Massive amount of data changing way retailers predict consumer behavior, futurist says
Doug Stephens says retailers are moving beyond old-school metrics.
Retailers may be worried about the future of stores but the same mobile and online shopping that is dampening enthusiasm for brick-and-mortar may provide the tools for salvation.
Data. Lots and lots of data.
Doug Stephens, a retail futurist and founder of Retail Prophet Inc. consulting firm, said companies have more data than ever on customers and that collection is growing exponentially. Data is doubling every 1.2 years and it is far beyond mere sales results. It’s social media interactions. It’s video.
He spoke last week on big data and retailing at the mid-year Professional Retail Store Maintenance Association conference in Columbus.
“Retailing has remained mostly unchanged for the past 100 years,” he said. “You ask customers to go somewhere, get something. A store is a product distribution hub. ... We’re measuring productivity the same since the 1800s. Same store sales, sales per square foot. These are old-school metrics.”
Data is changing that. Here are some of the numbers:
- 400 million tweets a day.
- 4.5 billion likes on Facebook a day.
- 5 billion connected devices, a figure expected to swell to 50 billion in the next decade.
Of course, big data isn’t just of interest to business. It is a business unto itself. Check out this breakdown by my colleague Carrie Ghose or the news of a potential Amazon.com Inc. (NASDAQ:AMZN) data center coming here, as reported by Brian Ball.
Stephens shared several examples of how retailers around the world are collecting and using data, with an ultimate goal of being able to predict customer behavior.
- CVS Health Corp. (NYSE:CVS) started “What’s Your Deal,” a digital advertising circular with personalized deals for the shopper.
- Woolworths Ltd. in Australia overlayed its insurance customers with its store loyalty card holdersand found that the lowest insurance-risk drivers bought more meat and dairy, while the highest liked carbs.
- Cincinnati-based Kroger Co. used video analytics data to reduce wait times in line.
- Amazon.com patented predictive shipping, which uses shopping data to anticipate when customers are going to order certain items and ships them to nearby distribution centers before any order comes in. When the order does come, delivery times could be measured in hours, not days.
“Eventually every one of us will have an algorithm following us around,” Stephens said.
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