Retailers: “The more experiments you make the better”*


The No. 1 retail trend for 2014 will be innovation powered by advanced analytics. Why? Because retailers with the ability to surface and validate new ideas from customer data will be able to test new ideas faster, launch them faster in stores, and roll out profitable programs faster.

Transformation today
Retail is in the midst of significant transformation. This transformation is about thinking differently. Old operations and systems do not apply. Out-of-the box thinking has:

  • Created transformations at established companies, like Belk and Macy’s.
  • Transformed the retail landscape with players like Amazon and Google.
  • Created new companies like Gilt Groupe.

This rapid change has been spurred by the power shift to consumers and enabled by the speed of new computing platforms. According to a recent survey from KPMG, retail executives cited social media (71 percent) and mobile and online shopping (52 percent) as the most relevant technology trends for their industry. In the same study, executives say data analytics is being used for customer insight (72 percent), brand and product management (67 percent), and pricing decisions (56 percent).

Experiments are everywhere
Clearly, retailers (and consumer goods companies) are experimenting more with new ideas. One major department store is resetting a major store twice a day to cater to changing store demographics. Another is using technology to monitor our movements in the store. More retailers are testing mobile checkout and roving associates with tablets a la Apple.

New online environments create relevant community for populations of customers and provide information, advice, service shoppers cannot get elsewhere and allows purchases.

In recent weeks, Amazon announced a partnership with the United States Postal Service to reclaim a full 1/7 of the year for their business - by announcing Sunday delivery. We can all enjoy next day shipping from multiple retailers and now we have same day delivery. Amazon is quietly sharing some warehouses with Procter & Gamble and other suppliers, so Amazon gains an advantage over retailers like Costco and Walmart in delivering consumer goods to us. Even a small slice of this gigantic business moving online is huge: $16 billion in 2012 at just 2 percent of consumer goods sales online.

Amazon is changing shoppers’ expectations by offering the “impossible.” SAS Retail executive advisor Lori Schafer notes "Consumers expect immediate gratification.”

Investment areas for the future
Retailers with an analytical foundation will be able to meet these demands and create new ideas faster, deliver goods more effectively. As these trends continue, look for innovation labs, analytical centers of excellence, and recruitment of more analytical talent in 2014.

* Title quote attribution: Ralph Waldo Emerson


About Author

Diana McHenry

Principal Product Marketing Manager

Diana is director for global retail product marketing at SAS. Diana has 27 years experience in the retail ecosystem, in companies as diverse as Procter & Gamble and IBM to a start-up retail software company. Diana’s been fortunate to work for some of the most highly-regarded companies in the world and with innovative retailers worldwide. In her current role, Diana is widely interviewed and quoted in retail and global publications. She gains market insight from global customers and the SAS Retail customer advisory board and shares industry best practices. Diana received her BBA with honors in quantitative analysis and information systems.

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