Retailers need to stop being intimidated by the “big” in “big data” and ask themselves how analytics can deliver specific and practical benefits to the bottom line and thereby strengthen their competitive position, according to a study by Brick Meets Click. 
"Details about ‘big data’ and retail often bog down in the vastness of its potential, leaving retailers with only the vaguest guidance as they try to figure out where and how to invest in this powerful tool,” Bill Bishop, chief architect of the Barrington, Ill.-based company, said in a new report.
To help retailers generate the best results for the effort expended, Brick Meets Click opted to focus its annual “big data” survey in a practical direction to determine which retail challenges analytics can solve, Bishop explained. The report, entitled, “Clear Direction on Solving Retail Problems with Big Data,” is being released Dec. 9.
According to the report, Brick Meets Click asked a panel of retailers to identify specific opportunities for solving retail problems with data analytics, after which it surveyed nearly 150 professionals to evaluate those opportunities based on their actual impact on business and the difficulty of executing them.
Bishop said the three opportunities that rated highest were identifying profitable items to promote; refining assortments to drive higher sales; and increasing spending by a store’s best shoppers.

The report’s advice included the following:
• To identify the most profitable items to promote, retailers should analyze item and category sales and gross profit dollars over a long period; build a list of items that are the most profitable; and increase weekly promotions of those items.
• To refine assortments to drive higher sales, retailers should identify which items are selling at a significantly different rate than suggested by the store space they occupy and which items deviate most — positively or negatively — from expectations, after which they should re-allocate more space to faster-selling items.
• To increase spending by existing customers, retailers should identify their top shoppers based on those who shop with them by choose and those who shop out of necessity, after which they should figure out how to appeal more effectively to each segment with different offers — by building on positive attitudes among the first group to increase their spend and to add additional tangible incentives for the second group.
The report also offers advice on other opportunities, including reducing out-of-stocks on promoted products; decreasing best-customer turnover; localizing assortment and pricing; attracting new customers who look like the best existing customers; increasing sales per square foot with customer tracking; and evaluating competition using social media sentiment to identify and exploit competitors’ vulnerabilities and to minimize their own.
The study urged retailers to seek out partnerships with data service providers; build analytical capabilities within their own organizations; shorten the time needed to implement change; and adopt a test-and-learn approach to innovation to move from insight to action more quickly.