chantelle#Kennedy##
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Data'analytics'has'provided'
significant'benefits'across'many'
industries'and'has'received'
much'attention'in'recent'years.'
However,'the'promised'returns'
have'remained'elusive'for'
many'retailers.'
'
Current'analytics'solutions'are'
often'difficult'and'inefficient'to'
use'and'do'not'empower'the'
user'to'take'action.'Many'
storage'and'data'warehousing'
systems'are'dated,'leaving'
retailers'with'messy'and'
inaccessible'data.'
'
There'are'huge'untapped'
opportunities'for'retailers'who'
can'crack'data'analytics'and'we'
have'identified'significant'
potential'for'retailers'around:'
• Customer'insight'
• Pricing'
• Supply'chain'management''
'
A'new'approach'is'needed'to'
enable'retailers'to'realise'these'
benefits;'PatelMiller'and'
Planixs'combine'deep'retail'
expertise'with'cutting'edge'
data'analytics'to'bring'a'fresh'
approach'to'data'analytics.'"
!
The'context:!
Our"research"suggests"there"is"
considerable"value"to"be"had"from"
improvements"in"data"analytics.""""
"
Retailers"collect"ever?increasing"
amounts"of"data"but"are"unable"to"fully"
leverage"this"data."A"recent"survey"by"
RSR"revealed"that:"
• Half"of"retailers"questioned"need"
cleaner"and"more"timely"data"from"
operational"systems"
• Well"over"half"believe"that"their"
existing"analytic"tools"are"not"fit"for"
purpose"
• Two?thirds"would"like"simpler"
analytic"tools"
"
In"this"paper,"we"will"explore"the"key"
challenges"faced"by"retailers,"the"
opportunities"for"the"future"and"how"
retailers"can"start"to"exploit"the"value"
of"their"data.""
“Our%customers%are%
talking%to%us%every%day%5%%
but%we%are%not%listening”%
"
The'challenges:'
PatelMiller"and"Planixs"have"surveyed"
leading"UK"retailers"and"found"three"
major"challenges"for"retailers:"software"
usability,"user"empowerment"and"the"
data"deluge."
"
1.'Software'usability'
Existing"technologies"are"primarily"one"
size"fits"all"and"lack"the"ability"to"be"
easily"customised,"reducing"the"speed"
and"efficiency"with"which"retailers"can"
use"their"data.""
"
There"is"a"clear"need"for"a"user?friendly"
solution"that"can"deliver"insights"that"
are"specific"to"each"retailer's"
challenges."A"value"fashion"retailer,"for"
example,"may"be"more"reliant"on"
promotions"and"more"sensitive"to"
changes"in"competitor"price"than"a"
designer"fashion"retailer"and"hence"
requires"a"different"interpretation"of"
price"and"promotions"analytics.""
"
Whereas"retailers"were"previously"
reliant"on"expensive,"on?site"solutions"
for"their"analytics"software,"cloud?
based"alternatives"offering"
customisable"solutions"are"now"
available."These"technologies"give"the"
flexibility"to"bolt"on"new"functionalities"
or"processing"power"when"required.""
"
2.'Empowering'the'user"
Retailers"often"require"skilled"analysts"
to"develop"their"management"
information,"slowing"down"the"speed"at"
which"they"can"make"decisions"using"
data"insights."These"specialists"are"
often"grouped"into"a"single"team"and"
can"hinder"the"extent"to"which"data"
analytics"is"embedded"across"the"
organisation.""
"
A"better"solution"is"one"which"allows"
retailers"to"empower"users"across"all"
functions"to"use"data"analytics"in"their"
daily"roles."This"makes"data"analysis"a"
way"of"working"rather"than"an"isolated"
function"within"the"business."
"
A"gap"in"analytical"skills"is"commonly"
cited"as"a"key"challenge"for"retailers"
looking"to"utilise"their"data."We"feel"
that"the"challenge"lies"with"the"tools"
and"processes"rather"than"the"user.""
Just"as"retailers"invest"large"amounts"in"
simplifying"the"user"experience"on"
eCommerce"sites,"data"analytics"
software"should"empower"even"the"
most"basic"user"to"quickly"and"easily"
draw"valuable"insights.""
'
3.'A'deluge'of'data'
Orderly,"accurate"and"intuitive"data"
storage"is"essential"to"allow"timely"and"
accurate"analysis."Traditional"
technology"requires"many"steps"to"link"
data"to"insight,"making"data"analytics"
systems"slow"and"inflexible.""
"
This"traditional"technology"requires"the"
purchase"of"high?cost"data"servers"for"
data"storage"and"management;"an"
expensive"solution"with"limited"ability"
to"scale."Cloud?based"solutions"can"
1"
often"be"delivered"at"a"lower"initial"cost"
and"are"able"to"scale"in"line"with"data"
volumes."While"there"is"a"perception"
that"cloud"solutions"are"in"some"way"
less"secure,"we"find"the"opposite"to"be"
true"with"cloud"solutions"benefiting"
from"dedicated"professionals"and"
software"updates"to"keep"data"safe."'
'
'
The'opportunities:'
Data"analytics"will"continue"to"grow"in"
importance,"and"those"who"master"
their"data"have"the"chance"to"gain"a"
competitive"edge."For"example,"by"
improving"forecasting,"a"retailer"with"
50K"SKUs"was"able"to"save"£100M"in"
inventory"costs.""
“We%spend%90%%of%our%
time%managing%and%
manipulating%data%and%
10%%drawing%insights”%
"
Through"the"retailers"we"have"spoken"
to,"we"have"identified"the"following"
three"areas"as"holding"the"largest"
promise"to"unlock"value"in"data:!"
