Retailers Slowly Increase Big Data Investments but Must Develop Greater Analytics Maturity

Improving customer-centric and operational decision-making through Big Data analytics is a key emphasis for retailers today. However, retailers are taking a measured approach to Big Data and must improve their overall analytics capabilities, according to a new research report from EKN.
The second annual report, State of the Industry Research Series: Big Data in Retail, provides a benchmark on how retailers approach Big Data as a business strategy. It surveyed 70+ retail industry executives and focuses on the challenges retailers face when building deeper insight from a massive stream of internal and external data, as well as the comparisons to these findings from last year. For example, 68% of retailers rate data organization as the #1 challenge in managing unstructured data, while just last year, data volume management was the top concern for retailers experimenting with Big Data.
Key findings of the report include the following:
A billion dollar retailer will spend an average of $75,000 on Big Data in 2013. Retailers plan to allocate less than half a percent of their total IT budget on Big Data in 2013. This investment is expected to increase to 1.2% by 2016 and signifies a move toward an experimental phase to help retailers determine the value of Big Data to their business operations.
Retailer's biggest challenge in adopting Big Data is the variety of data, especially unstructured data. 1 in 2 retailers in 2012 said managing the volume of data was their #1 challenge. In this year's survey, retailers rate data volume as one of their top concerns, aligning with EKN's predictions based on results from 2012. Alternately, management of the variety of data is the top concern for retailers in 2013.
Big Data analytics represents an opportunity for smaller retailers. Retail powerhouses like Target and Wal-Mart continue to make large investments in Big Data, yet smaller retailers can take advantage as well and strategically leverage analytics by making investments of their own. SaaS and cloud-based offerings can help smaller retailers compete with smaller investments.
Higher analytics maturity must precede Big Data investments. Retailers must focus on developing a higher level of analytics maturity in order to capitalize on Big Data. EKN's report says 80% of retailers are at par or behind competitors in terms of analytics use, or that 60% of retailers are able to perform only basic analysis or reporting.
Data visualization is essential. Data visualization is an important capability for retailers. Delivering the right insight to the right person at the right time is retailers' #1 analytics challenge, as more business users (not data scientists or statisticians) begin acting upon the information gleaned from Big Data. Data visualization will make insights easier to understand and comprehend.
"Big Data is one of the most exciting opportunities in retail, but retailers are taking a pragmatic, realistic approach to making Big Data investments," said Gaurav Pant, Research Director for EKN. "Big Data is still several years away from moving into the mainstream of retail. However, by taking the right steps now, retailers can position themselves to gain competitive advantage through the power of Big Data and advanced analytics."
State of the Industry Research Series: Big Data in Retail provides strategic recommendations to help retailers develop a roadmap for success in Big Data analytics, and the report also identifies a "Retail Honor Board" of best-in-class retailers for core Big Data functionality. The report is sponsored by SAS and is available for download here.

on December 6, 2013