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White Paper
Savitha Nallasamy
Customer Data & Analytics Consultant
Savitha Nallasamy is part of the TCS Retail Unit. Her expertise in marketing, loyalty
management, Customer Relationship Management (CRM) and customer insights comes
from her 15 year association with global retailers. Savitha can be reached at
savitha.nallasamy@tcs.com
Raja Marimuthu
Business Relationship Manager,
Big Data & Analytics engagement with a leading retailer
Raja Marimuthu leads one of the largest Big Data engagements for a leading retailer. He
has previously led several large engagements in customer data management, retail
marketing, CRM, Enterprise Information Management (EIM) and the Oracle Retail suite of
products. Raja can be reached at raja.marimuthu@tcs.com
Much has been said about the volumes of data that humans and machines together create
every second. We live in an age where anything anyone does almost always leaves behind a
trace of digital data. In the years to come, smartphones, tablets, sensors, social networks,
online engagement (such as shopping and gaming), video streams, and mobile payments
will all drive an explosion of structured and unstructured data popularly known as Big Data.
This magnanimous growth of data presents a great opportunity in every industry - to
understand the entities in any ecosystem, the spheres of influence and helps decide on the
triggers for success.
This paper attempts to look at various aspects of Big Data, including the top reasons for
which retailers are considering the use of Big Data and its tools. It is a peek into the potential
world of opportunities that Big Data presents for the retail industry, and the inherent
challenges that organizations go through.
Contents
Introduction
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Introduction
We are living in a world where companies like Google are considering leveraging data from home thermostats
(through Google's acquisition of Nest Labs) and marrying that with all the information they hold to be able to get a
'24 hour understanding' of customers, including - when they wake up, how many people are at home, when does
everybody leave home, where do they go (using GPS data), and what they buy and where they buy it from (using
GPS, Wifi Data, Mobile, Online).
A variety of data about consumer behavior, interests and intentions, is being generated from a number of sources.
These include web crawlers, web robots, web logs, emails, videos, tweet streams, genome sequences, and trafficflow sensor data, banking transactions, GPS trails, and online browsing in addition to the traditional market basket
data. The data is so complex that it cannot be processed using conventional methods and the focus has to be on
developing an analytical engine that can intelligently interpret this data. Big Data The technology ecosystem opens
up ways in which data can be analyzed and expands the scenarios where it can be applied. Big Data technologies
have had two key impacts: redefining how data is managed and revolutionizing how data can be leveraged. Data
and Insights Anywhere, Anytime. Real-time is today becoming more a norm, rather than an exception.
All industries small or large are looking at Big Data as a solution to manage their compounding data growth, to
satisfy the demand for faster processing and reduce the overall TCO to manage and delivery data based intelligence
and insights.
[1] Information Week, Why Sears is Going All-In On Hadoop, 24rth October 2012, accessed March 2014, http://www.informationweek.com/it-leadership/why-sears-isgoing-all-in-on-hadoop/d/d-id/1107038?
Merchandising
Pricing
Store Ops
Supply
Chain
Real
Estate
Suppliers
High
Medium
Low
Process
Assortment localization
- Optimized merchandising in real time using a combination of techniques like market basket analysis, shopping
cart analysis, and (local) purchase behavior analysis
- Use video data to identify shopping trends.
- Observe customer movement to assess the effectiveness of promotional displays and consequently improve store
layouts and product placements
- Study in-store traffic movement using video-log data and locate opportunities to promote items on certain
shelves or end aisles
- Price goods and services based on real-time metrics such as competitor pricing, supply chain and inventory data,
market data and consumer behavior data
- Differentiated, real time competitive pricing
- Individual pricing/semi-individual/micro-segment pricing and promotions
- Price point analysis and optimal price determination
- Detect products that are selling with other products, which promotions (own and competition) are currently
gaining pace in the marketplace, who is buying what product, and how are purchase decisions being made
- Use crowd-sourcing data for customer surveys and determine store deal of the week, product of the week, brand
of the week. Apply similar techniques to determine local competitor prices and then decide on a pricing strategy
for anchor products in that store
Consumption analytics
In-stock Improvement
- Monitor product availability on shelf in real time (using a combination of store inventory data and RFID, or Beacon
based apps or even in-store aisle video images taken every five minutes) and alert individual stores on stock
unavailability
- Improve next-day or same-day replenishment using live, real-time stock analysis at DCs, in-transit, store
Demand/trend forecasting
- Predict store (local) demand for products, to avoid under-stocking and over-stocking, underpricing or promoting
the wrong products
- Combine text mining with customer profile data in real time for dynamic configuration of online assortments,
and digital content presentation based on knowing the customer at any touch point and anticipating his or her
needs
- Analyze why visitors come to the website, what they are looking for and what drives them to make a purchase
Micro - segmentation
- Micro-segmentation for marketing campaigns, targeted store and web offers, brand promotions etc.
