Big Data Brings Big Challenge
Analysts and consultants agree on two things: One, Big Data is getting bigger, and two, the grocery industry is in its infancy when it comes to leveraging Big Data. But uncovering actionable insights shapes up as the holy grail for grocers, even the small to mid-sized companies.
By leveraging Big Data, companies can segment shoppers, understand them better, optimize promotional pricing and personalize promotions. Besides these often-quoted big benefits, there are many smaller ones that should not be overlooked. When researching this topic recently, several experts told me many secondary benefits. Here is a small list:
- Improving category management: Combining the large amounts of data readily available – from invoice information to scan records and vendor rebates, and others – grocers can gain a clear picture of profitability by day, as well as the ability to dig deeper into performance of each vendor, department or individual store.
- Increasing browser-to-buyer conversion: Analyzing transactional data and layering in traffic and ring counts can help grocers better understand their conversion rates, as well as spot opportunities for growth by comparing lower-rated stores to the most successful locations.
- Improving supplier partnerships: Providing suppliers with timely, valuable business insights boosts collaboration, improves performance and reduces waste.
- Improving the shopping experience: By combining data from frequent shopper programs with other sources of information – nutritional trends, preferred method of receiving promotions, weather-related events and customer traffic patterns – grocers can improve the overall shopping experience and drive revenue.
- Enhancing the supply chain: Grocers can harness Big Data to accurately forecast product demand, optimize inventory levels and turn rates, and reduce spoilage of perishables.
“Most grocers are just at the beginning of what’s possible with Big Data,” Brian Elliott, CEO of the Periscope division of McKinsey, told me. “But the proven impact is very, very large – delivering pure growth of 1 to 3 percent or pure margin of 2 to 7 percent, or a mix in between. These are career-changing levels of impact when you realize that most grocers have only single digit margins today. The hard part is to get started on the journey. After all, while Big Data is the fuel, this is as much a human change management journey as it is a technical one.”
Since no company wants to be data rich and insights poor, grocers need to figure out a path forward. They need to hire the right executives or develop the talent in-house to focus on Big Data. Otherwise, they need to work with an outside partner that brings services as part of an integrated, solution-as-a-service offer to lower the risk.
Either way, it’s time to get started.