Wake Up, Retailers! Make Money From Your Big Data
By Greg Munves, [email protected]
If you’re like many mid-level or tier one retailers, online or brick-and-mortar, you’ve probably made a significant investment in Big Data, capturing and analyzing customer buying patterns across your business. You may not realize, however, that this huge IT investment can actually be a profit center, if you sell your data back upstream to your suppliers.
Hundreds of consumer packaged goods (CPG) manufacturers like Pepsi, Johnson & Johnson, and Procter & Gamble regularly buy access to detailed, transaction-level point-of-sale data from their retailers. Why? Your data gives them insight into their products’ performance – down to a store-by-store level on a local, regional or national basis. Sharing point-of-sale (POS) data with your suppliers tightens the working relationship between your merchants and suppliers helping retailers move more product.
That powerful knowledge helps marketers increase sales, set unit pricing, and even understand where to focus marketing efforts for new product launches. Essentially, you enable your suppliers to apply their analytical expertise to help you run your business better, while generating high quality revenue in the process.
Technological enhancements now make it easier for retailers to share data with their suppliers. New cloud-based platforms or “portals” have come on the market, allowing retailers to monetize their data through spreadsheet-style user interfaces that are instantly comfortable for most analysts.
If you’re considering turning your Big Data IT investment into a profit center, there are a few considerations to keep in mind.
A publicly traded variety store chain with thousands of stores routinely does large-scale, high-speed analysis on billions of rows of data to provide real business insight to its marketing and merchandising executives tasked with increasing same-store sales. The company’s financial gains from implementing Big Data analytics have been impressive.
The variety store’s management team realized that by creating a more organized and robust means of sharing data with its vendor community, it could monetize that data and convert the expense of developing the system into a revenue stream.
While the revenues a company might realize from selling data to a supplier may vary, it’s typically extremely high-margin – by some estimates, representing as much as a half-penny to a penny-and-a-half on the retailer’s earnings per share.
In recent years, it has become possible to realize these benefits thanks to innovations in Big Data analysis technology – particularly the scalability and interactivity offered by cloud-based vendor portal platforms. The cloud allows convenient provisioning and sharing of large amounts of detailed data and analytics using simple protocols for securely sharing select data and customized analytics across multiple parties.
Cloud-based vendor portals make it easier for retailers to monetize data by offering tiers of pricing to suppliers – the more money is paid, the more access suppliers have to different levels of complex data and analytics. Robust access control capabilities allow vendors to see the margins on their own products but not on their competitors’ products (unless the retailer wants to grant additional access).
Once retailer data is available in the cloud, anyone with permission can access the data anytime, anywhere. Multiple users can access and interpret the information at once.
From there, retailers can leverage the analytical capabilities of their CPG vendors to analyze what’s going on in their stores – supplementing their own internal analyses. Inventory data lets suppliers participate in ensuring that individual stores are properly stocked. POS, market basket, and loyalty data provide insight allowing for more effective merchandising, pricing and promotions.
There are several important considerations for finding the right providers to help successfully turn your Big Data information into a revenue stream.
- Select a partner offering a platform that is easy to use and that your end-users are comfortable using. For example, many CPG data analysts are very comfortable using Excel spreadsheets. The system you settle on must, therefore, have user interfaces that resemble spreadsheets, to ensure quick user ramp-up time.
- Consider the ability to integrate other, third-party information such as weather, demographic or economic data. This could provide significant insight into buying trends – for example, how do changes in employment or weather conditions affect price sensitivity in the dairy department, region-by-region?
- Make sure pre-packaged analytics are available for things like market basket analysis and affinity analysis. Your portal should be able to offer sophisticated models to help CPG companies predict, for example, what items may soon be out of stock.
- Make sure your vendor portal provider can handle all your data in a non-summarized fashion. There is a big distinction when analyzing data at the market basket level versus store level versus a regional level. Your vendors’ analysts should be enabled to examine information at all levels for the most valuable decision-making and accurate conclusions.
You probably leverage your company’s POS, inventory and related data to improve performance, down to the store level. But if you’re not looking at ways to offer that data back to your vendors and give them the merchandising tools they need to help drive your sales, you’re only getting part of the bigger picture – and you’re missing out on a lucrative revenue stream.
Greg Munves is chief revenue officer at 1010data, a market leader in the analyzing, managing and sharing of big data. He can be reached at [email protected].
Consumers planning to spend tax refund
LOS ANGELES — The majority of Americans are planning to spend their tax refund.
According to PriceGrabber’s poll of 5,655 U.S. online shopping consumers, 24% anticipate a bigger refund than last year and 26% expect about the same amount. Thirty-two percent anticipate receiving less compared to 2012, and 18% aren’t sure how much money they will receive.
"As expected, many taxpayers are looking to save or pay off credit card debt with their refund, however our survey data also indicates a springtime boost in the economy as 56% (a 13% increase over last year) plan to splurge on clothing, home goods and electronics this year," said Rojeh Avanesian , VP marketing and analytics of PriceGrabber.
When consumers were asked to select all of the items or activities they will purchase with their tax refund, clothing was the top selection with 34% of respondents. Home goods and consumer electronics such as HDTVs, cameras or smartphones, tied for second place receiving 28% of the vote. Computers, laptops, tablets and e-readers followed in third with 34%, and 23% of consumers selected travel and vacations.
Those not shopping plan to save their tax refund. When the 44% of respondents who indicated they are not planning to shop with their refund money were asked to select all the ways they plan to use the refund, 37% said they will put it in savings. Twenty-six percent of consumers plan to pay off credit card debt; 12% plan to create an emergency fund; 11% selected home improvements; and 10% will pay off student loans, auto loans or a mortgage. Five percent of respondents plan to invest the money, and another 5% plan to indulge in leisure activities such as travel, dining out, concerts/events or spas.
Supervalu names new legal chief
MINNEAPOLIS — Supervalu chief Sam Duncan continues to finalize his leadership team by naming Karla Robertson as EVP legal.
Robertson replaces Todd Sheldon, EVP, general counsel and corporate secretary, who will stay through May to assist the company in the completion of its fiscal 2013 year-end filings. At that time, Robertson will assume the additional roles and responsibilities held by Sheldon, including the title of executive vice president, general counsel and corporate secretary. In this role, Robertson will have responsibility for overseeing the legal, risk management and asset protection teams for the company as well as working closely with Supervalu’s non-executive chairman, Robert Miller, and the company’s 11-person board of directors.
In addition, Supervalu announced that Sherry Smith, EVP and chief financial officer, will leave the company at the end of May. Smith has served as the company’s CFO since her appointment in December 2010. She has spent 26 years with Supervalu and previously served as senior vice president, finance. The company plans to announce a new CFO at a later date.
Robertson joined Supervalu in July 2009 as senior labor and employment counsel and was later promoted to VP of the employment, compensation and benefits law functions. Prior to Supervalu, Robertson served as senior counsel with Target Corporation and was an associate attorney at Faegre & Benson LLP, where she practiced in both the employment and business litigation areas.
“Sherry and Todd worked tirelessly to help structure the deal with AB Acquisition and then see the transaction through to completion,” said Duncan. “I am grateful for their commitment to this company and our shareholders and know they helped put us in a strong position to be successful going forward. I wish them both the best in their future endeavors.”