The Real Challenge With Big DataPosted October 31, 2013Posted in Advertising, Behavioral Marketing, Big Data, Blog, Marketing, Store Experience,Strategy, Technology, The Future, Trends
By Doug Stephens
It’s hard (read impossible) to go a day without hearing that big data is poised to revolutionize business. The speed, volume and variety of data now available at our fingertips, holds incredible promise for companies in all categories. For the average marketer, big data must seem like a giant catapult being rolled into a battle that’s currently being waged with sticks and stones. It is indeed a new war machine and by most accounts, including my own, it will be a formidable force. Of that there seems little question.
Within this new data landscape, companies are scrambling to comprehend the technical aspects of big data – what it is, how it works, what it costs and the true capabilities it might bring. These are early days on the big data hype curve, and it’s particularly challenging to separate fact from fantasy in terms of what the average company can actually expect to do with big data once they harness it. And the truth is that grasping this new and awe-inspiring technology is not without some challenges.
But as is often the case, understanding the technology is only a small portion of the full test that companies embarking on big data will face. Far less obvious but infinitely more critical are the human issues prompted by the use of big data analytics. These, to my mind, are the true challenges that companies should be addressing early, honestly and sensitively.
I see these challenges affecting three key constituents:
Leaders
Many of today’s corporate leaders were developed to believe that “strong leadership” means gathering all relevant facts and data, performing thorough and astute analysis and then making the most sage and correct decision possible. Measurement of the decision may come weeks or months later. Then and only then might there be any course correction. Decision makers have been expected to be firm and unwavering, because in today’s corporate world, equivocation and plasticity of thinking have often been seen as signs of weakness.
Big data leadership however, requires a completely different decision-making style. It involves making nimble and quick decisions based on limited information and best guesses, and then implementing through a series of tests, course corrections and pivots based on an immediate, robust and constant flow of data. It’s like navigating a ship using a GPS unit versus an antique sextant and the stars. In essence, the big data leader won’t set out to be “right first time” but to be “less wrong over time.”
The best retail leaders therefore, will no longer be those that aspire to be the most intuitively correct but instead those that are the most innately curious, and capable of asking the best questions of their data. In other words, instead of having the right the answers, it will be the leaders smart enough to develop the right queries that will drive results.
This requires a fundamental re-learning of what it means to be a leader and my guess is that many organizations (and their leaders) will fail to make the transition.
Employees
Cameras can record employee interactions with customers. RFID tags can track worker’s bodies through the store and measure their attentiveness to consumers and pace of work. Social filters can sift through millions of conversations to find mentions of staff names or their store locations for commendation or condemnation. So, companies venturing into the use of big data will have to ask themselves what sort of relationship they want to have with their employees.
Will big data be used as a device purely for routing out the weak or as a valuable means of developing the strong? Does the collection of data work to help the employee excel or does it work for the company only? And are employees entitled to their own performance (big) data or is it merely stored and deployed at them?
This new and microscopically invasive tool can be either remarkably positive or devastatingly destructive depending on how it’s positioned, shared and executed with the workforce.
Customers
Take it from someone who has scoured the earth for good retail big data use cases, there aren’t many. In fact, the best big data case studies tend to be found in other areas, such as health, government, medicine and education. Why? Because in these situations, consumers have little choice but to share accurate and complete data. They have no such obligation in most retail situations. Retail customers lie, share loyalty cards and coupons, move and yes, even die, all without informing retailers. Consequently, at any given time, much of the data in a retailer’s system is garbage…big garbage.
The only way for retailers to gather good data is to compel customers to willingly and even happily share it with them. This requires two things; implicit trust on the part of the consumer and a one-to-one sharing of value between the two. If data is, as some call it, a new currency, what does the customer get when they spend their data currency with you? More advertising or a tangibly better shopping experience? More junk mail or more relevant and personalized communications? It’s a critical philosophical question that your company has to align on. Trust will represent as great a competitive advantage as a fabulous product or standout service – perhaps even greater. So that privacy policy that currently sits as an obscurely written, 5 page, legal footnote on most websites? Well it may be time to put it in plain English and move it up to the header.
Table stakes
Three to five years from now, I suspect we’ll take big data for granted. It will be 
table stakes to play in chain retail, and most companies will have honed a relatively acute understanding of big data’s technical traits. They’ll get that piece pretty quickly. But it’s the companies that recognized early on that big data is not a technical challenge but rather a human challenge that will be more likely to master it’s true potential. Get the human piece wrong, however, and all the distributed computing, in-memory processing and Hadoop databases in the world won’t help you.
Great piece Doug.
Working with retail chains To improve their store performance I am constantly amazed how many of them will spend tens of thousands of dollars to capture more customer data – but won’t spend on instore training of staff, better store management, or better communication with their employees.
Big data for retailers is over-hyped while the basics of good customer service that lead to increased customer satisfaction suffer.
By Doug Stephens
Today’s retailers face a tsunami of problems but none, in my opinion is more deadly than the pandemic of sheer consumer boredom that shoppers are being subjected to. Most retail is just painfully boring. In fact, the majority of store chains, malls and shopping centers have become beacons of boredom, monuments to mediocrity and havens of ho hum.
There are a couple of reasons for this.
To understand why this is happening, you only have to put yourself in the shoes of a category buyer for Macy’s. What is the number one criteria that you, as that buyer, would place above all else when reviewing products to bring into your stores? Sales of course. Because unless a product will sell in significant numbers, it won’t justify the square footage it occupies. And it is for that one single reason – anticipated square foot sales volume – that a plethora of unique, fun, fashionable and fascinating products will likely never see the light of day on the sales floor.