Re-targeting
- Synthesize data from website browsing, off-site browsing (other retail web sites, social networking sites,
recommendations web sites) and then propose recommendations based on content collected
- Detect type of the trip based on the contents of a basket (as they scan the items into the cart using their own
mobile phone) and alert customer about potentially missing items (for instance, on the same mobile apppotential grocery scenario.)
Store Operations & Planning
- Analyze shopping routes, time spent in each critical aisle, correlation of in-store shopping route and items
purchased
Fraud detection
- Accurate fraud prediction and prevention by combining technologies like in-store videos, business rules, anomaly
detection, predictive and learning models
Staffing
- Use weather forecasts, promotional campaigns and dates to effectively meet staffing requirements on holidays
and all year round
Process
Location-based analytics
- Identify customers at relevant locations and drive location-based marketing in real time
- Use data from Map Apps (Google Maps etc.) to understand the target driving destination of customers/prospects
and combine it with real time GPS data to send contextual marketing offers
- Real time decision analytics combines contextual information, gathered while interacting with a customer, with
pre-defined customer engagement rules and predictive models. Real time inputs include information such as
reason for the interaction, current event and request. Applicable for customer service centers
- Sophisticated video data providing information on body temperature, gait, and posture to determine health,
mood, and buying habits of a consumer
- Understand how many people visited the store (unique visits), number of visits in all, average visit duration,
number of new visitors vs. returning ones
- Analyze data customer frequency counters at the doors, the cashier system, free Wi-Fi access points, video
capturing, temperature, background music, smells
Location analytics
- Impact of external factors and events on sales could include factors from macro-economy, weather related
events, sports related events, social events and more
Synthesis of interests from a combination of blog, Facebook data and market basket analytics to propose
recommendations Retailers leverage (or buy) travel website data (using cookies, Facebook posts etc.) to
understand travel plans of customers and suggest items such as luggage and travel supplies. If this travel data
can also be married with the customer's profile to understand how many children are in the family, then the
recommendations can include child travel need items as well. Taking it one step further, if the local weather data
of the destination city can be included, more relevant recommendations like sunscreen, umbrellas, sandals and
beachwear can be recommended too. The possibilities are just endless.
Next best action Recommending the next action (an outbound call from a call center, an instant thank you
message for a Hi-Definition TV purchase followed by an offer on a related service or accessory, a reminder of
upcoming bad weather) or a next best offer based on needs, wants and anticipated behavior
Individualized Digital Coupon Wallet A coupon wallet that every individual shopper can create and
consume from anywhere and using any device. This can be as simple as an online page or a kiosk or a mobile
app or a combination of the above where the customer logs into to choose coupons of their choice. The retailer
can use this as an opportunity to present the supplier funded coupons along with their own discounts to
improve reach
Refill reminders for products driven by consumption of baby products like diapers, pantry and dry grocery
Upgrade reminders for digital devices, accessories sports wrist bands, software and upgrades among
others
New accessory reminders for gadget savvy customers based on their brand preference
Trending items online, Pinterest, Instagram, Twitter, Facebook and even in store provide it as a package for
the customer
Life stage based engagement As shoppers' progress through life stages, the type and medium of
communication and content that interests them change. Examples of life stages include newly-wed, new mover
to a community, pregnancy, new baby, school going kids, empty nesters and seniors. The needs at each stage
are different and hence communication needs to be tweaked in recognition of this
Leveraging store traffic generated heat maps in the store combined with a customer's in-store location, retailers
could offer some relevant advice and information. This also presents an opportunity to take the customer to the
other end of the store in an effort to increase the overall basket size
Communications customized to household type Households with kids receive emails, newsletters on healthy
eating, outdoor activities and recommendations, organic choices. Households with early retirees on wellness
recommendations, diet choices, supplements recommendations etc.
Individual cookie level behavioral data (based on online browsing, mobile browsing) that can be assimilated and
analyzed in real time to throw-up more Amazon-like recommendations on 'What you might need' or 'What you
might be interested in'
Some of the recent explorations that we keep hearing about can predict a customer's mood using sensors that
monitor human body temperature and gestures (as observed by an in-store video cam and synthesized by
analytics). This information can then be used to propose recommendations like an offer at the in-store deli or
bakery or to a pleasing music playing section in the store.
