Retail Business Intelligence: a Work in Progress

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Retail Business Intelligence: A Work in Progress Benchmark Report 2012 Nikki Baird & Steve Rowen, Managing Partners October 2012

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Executive Summary
Rapid shifts in consumer behavior and proliferation of new channels are forcing retailers to cope with new data sources, new ways of looking at analytics and new analytics capabilities, like high performance databases and visualization techniques. Add in new form factors, like tablets and smart phones, and a discipline that is theoretically staid and well-established is suddenly upended. Retailer survey respondents report that they are feeling the disruption. Although they have not made much progress in establishing and executing against a business intelligence strategy, they report that their priorities and opportunities have shifted significantly.

Key Findings
• 47% of mega-retailers (over $5B in sales) have had a BI strategy in place for longer than 2 years, vs. 22% of those with revenue under $250 million, and 36% of those with revenues $250-$999 million. 58% of Winners (those who outperform their peers in retail sales) say all channels can take equal benefit from BI investments vs. 48% of peers. Conversely, 32% of nonwinning retailers still say the store should be the primary beneficiary vs. only 23% of Winners. This kind of shift is typical of Winners, who have a tendency to identify the need to change direction sooner, and make that change faster. 43% of retailers under $250 million in revenue report that they dump data into Excel as their primary method for BI insights. Only 13% of mega-retailers report this, and an even smaller 5% of retailers bringing in between $1-5 billion in revenue. The top two opportunities reported by our overall survey respondents are merchandising-oriented: what-if capabilities for matching demand with assortment, price, and promotions, and more intelligent space and product allocations, which on the surface seem a lot more product-oriented than customer-focused. Across the board, Winners provide more insights access to their stakeholders than their peers do, but the biggest differences are closer to the edges of the enterprise: 56% of Winners report access to analytics and insights for line managers vs. 26% of peers, and 52% of Winners report access for store managers vs. 32% of peers. While 64% of our respondents say Executive Mandate is the way to bring the st organization – and the tools it has at its disposal – into the 21 century, Winners are even more bullish: 79% of the best performing retailers report that an outspoken visionary at the head of the table is the most effective way to move forward. 35% of retailers are budgeting to give their employees mobile access to BI tools and data. What’s fascinating is that Winners make up the smallest portion of this group (only 24% of Retail Winners are budgeting for mobile access, compared to 36% of laggards). Winners appear to be waiting until their BI houses are in order before making it available on mobile devices.













BOOTstrap Recommendations
With all of the changes impacting retailers' BI strategies, recommendations focus on staying on top of the wave, the better to avoid being crushed by it. Whatever "big data" strategy a retailer decides to take on, they should stay oriented toward delivering that big data in small bites - to every potential stakeholder in the enterprise. This means reversing the flow of information

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currently at play in retailers, so that the people at the edges of the enterprise have access to the immediate information needs that keep them on track. However, it's important to remember that while store employees will need to play a critical role in future BI efforts, the focus on the store should not be about improving declining performance so much as it should be connecting the store to digital channels - which adds a major new source of customer behavior data at the same time. And while the smallest...
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