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Big Data Big Opportunity

Big Data Big Opportunity

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Published by Infosys
This paper explores the current state of the retail industry and discusses how Big Data is a fast becoming the solution retailers can
adopt to maximize revenue.
This paper explores the current state of the retail industry and discusses how Big Data is a fast becoming the solution retailers can
adopt to maximize revenue.

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Published by: Infosys on Sep 09, 2013
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09/09/2013

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Harnessing the Power of Big Data
 
Big Opportunity for Retailers to Win Customers
 
- Srinivasan. N, Rajeev Nayar 
 
 Abstract
 
Retailers generate large volumes of data across their supply chain and at various customer touch points across omni-channel
 
operations. At the same time, the current digital customer and social media experience is feeding a massive data explosion.
 
The analysis of this huge volume of Big Data presents a sizeable opportunity for retailers. Leveraging advanced technologies to
 
understand this data, they can maximize the potential of these disruptive trends and win in the competitive marketplace.
 
This paper explores the current state of the retail industry and discusses how Big Data is a fast becoming the solution retailers can
 
adopt to maximize revenue. It explores the key pillars of Big Data along with its transformative opportunities and an adoption
 
roadmap for retailers.
 
www.infosys.com
 
 
The State of the Retail Industry:
 
Costs, Customers and the Digital Age
 
In a marketplace riddled with slow economic growth and high
 
costs, retailers are battling aggressively to increase their share
 
of the
customer’s
wallet. Operating within tight single-digit
 
percentage margins, retailers are striving to improve efficiencies
 
and reduce costs. The rise of a new breed of digital customers
 
that wants convenience, personalization, and promotion-based
 
pricing has made winning in this environment even more
 
challenging.
 
Disruptive trends associated with digital customers
 –
such as
 
e-commerce, social media, and mobile commerce
 –
have created
 
a wealth of data residing in emails, blogs, videos, phone calls,
 
and social network messages. Processing such voluminous and
 
diverse data sets to better understand customer behavior is a
 
tremendous challenge for companies. In the coming years, this
 
challenge will continue to grow as seen from recent studies.
 
 According to Gartner, the volume of data is set to grow 800%
 
over the next five years and 80% of it will reside as unstructured
 
data
1
. Another study by a leading research firm indicates a
 
30-fold increase in digital content over the past 10 years to
 
35 zetabytes with a 60% annual growth in data volume.
 
This explosion of data is both an opportunity and an asset
 –
but
 
only if retailers can make sense of what it means. Retailers are
 
realizing that the power of Big Data cannot be harnessed using
 
usual database management tools. The retail industry requires
 
solutions that can help them access this customer and product
 
information, understand and play with the trends of customer 
 
behavior, and ensure their continued relevance and survival in a
 
highly competitive market. The solution needs to quickly gather 
 
and process this mass of data from multiple sources and draw
 
near real-time insights and analytics to enable quick decision-
 
making for generating true business value.
 
2|Infosys
 
 
Earlier, retailers and customers connected at limited touch
 
points, usually brick-and-mortar stores. Retailers relied either 
 
on some kind of customer identification programs
 –
such as
 
loyalty cards
 –
or on the
customer’s
physical presence within
 
the store to wield influence and provide information on
 
promotions and offers. Today, customers purchase products
 
across multiple channels such as mobile and web, use real-time
 
information through social media, customer forums and blogs,
 
and make purchase decisions through ratings, reviews, price
 
comparisons, and product recommendations. At all these touch
 
points and across all transactions, customers leave a trail of 
 
information about their preferences and behavior that retailers
 
can follow to find their way through the market. Retailers need
 
to gather, aggregate, process, and analyze such structured and
 
unstructured information to adopt customer-centric strategies
 
that help them engage customers.
 
Moreover, to ensure the success of such strategies and campaigns,
 
retailers need to access relevant customer information in real
 
time and deliver options to customers at the moment of truth.
 
Retailers need solutions that gather data residing in silos across
 
channels and apply advanced analytics to yield useful insights
 
and marketing intelligence. For instance, how can retailers run
 
a profitable one-to-one marketing campaign without eroding
 
margins? How can they ensure customer micro-segmentation
 
to provide relevant marketing messages to target customers?
 
How can they combine data from different sources
 –
internal and
 
external to the organization such as social media and forums
 –
 
to provide relevant recommendations to the shopper at crucial
 
purchasing moments?
 
MANAGING VOLUME
 
The ability to process large volumes of data is a classic requirement.
 
For instance, retailers want to adopt a dynamic pricing model
 
where the cost of merchandise varies based on market conditions
 
and the
competitor’s
price. Such a model should track various
 
quantitative and qualitative measures to understand demand,
 
monitor the
competition’s
pricing strategy, and generate an
 
appropriate real-time response on their stores and eCommerce
 
site. This requires the processing and analysis of large volumes of 
 
data, which existing systems are unable to handle.
 
HANDLING VELOCITY
 
Increasingly, retailers are driven to make real-time decisions
 
based on a large number of data points available in an instant.
 
For instance, the capability to make timely and relevant offers
 
o customers at crucial touch points to drive sales and ensure
 
customer loyalty. For large retailers with multiple channels and
 
Point of Sales (PoS) systems that handle millions of customers at a
 
single moment, such a capability requires simultaneous gathering
 
and processing of high velocity data.
 
DEALING WITH VARIETY
 
Data types
 –
which vary from structured information such
 
as customer demographics, basket data, and sales data to
 
unstructured text, audio, images, and video
 –
can be analyzed
 
o provide useful information. Take, for example, a coffee retailer 
 
who wants information on global weather patterns to estimate
 
he supply of coffee beans to preserve margins, or a retailer who
 
wants to know about local events to predict and plan for future
 
demand of products. In both these cases, the analytics provided
 
can drive top-line and bottom-line growth. However, it involves
 
quick and timely processing of a variety of data sets. All enterprises
 
can now bring all possible data types and volume necessary for 
 
accurate and timely decisions into play with Big Data.
 
Conquering the Data Mountain for Customer Intimacy:
 
Problem and Opportunity
 
Infosys|3
 

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