How Big Data Impacts the Retail Industry
What exactly is “Big Data”? This refers to large unstructured volumes of data that cannot be processed by traditional data processing software or techniques. Big data comes from three primary sources; social data, machine data and transactional data. In other words it is derived from text, audio, video, images etc which are then analysed to discover trends and patterns in human behaviour and interaction.
So how exactly does big data impact the retail industry? In the context of the retail industry, big data means an analysis of consumer shopping habits, preferences, and how to attract new customers. Retailers can create personalized shopping experiences for the customers by giving them recommendations based on the analysis of big data. Moreover, companies can even organize stores, manage stock through the use of big data in retail.
Big Data Analytics
Through the use of big data analysis retailers can find solutions to in-store and online problems. Analysis of big data can allow retailers to enhance the shopping experience for the customers through personalized recommendations and discounts. Consumer shopping habits, preferences and other external data could be analysed to find methods and strategies to not only keep the current customers coming back to the store but to also attract new customers.
In fact, the world’s biggest retailer, Walmart, has its own in-house data analytics hub called Data Café, where over 40 petabytes of internal and external data is analysed every hour. Through this technology, any problem found in-store or online can be fixed in a matter of seconds.
By analysing data collected through loyalty programmes, credit card transactions, user log-ins etc., retailers can identify the variations in the customer’s shopping habits. This can be used to predict future spending and can be used to make personalized recommendations.
Amazon used big data gained through analysis of your search and purchase history to recommend items that you may be interested in. Even Macy’s uses big data analysis to improve their customer experience.
Predicting Demand in Retail
Through the analysis of customer spending habits, purchase history, and competitor demand, a retailer can predict what items would be in demand in the near future as well as what kind of items the customer would prefer to buy. The retailer can stock their stores in advance or even develop new items according to the predicted customer demand.