Retailers in the U.S. provide 42 million jobs and add more than $2.6 trillion to the GDP each year. Nearly 99 percent are small businesses with fewer than 50 employees, and about 95 percent are single-location stores. Until recently, few had access to sophisticated retail analytics. Yet national mega-retailers have spent millions to build out big data analytics using and other software components, as well as thousands of commodity servers a project far beyond the budget or capability of smaller retailers. Those national chains turn to analytics routinely to gather more customers and further enlarge their market share.
As long as three years ago, Kerem Tomak, Vice President of Marketing Analytics at Macys.com explained how advanced analytics is critical to the companys growth. As the worlds largest retailer, Walmart implemented big data analytics even before the term was coined, and has since made it part of its DNA. But now, finally, smaller retailers can tap into sophisticated retail analytics in the cloud without the expense and complexity of building out and operating a data center.
Cloud analytics give small and mid-sized retailers customer-specific insights so they can better understand customers and their behavior.
- How customers purchase (online, brick and mortar, mobile);
- How customers are segmented (demographics, psychographics);
- What customers buy (market basket analysis);
- Analysis of marketing and promotion effectiveness;
- How to increase loyalty.
Much more than business intelligence (BI) with its dashboards and key performance indicators, cloud analytics is designed to process big data that flows in from social media (like a retailers Facebook page or Twitter account); from customer interactions on the company website; as well as data from the POS and other internal data sources.
Six Ways Smaller Retailers Win with Cloud Analytics
According to research company IDC, three-fourths of companies using cloud services cited speed of implementation as the number one benefit. For smaller retailers who want to embrace analytics without having to buy, install and configure hardware, and then hire people to manage it, cloud analytics are the answer. IT department? None required.
Likewise, the subscription cost for using retail analytics in the cloud is a tiny fraction of building an on-site data center.
With frequent reports of hacking, break-ins and breached systems, security is a constant concern, especially when customer data is at risk. Cloud providers recognize that fear and use advanced technologies software-defined networking that gives cloud admins far more control over traffic and its sources; certificate and key management systems such as Venafis that encrypt all cloud traffic; and others.
With cloud services available through the public Internet, retailers can access their retail analytics from home or from a mobile device, giving business owners and managers 24 x 7 access.
Not to be overlooked, users can get up to speed with cloud analytics without spending days in training classes. Intuitive dashboards and UIs spell productivity and useful results almost from day one.
Finally, as a retailers business grows (and as the volume and velocity of data grows, as it certainly will), cloud analytics are scalable. Again, theres no need to buy hardware; greater capacity is a simple matter of upgrading the cloud subscription.
Retailers in the Winners Circle
One retailer that has tapped cloud analytics is a small chain of wine bars, Vino Volo. Their approach uses a cloud-based loyalty program that crunches lots of real-time data from mobile, social, and POS to automatically provide brands (in real-time) 360-degree insights about their customers and stores, including visits by location and time of day, orders including specific menu items, reviews and sentiments of reviews, and campaign response rates, in the words of the analytics software provider. Vino Volo reports a ten percent increase in business at some of its locations.
Other smaller retailers using retail analytics include Made.com, a UK-based furniture company founded in 2010; and, QuBit.com, a software maker also founded in 2010. Learn why these smaller firms have embraced analytics in this Financial Times short video (5 minutes).
Conclusion
Analytics have grown to become one of the most powerful tools available to retailers, and with cloud analytics available to even the smallest retail shops, its adoption curve is beginning to look like the classic hockey stick. You might want to review Babson Executive Educations in-depth study to gain a fuller understanding of how analytics can help take advantage of the ever-growing data your business generates.
