Projections for Black Friday 2015 and the impact of analytics
So are retailers more positive about Black Friday 2015? The majority, especially larger retailers are, but to put it in perspective only 53% expect it to generate more revenue than last year. It could be that the smaller retailers are concerned about High Street footfall and they don’t have an effective Internet shopping channel.
It could also be that this is an issue of the wider economy and spending power. On the latter, the Government statistics would say not with average earnings on a constant upward path and consumers always quick to take advantage of bargains and sales.
When it comes to the use of data to support business decisions, be that data around customer or sales data, 24% said that they didn’t use it. No surprise that the vast majority of these were small retailers but there were some larger retailers in this group which was unexpected. Also unexpected was the fact that 16% were unsure if the organisation used data to support their business decisions and this also included a mix of smaller and larger retailers.
When asked about the use of analytics to understand data, the numbers changed showing that despite looking at the data, some retailers were not using analytics or visualisation on their data. It is unclear from the survey exactly how they were then using data without some form of analytics and the change is small enough to be within the boundaries of error.
What was more interesting was the responses when the no’s and don’t knows were asked if there was a desire to take advantage of data and analytics. Half of the respondents were not sure while a third said no. Unfortunately there doesn’t appear to have been any detail to the no response which would have been interesting. It may be an issue of cost, complexity, understanding of the benefits or a combination of all three.
For Black Friday it is interesting to see that those retailers using analytics were keen to use it to plan stock management, understand the potential of in-store footfall and ensure that the supply and delivery chains could meet the expected demands of the business. These are the typical things you’d expect from any retailer.
Despite this, the majority of retailers have not increased their spending on analytics tools in preparation for Black Friday. Instead they believe that they have the right tools to deliver what the business needs. This will come as a disappointment for many analytics vendors but for those vendors who are combining their analytics and ERP suites, there is a significant opportunity given the key uses of analytics for Black Friday.
The benefits of analytics across the company.
When looking at the wider uses of analytics across companies it is interesting to see where people believe they can deliver. There was a distinct difference here compared to when they were asked specifically about Black Friday. For example when asked about the use of analytics for October 2015 the top three reasons given were:
- Better customer service
- Targeted marketing
- Better strategic decision making
On a wider note in terms of the benefits to the organisation the top three are:
- Better customer service
- Targeted marketing
- Reduced costs
Given these results it is not surprising to see that customer service, marketing and purchasing are the departments who are believed to benefit the most of the use of analytics. What is disappointing is that the C-Suite is not among the top three users of analytics. Unless the board understands what is happening it cannot begin to effectively plan for the future or invest in new projects.
Mike Dennis, Managing Director, Consumer Research at Cantor Fitzgerald added: “There is a big difference between gathering data and using it effectively. To do this, retailers must apply the power of analytics to the relevant business departments, such as marketing or the supply chain. Even the smallest business can derive valuable insight by, for example, looking at trends in social media or by analysing their stock figures to see what improvements can be made.”
Conclusion
The combination of analytics and the retail sector is nothing new and the use of analytics by very large retailers is often used as examples of the benefits that companies can get when they better understand the data they hold. What is clear from this admittedly small set of retailers is that the expected overall uses such as ROI, stock management and new product investment are not at the top of the list for users.
While retailers may perceive that the cost of implementing analytics from within their new solutions is cost effective this may not be the only or best answer. Third-party analytics such as Tableau can often interrogate far wider data sets and reveal insights that can make a serious difference to the bottom line for companies.
For those retailers with legacy software it will be easier to implement an analytics package, Tableau even has a methodology called Drive to make this process straightforward. As ERP and CRM vendors increase the availability and complexity of their inbuilt analytics solutions how can analytics vendors ensure they are still relevant in this market.
