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    The Power of Big Data Analytics in the Retail Industry


    The way ahead – How can Retail and Fashion Brands gain competitive advantage by leveraging the power of Big ?


    Have you pondered about these questions just like I did – Do today’s Retailers really know their customers? How likely are the customers going to buy the products or services? Where do the customers usually shop?


    It is interesting to realise that customers leave their footprints by way of browsing retail websites, enquiring with sales staff and buying the products or services. Footprints are clues about the customers’ preferences and understanding this for retailers can be a powerful tool as retailers who know their customers’ preferences are sure to have a competitive advantage.


    Benefits of Retaining Existing Customers:


    • Gaining a new customer is 5 times costlier than satisfying the existing customer
    • Companies on an average lose 10 percent of its customers every year
    • 2 percent increased customer retention is equivalent to 10 percent cost cutting
    • Success of modern retail is 50 percent right blend of brands and the remaining 50 percent success is determined by how much the retailer focuses in engaging the customers


    In today’s age where consumers meet retailers digitally, Big Data Analytics helps in demystifying retail operations by mining data to gain insights and thereby improve decision making with agility. Customer behaviour in the form of real time-data is being captured at a rapid pace and the retailers’ goal is to leverage this data for sustained profits. Analytics makes this possible!


    Retailers are constantly on the lookout for solutions, which address the challenges of voluminous data, complexity, variety and speed, needed for data crunching which generates valuable consumer trends and insights. Big Data Analytics helps companies to manage internal and external information in real time to better serve their customers by innovatively managing volume, velocity and variety.


    As per the estimates given by National Association of Software and Services Companies (NASSCOM) and ( Limited) CRISIL, the Indian Big Data industry is expected to grow from USD 200 million to USD 1.0 billion in 2015.


    Figure – Estimated Growth of Big Data Analytics in India

    Understanding the Business Using Analytics

    Analytics helps in analysing consumer trends and patterns. It also helps to optimize inventory, launch marketing campaigns and manage investments and cash more efficiently.

    I would like to briefly highlight the key pillars of Analytics:

    1. Business Intelligence (BI)

    BI uses concepts, technologies and methods that gather and analyse data for effective decision making process.

    2. Analytics Applications

    This tool measures the operational performance and sets the stage for better results.
    Here are some key insights that the tool helps achieve

    • Which service or product lines are driving profits
    • Which stores or channels are more productive
    • Buying behaviour of customers during festival or holiday seasons

    3. Financial Performance and

    These tools enable in driving greater profit and sustainable growth across retail operations. This area of Business Analytics deals with the following aspects:

    • Budgeting and Planning
    • Financial Consolidation and Analytics
    • Strategy Management

    4. Advance Analytics

    These tools can leverage historic, current and predictive data to help in decision making and performance optimization. Advance analytics includes data mining, predictive modelling and simulation techniques. It also deals with statistics to identify meaningful patterns and predict future events and sales.

    Industry analysts report that the organisations proficient in demand forecasting manage to achieve on an average 15 percent less inventory, 17 percent higher perfect order fulfilment, 35 percent shorter cash to cash cycle times and 10 percent fewer stock outs.

    Data by itself is not useful unless one is able extract valuable and meaningful information from it. Brands and Retail companies are grappling with three major challenges:

    • Lack of insight
    • Inefficient access to data
    • Inability to predict future events

    This is where Analytics helps companies with actionable insights and trusted information. In today’s world, no business can survive if it is not aware of and does not understand how to sail through the Volatility, Uncertainty, Complexity and Ambiguity (VUCA) effect. In such a state, Analytics becomes all the more important and essential.

    Analytics helps retailers to customize and bundle offers for increased ticket value. Using insights that Analytics offers, retailers can predict and adjust the discount percentage and period for better returns. Further, by using a tool called Category Profit Management, they are also enabled to forecast the product demand for better profitability.

    Enhancing the Shopping Experience Using Analytics

    Another key endeavour for retailers is to enhance the shopping experience for the consumer. Analytics helps in clearly identifying consumer buying and behaviour trends. It can also be applied to improve retail promotions, develop key financial indicators, align store operations etc. Analytics helps to optimize merchandise plans and assortments and gain visibility across the supply chain. Improving shopping experience demands visibility into key areas across supply chain, sales, labour, inventory and promotions. Analytics helps Retailers to lower costs and improve margins with a consistent supply chain process based on integrated analysis of information from multiple systems. The content analytics helps to harness the powerful information in social media today. It is important from the Retailers perspective to keep the customers digitally engaged for

    • Positioning and Branding across offline and online channels
    • Visibility into the before, during and after sale states
    • Testing the effectiveness of messages and offers

    In today’s digitally connected world, the future for retailers lies in realizing the potential of Social Mobile Analytics and Cloud (SMAC)

    Being Customer Centric via Big Data Analytics

    Analytics can help companies to become more customer-centric. Customer centricity drives results with “Outside In” approach. This essentially means that companies aim to deliver something of value to customers rather than focus only on products and sales.

    There are some key perspectives which are expected to transform the dynamics in the retail industry:

    • Being loyal to customers and not to presume or expect the other way
    • Keep in mind the long term view of ‘customer lifetime value’ and not just short term profit
    • Become more agile and responsive by rapidly catering to customer needs. This will require companies to move from ‘Insight to Action’.
    • Break the silos within their organisations and bring about synergies and collaboration
    • Mass customise the strategy.

    For instance “” was the first retail company to create a unique and vibrant loyalty programme called “First Citizen”. It has invested in Business intelligence (BI) technologies and believes that customer insights will define its success as a retailer. Data mining technologies are used to continuously derive customer preferences. Its allocation system uses algorithm to intelligently push fast-moving merchandise at a rapid pace.

    Shoppers Stop uses social media such as Facebook, Twitter and Youtube extensively to engage with its customers.

    More forward looking Retailers and Fashion Brands are realizing the power of Big Data Analytics and are increasingly adopting Analytics to derive sustainable growth and profitability.

    About the Author: Sudhir Kumar R. is a Consultant and an Executive Coach. He has over thirty years of extensive experience in the fashion industry at senior levels.