When it comes to the retail industry, customer data certainly isn't in short supply. Yet, while retailers may have an abundance of information at their disposal, few have the necessary systems in place to bring insight to action.
EKN Research's "3rd Annual Analytics in Retail" benchmark study explores the average retailers' struggle with analytics, highlighting their inability to derive significant value and the importance of an effective data strategy.Sponsored by Manthan and SAS, the report examines the glaring disparities between retailers' overall analytics aspirations and their current ability to carry out said goals. According to the more than 200 retailers polled, customer data has the well-known power to drive decisions and engagement, but few employ the resources and tools required to establish dominance within the retail space itself.
The following statistics demonstrate where retailers currently stand on the path toward analytics maturity and their plans for investment in 2014:
- In 2014, data organization (63 percent), data integration (57 percent), and data infrastructure (43 percent) stand at the primary data management challenges facing retailers today. However, the retail industry expects spending on analytics to climb from 14 percent (2013) to 23 percent (2017), which will enable brands to implement improved resources and systems.
- Of those retailers polled, the majority (80 percent) believe they lag behind Amazon when it comes to analytics maturity, with 71 percent of retailers performing only basic analytics reporting or none at all, thereby highlighting the inefficiencies throughout the industry.
- When it comes to rating their organization's analytics maturity as compared to the industry overall, 29 percent of retailers claim they are better, 46 percent say they're on par, and 26 percent believe they lag behind the rest.
- When it comes to today's "data-rich" retailers, 80 percent currently use an enterprise-grade analytics tool and 81 percent use an inventory optimization solution. However, only 50 percent of those surveyed have Web and social media analytics solutions in place.
- In contrast, "insight poor" retailers cite the lack of skilled resources to interpret the output of analytics tools as their top analytics challenge in 2014. Also, 19 percent allow store associates to track and manage inventory across channels via a mobile device, while only 10 percent make customer profiles available to merchandising and marketing teams in real time.
- Fifty-one percent of respondents don't have an established, formal analytics team, thereby creating data silos and reporting inconsistencies, while 42 percent have no single owner responsible for creating an analytics strategy and roadmap.
- Currently, retailers allocate the bulk of their business intelligence (BI) and analytics budget to resources (33 percent) and new capabilities (31 percent), with many looking to implement predictive analytics (49 percent) and mobile BI (44 percent) within the next 24 months.
Key takeaway: In most instances, retailers are focused on looking back instead of ahead when it comes to their current analytics strategies. Today, 70 percent of retailers remain stuck in hindsight-oriented reporting cycles as they analyze customer data after the fact to determine past behavioral patterns while depending upon intuition-driven decision-making to guide their plans. But, if retailers are to move forward and achieve competitive differentiation, they must shift toward data and insight-driven decision-making so they may improve efficiency and performance. By developing an analytics strategy that allows the brand to bring real-time data into the mix, retailers can then begin to predict future trends so they may pinpoint opportunities for engagement. Harnessing the power of this information will allow retailers to fill the capability gaps that result from these lesser analytics techniques, thereby introducing added value, customer satisfaction, and ultimately, an industry advantage.