How UK retailers can use retail data to their competitive advantage
Much has been written from a cross-industry perspective about the value that can be gained from analytics projects. However, when we drill down to look at the extremely competitive world of retail, we find few tangible examples in the public domain. Major UK retailers are well known for keeping their cards close to their chests, and when it comes to competitive advantage nobody is giving an inch. Perhaps divulging hard results against hard metrics is just too much.
Perspective from the retailer side
Nevertheless, looking just a bit further reveals some really helpful case studies from well-known, established brand names. These brands include UK furniture retailer DFS, stationery retailer Paperchase and start-ups such as retailer Honest Café and the managed-services provider (MSP), Clear Returns. A useful lens with which to view these stories is to consider the value of analytics projects according to two dimensions:
- Impact of the analytics project on the organization’s process efficiency: to what extent is the efficiency of the underlying processes improved?
- Impact of the analytics project on strategic decision making: to what extent is the analytics project making a difference to the organization’s strategic decision making?
For the market-leading retailer DFS, the value of analytics is seen across both dimensions. Following the implementation of an IBM Analytics platform by the IBM Business Partner, Assimil8, DFS has already gained major benefits. As Hollie Haeney, head of financial planning and analysis at DFS says, “The main business benefit is the speed of getting information out of our system, with certain questions that would have taken days to answer now take seconds or minutes.”
Hence, we can see a big improvement in the speed of reporting—a process efficiency improvement. At the strategic level, Nicola Bancroft, director of commercial finance at DFS, who is an advocate of the analytics solution, said: “We are able to look at [a] granular level at the drivers of performance on a day-to-day basis.” As a result, the analytics project is also delivering impact within DFS at the strategic level.
As a well-known retailer of high quality, unique stationery, gift items and craft materials, Paperchase is using IBM Analytics to track customer behavior and shopping patterns. The retailer is undoubtedly experiencing important process improvements by being able to see who their customers are and their buying behaviors in much more detail on a day-to-day basis. Pete Byrne, multichannel program manager at Paperchase, believes that the major benefit for the company is “giving us a method of engaging with our customers more closely,” leading to improved strategic decision making.
Honest Café (a start-up coffee shop chain that runs self-service outlets where customers purchase healthy, organic and Fair Trade food and drinks from state-of-the-art kiosks) is using IBM analytics to help support the rapid growth of their business. Mark Summerill, head of product development at Honest Café, reveals the benefits from using IBM Watson Analytics, a smart data discovery service available on the cloud. “It instantly transformed our understanding of who our customers were and how they were using Honest Café,” Summerill says. “Watson Analytics has completely transformed not just our understanding of customer behavior, but our entire business model.”
By using sophisticated analytics, Clear Returns provides a service to identify the causes of returned products—so-called toxic returns—in the retail industry. This service helps retailers minimize the negative impact of returns on the business and their customers, without having to hire an expensive data science team. Undoubtedly a major benefit for retailers, Vicky Brock, CEO at Clear Returns, spells out the value proposition underpinning the analytics solution: “With new insight into how and why returns happen, our clients can increase revenue by focusing on high-value customers, reducing costs by optimizing their product catalog and reducing the return rate.”
Significant observable impact on the process of managing returns on a day-to day basis is quite evident, which, in turn, can lead to improved strategic decision making and a positive impact on the bottom line.
Beneath the competitive intensity
Clearly much food for thought, these case studies are really interesting examples of how UK retailers are gaining benefits from analytics. Arguably, some of the soft benefits even outweigh the hard, more metric-driven benefits. However, perhaps you have to get under the covers of the organization to find them, and because of the intense competitive nature of the world of retail, maybe not everybody will tell you what is really going on.