Retail 4.0: More Data = Better Data?
Predictive analytics and big data are central themes in the Retail Technology segment of EuroShop
The validity of data increases with the amount of data available – provided there are suitable tools available for fast analysis in order to identify demand trends early on, optimise ranges and inventories or offer networked shoppers a seamless customer journey across all channels in Retail 4.0. Predictive analytics and big data have by now become established as central themes in the Retail Technology segment of EuroShop.
Tangible resources like merchandise and retail area that have for years formed an integral part of retail business models are now increasingly losing in importance – while the intangible resources like staff and information are moving centre stage. Employees’ service and analytics expertise as well as detailed “shoppers’ intelligence” revealing their lifeworlds, needs and behaviours will become the principal success factors in Retail 4.0, say consultancy Bearing Point and the Institute for International Retail and Service Management IIHD in a current study. “Companies that fail to consistently record customer data and to compile this data to generate shopper profiles will suffer a strategic competitive drawback,” explains Kay Manke, partner at Bearing Point.
Next to the availability of data, decision-making speed will also play a critical role in success. Investment in data strategy, analytics and facts-based decision making as well as the development of innovative evaluation options will therefore increasingly impact corporate success and ROI. Bearing Point sees substantial “backlog demand” in European retail. Not even one in ten firms, they say, are currently technically fit to establish a speed-based retail business model. The trade fair EuroCIS held as part of EuroShop will provide an ideal setting in March 2017 to find out about the current trends in, and solutions for, data warehousing, business intelligence and predictive analytics.
These include In-Memory database technology for high-speed evaluation of very large datasets as with SAP Hana. At EuroShop visitors will have the opportunity to gather information about the new Hana-based version of the merchandise information system (MIS) S4 for Retail & Fashion that supports speed-based business models. The solution offers various new functions for short-lived seasonal articles and initially targets the fashion industry. In order to develop the MIS system further, SAP will in future cooperate with international technology consultants Accenture. “Retail requires speed,“ insists Jill Standish, Senior Managing Director of Retail at Accenture – be it in the dialogue with shoppers, in the launch of new products, the expansion into new regions, the integration of bought-in items or the improvement of operative efficiency.
However, this does not apply to fashion only: other ranges can in future also be managed so much better on the In-Memory basis including the non-food campaign items in food retail or short-lived trend articles in electronics retail. At Lidl in Austria SAP Hana has already been successfully used since 2015 and is currently being rolled out to further stores. With the Customer Activity Repository CAR Lidl is also using the second Hana-based SAP module in addition to the MIS. CAR here takes care of processing sales slip and shopper data as well as stock levels in real time. This means Point-of-Sale data can be analysed several times a day in real time.
In addition to check-out or inventory data retailers are also increasingly tapping into new data sources for their analytics such as text and audio files from customer service or smartphone data, that permit retail to track shoppers’ routes not only on websites but also offline in stores – anonymously or, with shoppers’ consent, also identifiably. “There is huge potential lying dormant in this big data. Due to its different structures, however, they cannot be migrated to classic data warehouses without losses,” remarks Volker Giessler, Senior Industry Consultant at Teradata. One possible solution that this data warehouse supplier introduces at EuroCIS are so-called Data Lakes: In these systems companies can hold big datasets inexpensively – regardless of their structure or later use. “But Data Lakes are not a panacea,” says Giessler and warns that most of them are based on Open-Source software such as Hadoop or NoSQL technologies and can therefore not simply be “fed” in the standard database language SQL. “It therefore makes sense for companies to integrate a Data Lake into an overriding architecture thereby combining the benefits of data warehouses and Data Lakes.” The IT vendor will be pleased to assist its customers in doing this.
The pressing issue of how and where to flexibly and inexpensively save and process big data these days inevitably brings up the Cloud theme. The potential of Cloud Computing as a key technology for digital transformation has also long been identified in Germany, admits Thomas Kurian, President of Product Development at Oracle, but many firms are still hesitant to opt for the Cloud nevertheless. With its new solution “Cloud at Customer” Oracle addresses these concerns and helps organisations to migrate their data and processes seamlessly to the Cloud if need be. Here CIOs stay in control of the infrastructure because they can use the Cloud services “on-premises”, i.e. at their own computer centre, promises Oracle.
Noticeable benefits for costs, speed and seamless data integration are offered by Software-as-a-Service SaaS in the Cloud. The German Cloud-Commerce specialist Demandware now offers even better connection between marketing and after-sales service and its e-commerce solution after being taken over by Salesforce in mid-2016. The latest innovations also include the integration of the mobile payment solution Apple Pay via iPhone, iPad or Mac. “Consumers prefer paying via mobile devices these days. Unfortunately, the check-out process has not been adapted accordingly so far,” regrets Elana Anderson, Senior Vice President of Marketing at Demandware. With the new solutions retailers can now integrate Apple Pay into web shops thereby converting traffic into sales even more easily.
At EuroCIS big data expert Blue Yonder will also showcase its Cloud-based software applications for sales forecasts and automatic overdraft information, which are used at Kaufland (for fresh meat), Drogerie Müller, dm, Bauhaus and the Otto Group, to name but a few. Otto holds a 31% share in this enterprise. The new developments introduced by this young German company include solutions for price optimisation and 1:1 marketing. Blue Yonder CEO Uwe Weiss feels that German retailers are still lagging behind their colleagues in the US and UK when it comes to dynamic pricing. In view of the possibilities in online retail he advises both offline and online retailers to get geared up: “Prices are such a strong lever that nearly all retailers in Germany are starting to take a closer look at software solutions.” Blue Yonder’s pricing software automatically “learns” how prices relate to sales on the basis of current and legacy sales data. It considers such factors as articles (for textiles also colours and sizes), outlets, point in time, weather, cannibalisation or windfall effects. Furthermore, the solution can be attuned to the retailer’s individual pricing strategy. Here such criteria as price image, offset to important competitors, maximum number of changes per week or rounding rules come into play. Closely related to this is so-called customer targeting – the customised selection of promotion items or suitable discounts. Excessive discounts could therefore be avoided by computing power and machine learning, says Weiss.
Artificial intelligence is also centre stage at the IBM stand. The company presents approaches for using the Cognitive Computing software Watson in retail. Of course, the system processes language, automatically learns and is capable of recognising requests, intuitions and linguistic nuances. First movers in retail include US outdoor brand The North Face that uses Watson as a personal sales assistant for jackets on its website. And the US chain department store Macys also started a pilot in mid-2016. With the help of Watson it is hoped shoppers can find their bearings faster in differently laid out outlets. In future, they will no longer have to study floor plans or look for signs. With the “Macy’s on Call” App on their mobile phones they just have to verbally ask the question: “Where are women’s shoes?”
EuroShop 2017 is open for trade visitors from Sunday, 5 March 2017, to Thursday, 9 March 2017, daily from 10.00 am to 6.00 pm.