'
A.'Customer'insight'and'marketing'
Understanding"the"customer"and"
targeting"them"in"the"right"way"is"key"to"
capturing"and"holding"a"customer’s"
attention"amongst"the"myriad"of"
brands"on"offer.""
"
In"this"study"we"identified"a"number"of"
factors"impacting"a"retailer’s"ability"to"
use"their"data"for"customer"insight"and"
marketing:"
• Lack"of"available"customer"data:"
many"smaller"retailers"have"
difficulty"capturing"customer"data"
and"are"unable"to"link"data"across"
channels"
• Lack"of"knowledge"within"existing"
marketing"teams"to"leverage"
customer"data"and"insights"
"
We"predict"that"the"increased"use"of"in?
store"technology"will"enable"even"
smaller"retailers"to"collect"actionable"
data"on"their"customers."iBeacons,"
mobile"payments"and"smart"watches"
provide"new"ways"in"which"individual"
customers"can"be"tracked"within"the"
store."This"reduces"reliance"on"
traditional"sampling"methods"and"
allows"smaller"retailers"greater"scope"to"
introduce"more"effective"loyalty"
initiatives"for"their"customers"based"on"
richer"customer"data."In?store"
technology"also"creates"the"opportunity"
for"real?time"marketing,"increasing"
!
customer"engagement"and"helping"to"
combat"show?rooming"behaviour."
"
B.'Pricing'and'promotion'
Effective"mechanisms"to"price"and"
promote"products"in"a"data?driven"
manner"have"proved"difficult"for"many"
retailers.""
"
Price"and"promotional"analysis"is"a"
complex"area"that"often"benefits"from"
knowledge"of"specialist"analytical"
techniques."As"a"result,"many"retailers"
rely"on"intuition"to"make"pricing"and"
promotional"decisions."Data"analytics"
systems"provide"a"resource"with"which"
to"improve"the"accuracy"of"decision?
making"in"pricing"and"promotions,"fine?
tuning"intuition"using"a"comprehensive"
analysis"of"past"decisions."For"example,"
data"analytics"can"help"to"inform"mark?
down"and"clearance"decisions"to"
prevent"giving"away"too"much"margin."
'
C.'Supply'chain'
Retailers"need"to"be"able"to"react"
quickly"to"customer"demand;"getting"
the"right"products"on"the"right"shelves"
at"the"right"time"is"crucial.""
"
In"many"cases,"accurate"forecasts"are"
difficult"to"obtain"as"a"result"of"the"
large"number"of"unpredictable"factors"
involved."However,"even"small"
improvements"in"the"accuracy"of"
forecasts"over"time"can"deliver"big"
benefits"for"retailers.'
"
Smarter"solutions"are"increasingly"
becoming"available;"these"solutions"
deliver"timely"insights"to"help"the"user"
make"better"decisions."A"solution"that"
monitors"changes"in"demand"and"helps"
the"user"set"the"best"parameters"to"
control"the"forecast"could"help"the"user"
to"identify"the"effect"of"competitor"
availability"on"demand,"for"example."
"
'
Unlocking'the'potential:'
Retail"analytics"has"the"potential"to"
unlock"great"value"for"retailers.""
"
We"find"the"following"steps"are"useful"
in"reviewing"analytical"capabilities"and"
starting"to"drive"data"into"insight"and"
action:"
• Assess"how"well"data"is"used"in"your"
decision"making"today"–"how"much"
time"is"spent"getting"the"data"
versus"doing"something"with"it,"
how"much"decision"making"is"based"
on"intuition"and"which"gaps"will"
make"the"greatest"difference"
• Think"about"today's"needs"and"also"
those"three"years"ahead"–"make"
investments"that"have"a"positive"
return"on"investment"immediately"
•
•
and"that"can"grow"to"provide"
strategic"long"term"capabilities"
Be"brave"in"evaluating"your"data"
capabilities"–"challenge"the"status"
quo,"ask"what"could"be"done"
differently"and"ask"technology"and"
consulting"partners"for"help"and"
ideas"
Focus"on"early"wins"and"build"
momentum"–"there"will"likely"be"
easy?to?implement"medium"and"
high"value"opportunities;"focus"on"
making"these"a"success"and"winning"
business"confidence,"gradually"
building"to"an"enterprise"solution"
"
PatelMiller"and"Planixs"have"the"deep"
retail"expertise"and"cutting"edge"
analytics"to"help"retailers"utilise"the"
power"of"their"data."We"work"with"you"
to"help"define"your"challenges"and"
opportunities,"creating"a"customised"
solution"to"take"your"data"from"insight"
to"action."
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Our'people:''
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Jim'Zalles'
Associate'Partner'
PatelMiller'
Jim"has"considerable"
consulting"and"analytics"
experience"in"the"retail"
and"airline"industries"in"both"the"UK"
and"the"US."He"has"held"positions"as"an"
analytics"consultant"at"Accenture"and"
Deloitte"and"served"as"Chief"Data"
Officer"(interim)"at"dmg"Media."
"
Kevin'Blackmore"
Director'of'Analytics'
Planixs'Retail'
Kevin"has"over"20"years"
of"experience"in"retail"
analytics."He"has"held"senior"positions"
at"Accenture"and"Deloitte"where"he"
worked"with"leading"retailers"and"was"
VP"for"Consumer"Analytics"and"Insights"
at"Best"Buy.""'
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Find'out'more:'
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www.patelmiller.com"
[email protected]"
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www.planixs.com"
[email protected]"
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