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Amazon, has honed its targeted online marketing skills over the years. Real time personalization of web page
content and product recommendations for every concurrent web user is a big accomplishment for the fastest
growing online retailer.2
Target uses customer purchase histories to tailor advertising to customers they 'deduce' are pregnant. According
to the company's former president Gregg Steinhafel, quoted in a Forbes article, the goal set is for heightened
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focus on items and categories that appeal to specific guest segments such as mom and baby.
Nordstorm is piloting in a few stores the integration of Pinterest with store shopping. Popular on Pinterest
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(belonging to certain select categories like handbags and Shoes) are showcased/tagged in the stores.
[2] Big Data: Personalizing the customer experience in real time, 12th March 2014, accessed April 2014, http://www.retailcustomerexperience.com/article/229243/Big-dataPersonalizing-the-customer-experience-in-real-time
[3] The Power of non-Predictive Analytics, 1st May 2012, Accessed March 2014, http://www.forbes.com/sites/piyankajain/2012/05/01/the-power-of-non-predictiveanalytics/
[4] Nordstrom Could Start Using Pinterest To Make Merchandising Decisions, 9th July 2013, http://www.businessinsider.com/how-nordstrom-is-using-pinterest-2013-7
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Wal-Mart Stores division @WalmartLabs is using Hadoop and other software to search through Twitter posts and
Facebook updates to target specific customers. Walmart is also using Big Data to create mobile app that provide
assistance with every part of the retail experience from pre-store planning to in-store shopping and decision
making to checking out. Shopycat, the company's social-gifting platform also leverages social media activity5
Macy's allows its shoppers to add offers to their Apple Passbook making it easier for customers to access them
while they are shopping in store. Macys.com also analyzes social media, store transactions and even Twitter
feeds every day to better understand customer-buying behavior and sharpen its promotions. A 2011 Forbes
article quoted Tomak, Vice President of Analytics and Macys.com stating that these steps has helped Macy's
boost store sales by 10 percent6
Starbucks sparked an innovative customer engagement through its most popular 'My Starbucks Idea' campaign
that leverages crowdsourcing to make customers a part of their innovation ecosystem7.
Williams-Sonoma sends email offers to customers that tailored the moment the email is opened. The analytics
software calls on it data repository for real-time data on location, age, gender, online activity, and inventory. The
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retailer was able to receive ten times more responses based on this personalized email offerings .
[5] Inside Walmarts App Strategy to Turn User Experience Into Sales, 8th November 2011, accessed May 30, 2014,
http://www.forbes.com/sites/lydiadishman/2011/11/08/inside-walmarts-app-strategy-to-turn-user-experience-into-sales/
[6] Retail Goes Shopping through Big Data, 15th April 2013, accessed May 30, 2014, http://www.cnbc.com/id/100638141
[7] Starbucks,MyStarbucksIdea.com, accessed March 2014, http://www.starbucks.com/coffeehouse/learn-more/my-starbucks-idea
[8] Williams-Sonoma pushes personalized marketing, 22nd May 2012, accessed March 2014, http://www.homeandtextilestoday.com/article/416518-williams-sonomapushes-personalized-marketing
[9] Hadoop, accessed 30th May 2014, http://www.tableausoftware.com/solutions/hadoop-analysis
[10] Harnessing the Power of Big Data Analytics for Users, accessed 30th May 2014, www.qlik.com/us/explore/products/big-data
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Another big trend is that many BI players are merging their software and hardware to create Big Data appliances
that provides one-stop solutions for Big Data analytics. Analytics leaders like SAS are talking about their increased
focus on high-performance analytics and massively parallel processing (MPP) architectures. According to SAS,
Hadoop-based storage combined with visual data-exploration and predictive analytics capabilities make new SAS
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platform stand apart in in-memory computing . Some companies have adopted partnership models to close the
gaps in their existing landscape. For example, Teradata has teamed up with Revolution Analytics to present joint
solutions for maximizing the value of Big Data by running R analytics inside the Teradata database12.
[11] SAS Introduces Big Data Visual Analytics Platform, 23rd March 2012, accessed 30th May 2014, http://www.informationweek.com/big-data/software-platforms/sasintroduces-big-data-visual-analytics-platform/d/d-id/1103518?
[12] Teradata and Revolution Analytics Take R In-Database, accessed 30th May 2014, http://www.revolutionanalytics.com/partners/teradata-global
[13] @Walmart, accessed 30th May 2014, http://www.walmartlabs.com/about/acquisitions/
[14] Home Depot Acquires Data-Driven Retail Pricing Startup BlackLocus, 17th December 2012, accessed 30th May 2014, http://techcrunch.com/2012/12/17/home-depotacquires-data-driven-pricing-analytics-startup-blacklocus/
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