Harnessing the Power of Big Data: A Crucial Competitive Advantage...

Harnessing the Power of Big Data: A Crucial Competitive Advantage for Brick-and-Mortar Retail

By Alex Bordei, Director of Product and Development, Bigstep

Alex Bordei, Director of Product and Development, Bigstep

Wal-Mart is still the no. 1 chain retailer in the world,and 90percent of all shopping is done in offline stores. Over 7,000 retail stores were closed in 2017 in the U.S. alone and brick-and-mortar retailers face growing structural problems.   

Situation Status: Checking the Numbers

The 2018 retail market analysis by Deloitte shows growth in aggregate retail revenue of the top 250 retailers, from a total of $3.25 trillion in 2008 to $4.44 trillion in 2017. Europe is losing ground to Asia,and Carrefour dropped from 2nd place in 2001 to 9th place in 2017. Barely entering the top 200 retailers in 2000, Amazon now sits comfortably at no. 6 and is expanding.

The changes driven by technology to retailers have never been so drastic in the history of the world. Do retailers like Carrefour have a way of getting back on top?

Yes, and the key rests in technology. In the report The New Digital Divide, Deloitte shows that out of $1 spent in retail stores, 56 cents of spending is driven by digital interactions – online presence, social media marketing, YouTube videos, targeted adsall of these increase shopping not just online, but in the bricks-and-mortar environment as well.

Business Challenges for Bricks-and-Mortar Retailers

The fundamentals of retail have changed. People use a mix of online and offline purchasing now. Brick-and-mortar stores are preferred where customers want to interact with the products and with people. The online is for products that need extensive research or for fungible products expensive enough to warrant vendor hopping.

"More data speeds up the business decision by analyzing a multitude of key performance indicators and partly solves one of the core issues of offline retailers"

The challenge is how to stop people from doing vendor hopping and getting them closer to the emotions-based shopping process that is best done in stores. Of course, customers are not easily persuaded to get off the couch unless there is a real benefit by doing so. This is why many retailers started using cutting edge technologies like VR (for example Ikea). Other retailers use in-store tabletswhich they can use to pull up customer history and get personalized recommendations, in the hands of well-trained sales associates that provide a more informed and personal interaction.

Quickly spotting trends has become crucial for the offline retailer. Everything is accelerated now compared to a decade ago. Fashion or technology trends last less and technology replace cycles have in fact lengthened. Retailers like Zara or H&M reduced the fashion cycle to 5 weeks from 6 months.

For the same reason, the retailer needs to predict what a specific customer will do, to optimize inventory replenishment and better predict required stock levels. A better pricing strategy for each product displayed in the shop can be achieved by running experiments tocontinually test the customer’s pricing sensibility. This is a form of running A/B tests.

Analyzing the customer receipts can provide insight into some surprising correlations: a customer drinking milk may love comedies more than a customer that avoids milk.

Brick-and-mortar retailers think they understand customer behavior, but it is this very type of seemingly uncorrelated preferences that big chain retailers miss, and online retailers do not. Correctly using big data while being careful with sensitive user information is critical. 

All these require data, and, with an influx of IoT devices coming our way by 2024, this data collection will be more achievable by bricks-and-mortar retailers.

More data speeds up the business decision by analyzing a multitude of key performance indicators and partly solves one of the core issues of offline retailers, which is the operational inefficiency in the supply chain management. For example, companies use big data to understand the hourly flux of customers, thus optimizing when to open more or close some of the checkout points.

Even if the focus is on offline, the retailer must increase revenue across multiple distribution channels, as the online/offline dichotomy is continuing to dissipate and become even more interconnected. Also, dropping cash use and moving more towards mobile app payments and crypto-currency payments is another plus in the face of the young consumer.

Business, data science and IT no longer on different floors

To do all this a far closer integration between teams of specialists and between systems is required. A single source-of-truth repository is essential: this makes it easier for your data science and business teams to promote data democratization across the organization, driving significant increases in revenue and more accessible for IT to push data into and maintain data quality.

Self-service analytics and self-service data visualization across the organization is essential to make your lower level decision-makers indeeddata-driven. The key is implementation speed. No longer can we afford to wait six months for a change to be implemented by a third party. Data literacy is going to be a crucial skill to have in the years to come.

Data-driven decisions will be everywhere. It’snot just the products you sell: it is the arrangement of products on shelves, the pricing, finding out if customers prefer a particular design of a retail store or how they react to your Instagram sponsored post. All of these are radically improved by harnessing the power of big data.


People love shopping,but while online shopping is cheaper, more diversified, and faster, the reason to shop in brick-and-mortar stores is still there but hanging in the balance. To win people over you need a compelling shopping experience.

These are the fundamentals that have changed with the Internet and smartphone shopping, and offline stores need to provide both a service and a user experience, not just products, to survive. Who knows, with the power of having a physical presence where customers can engage in real-time, in-person, with enough time and innovation, brick-and-mortar stores that operate with the technology edge currently leveraged by ecommerce may eventually outpace their online-only retail peers.

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