Report says most retailers lag Amazon in strategic use of analytics

July 9, 2014

The retail industry is rich in data, yet retailers struggle to derive significant value from their analytics investments, according to a new research report from EKN Research. Results show that while 4 in 5 retailers use enterprise-grade analytics, they cite analytics interpretation as their biggest challenge. EKN’s 3rd Annual Analytics in Retail benchmark, sponsored by Manthan and SAS, surveyed more than 200 retailers, of which 59 percent were above $100 million in annual revenue.

Results from EKN’s new benchmark report reveal significant disparities between retailers’ analytics aspirations and their current ability to execute. Findings of the report include:

• Retailers lag far behind Amazon in analytics maturity. 80 percent of retailers say they are behind Amazon in analytics maturity, and 71 percent of retailers perform either basic analytics reporting or none at all.
• Retailers lack structure and ownership for analytics reporting. According to EKN’s data, 51 percent of surveyed retailers don’t have a formal analytics team, and 42 percent have no single owner that is responsible for creating an analytics strategy and roadmap.
• Retailers are focused on hindsight reporting. 70 percent of retailers are stuck in a hindsight-oriented reporting cycle.
• Retail spending on analytics is increasing. The retail industry’s average spending on analytics as a percentage of the total IT budget is set to increase from 14 percent (2013) to 23 percent (2017).

“Retailers view analytics as extremely strategic, yet they currently struggle to derive commensurate value from their analytics investments,” said Gaurav Pant, SVP Research and Principal Analyst, EKN. “However, there are significant opportunities for retailers that can harness the power of analytics. Retailers that can overlay their analytics capabilities with a strategy and organizational capability tightly linked with their business model will gain competitive advantage.”