Executives are still wrapping their heads around the potential advantages and pitfalls of “Big Data.” The concept of collecting and analyzing the wealth of information available—not just about consumer behavior, but also concerning transactions and internal operations—holds significant promise for retailers.
A survey of North American retail executives conducted by the research and content service company Edgell Knowledge Network in May through June 2012 found that only 17% were unaware of the concept of Big Data. The remainder of respondents had varying degrees of familiarity with the subject, with 10% saying they understood the ideas behind Big Data, but were unsure about how the concept might affect retail.
Retailers thought they stood to gain the most from Big Data initiatives in the area of ecommerce or multichannel purchases, named by 62% of those polled. That was followed by marketing (60%), merchandising (44%) and supply chain (29%).
Retailers already have a history with handling large chunks of data—barcodes and inventory management tasks have required the parsing of information for years. But Big Data presents challenges even among those retailers who consider themselves to have well-developed analytic capabilities. Among those polled, 46% named handling the volume of incoming data as their topmost challenge, while 34% said handling the sheer variety of data types was their topmost concern, and 20% identified dealing with the frequency with which data was generated as a problem.
More than half of retailers had already created a Big Data strategy or were in the process of doing so, however, only about three in 10 had actually executed one or were about to. But given the potential rewards of data analysis, a sizeable number of retailers were setting aside room in their budgets for a Big Data strategy, with 44% of respondents saying they already had a budget, or planned to implement one within the next two years.
What may be giving retailers pause in putting more of their resources into this area is that its potential benefits and return on investment still remain cloudy—nearly half of respondents said those issues were the biggest challenge to their plans, making it their number one concern about Big Data.
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