The latest buzzword that you may not yet have heard is 'big data' – which refers to the massive amounts of data that are available to be recorded about consumers' retail shopping habits. Driven largely by a sudden rise in the online shopping sector, not to mention the increased use of computer technology in brick-and-mortar stores, big data is, for lack of a better term, the next big thing.
Whenever consumers visit a retail website, every aspect of their experience can be documented and stored. Increasingly, thanks to distributed ad networks and pieces of harmless software called 'cookies', many retailers can even track the browsing habits of consumers to try to learn more about what makes them buy. Additionally, the rise in the use of social media adds yet another vector for gauging product interest and brand engagement data. All of this, combined with any data gathered in-store, collectively generates the 'big data' dataset.
Up until now, this has been a veritable flood of information that left many retailers drowning in data that couldn't be correlated and analyzed. Huge decreases in the price of data storage and the availability of vast amounts of computing power through cloud-based services has changed this situation dramatically, however, and retailers are beginning to get a handle on just how big of a goldmine big data is proving to be. The possibilities for online, real-time marketing are virtually unlimited: cross-selling, up-selling, and targeted sales for potential consumers who've opted out of sales pipelines are barely scratching the surface, and the sooner retailers adopt good data analysis practices, the sooner they'll have a huge competitive advantage in the marketplace.
The benefits aren't limited to online shopping experiences, however. One Canadian company, Lighthaus, has even begun to capitalize on the data stored by CCTV security cameras installed in most retail outlets as anti-theft devices by measuring customer engagement with various aspects of the store itself. Specific displays, products, and store layouts can all now be digitally analyzed to help retailers boost conversion rates, a practice that has typically been most successful in the domain of online shopping analytics. Lighthaus aims to bring the digital data revolution to the store, and several major retailers such as Foot Locker have begun using their system to help boost conversions. In a similar move, a new startup named RetailNext has also brought data analysis to combine video data with purchasing and customer data from point of sale systems to achieve the same goals.
Regardless of the method retailers choose, however, the importance of big data is undeniable, provided that it is properly analyzed and acted upon. This may not be quite as simple as it sounds, as simple analysis techniques such as means and averages rarely tell the whole story, but the competitive advantage that can be gained from even a 5% boost in sales conversion rates can make the difference between dominating the market and being stuck in the middle of the pack. As customers grow savvier, retailers must expand their abilities to stay on top of emerging trends – and the proper analysis of big data is the only way to stay ahead of the competition.