Now, repeat the Macy’s buyer mandate across the thousands and thousands of retail buyers, each of whom follow the same essential rule, and soon every store in the mall begins to look the same. Every mall looks vaguely like the next. And voila…mass boredom!
Exacerbating this phenomenon is the fact that our expectations of variety, selection and discovery are being pervasively shaped by the endless sea of products available online. Online marketplaces like Amazon, Alibaba, Etsy and throngs of pure-play specialty merchants provide shoppers with the ability to search, discover and learn about an abundance of new and interesting products. Online sellers can do this, of course, because they don’t have to stock a thousand of something if they only sell ten of them. They can still carry the item, without tying up massive amounts of capital and floor space. Consequently, online is where you’re likely to spot the next cool, new product. Not in a store.
The Economics of Retail Are Broken
At the heart of all this brick and mortar boredom, lies an outmoded model for how retailers make money. The wholesale to retail model by definition discourages risk. The commitment to per square foot volume of sales as a primary metric of success becomes a straightjacket that impedes any creativity or adventure on the part of a buyer.
The Store As Media
To escape this moribund state, retailers will have little choice but to move to a new economic model. One that depends less on volume sales and more on the volume of positive shopping experiences. As I’ve written in the past, this new model will, as I envision it, be far more like a media revenue model than a typical wholesale to retail buying agreement. In essence, the store itself ceases to operate solely as a distribution vehicle for product but also, and perhaps more importantly becomes a media channel for consumer experiences. Physical stores become interactive media environments where brands can communicate their unique stories, consumers can have immersive interactions with products and all this activity is measured and quantified in real time.
A prime example of this is the Palo Alto based b8ta, a new internet of things store and brainchild of four ex Nest employees. b8ta defies conventional retail paradigms by purely stocking those products its owners find compelling or intriguing. The store may or may not sell a given item and if it does, it may only collect a small consignment fee per sale. Instead it charges brands – established brands and startups alike – rent for the space their product occupies. In addition to exposure for the product, brands and manufacturers are given access to immediate feedback on both sales and customer interactions with their products.
Unlike Best Buy, that sets out to first sell things and then attempts (often in vain) to be interesting while they do it, b8ta works to be interesting first, and uses that quality to drive their revenue model. 
As I see it, unless retail solves its boredom problem nothing else matters – mobile, omni-channel, beacons – none of it will make any difference whatsoever. Unless retailers can extricate themselves from the tyranny of per-square-foot decision making, and build stores that customers love visiting, all other efforts, initiatives and investments will be in vain.
The bottom line is that In a world where three taps on a piece of glass gets me anything I want, there’s simply no more room for boring stores.
Thank you for your Post, it’s very valuable.
Any suggestion regarding how to quantify “positive shopping experience level”?
Being qualitative, it’s very difficult to measure, isn’t it?
Thank you for your comment,
Andy Cavallini
Reply
Doug Stephens says:Good question Andy! It’s hardly something we could look at as an exact science at this point. The first step is to deploy technologies that enable an understanding of the store environment in real time. Video analytics, heat mapping,mobile ID tracking, anonymous facial recognition etc. While these won’t give a quantifiable view of the store experience, they will at least lead to an understanding of who the audience is, where they’re travelling in the store, what and whom they’re interacting with and how long they’re staying on site. Much like a website, the retailer can gain a general sense of the performance of various elements of the store.
But ultimately, the key is to connect visits to sales, across channels. This is where it gets trickier and where retailers need to deliver more value and build trust.
The first important step is to reconsider the approach to data in the store environment. Retailers tend to look for opportunities to push – be it coupons, offers or promotions – all of which, consumers are most often unwilling to exchange their identity for. In fact, one study found that 91% of consumers resented retailers who attempt to capture personal data through coupon usage. Instead, retailers need to consider how they can use technology to pull consumers through the experience, giving them things of true and present value, beyond mere discounts. Things like personalized shopping experiences, concierge levels of service, key tools or pieces of information to better inform their shopping trip or things that simply make the store more fun and enchanting. Then use these points to get customers to willingly declare their identities and approval for data to be gathered. Starbucks does a great job of this through their loyalty and payment app. Once customers are bought in, and can see the value they get in return for transparency, retailers will be better able to develop a single view of a shopper, connect visits to purchases across channels and therefore begin to quantify the store experience in a meaningful and verifiable way.
The key component is not the technology. We already have all that. It’s that retailers come through with delivering a truly valuable experience that consumers are willing and happy to make an even trade of data for. That’s the tough bit.
Reply
Thank you for your commentary….I thought it was just me who is literally bored out of my mind any time I finally force myself to walk into a store, attempting to improve my aging wardrobe. Let’s start by eliminating sparkle and spangle on every item, and go back to primary colors for at least one season. Muted tones and all black have completely taken over everyone’s wardrobe. I’d love some fashionable work clothes for the majority of us who actually have to go to work everyday. The Kardashians are NOT fashion experts.
Reply
Boring. My sentiments exactly. Each time I am dragged into a store, I feel sleepy. The colors are dark, blue or black. The styles are not trendy and doesn’t evoke any excitement. I’ve stopped shopping at malls for years and will not return anytime soon.
Reply
Is the boredom also a part of every retailer trying to get $ from everyone- regular size, plus size, accessories, kids, teens, tweens, Millenials, Boomers, etc. A store like Macys has vast floor space of stuff, but nothing is merchandised as exclusive or needed now. You know the same stuff is going to be there for months- on the rack, on the floor, spewed across dressing rooms. It’s just “stuff” and looks like the landfill where all the unsold items will end up.
