How can retailers find the right balance between tech and humans?
Through a special arrangement, presented here for discussion is a summary of a current article from the Spieckerman Retail blog.
Retailers’ love affair with data-driven insights and action will continue to heat up as advances in behavioral analytics, cognitive computing and external data integration promise to keep everything fresh and exciting. The human touch that, back in the day, drove everything from product buying to ad spends consequently seems to be going the way of the cash register.
Technology and data mastery have also played a role in the recent run of layoffs from retailers including Whole Foods, Walmart and Target. The multi-layered merchandising structures that have traditionally powered retail will continue to collapse (or as I like to say, "the retail world is flat") because more can be done with fewer people. Against this backdrop, it was refreshing to hear at the IBM Insight conference in Las Vegas several mentions of the need for balance and even downright respect being given to imperfect people-based decision-making.
In her presentation, "Using Advanced Analytics Capabilities to Improve Merchandising Decisions," Holly Devine, Urban Outfitters’ executive director of planning, touted the value company derives from integrating art and science, stating that data will "inform, not dictate" its strategies.
Urban Outfitters has a well-earned reputation for sniffing out and pouncing on the next big thing in experiential retail, and people-powered gut instinct still fuels many of its contrarian decisions, including going deep into vinyl, even as others jumped on the digital bandwagon. According to Ms. Devine, Urban Outfitters’ primary identity is that of a lifestyle retailer, not an apparel retailer, giving it plenty of room to experiment widely and fail fast if individual tests fall flat.
Photo: Urban Outfitters
Kyle Wierenga, Costco’s manager of advanced analytics, backed this sentiment when he spoke of the respect that his company maintains for its buyers and the merchandising instincts they have honed in their industry-defying tenures. Some buyers have been at Costco over 20 years. According to Mr. Wierenga, investments in social analytics and other tools are ensuring its buyers can focus on what they do best.
IBM executives consistently promoted the possibilities to augment, not replace, human workforces in service-based businesses. IBM’s VP of Watson, Stephen Gold, outlined the "five E’s" defining the company’s cognitive platform (engagement, expertise, experience, efficiency, and exploration), which collectively read like a modern recipe for retail success.
The implications and applications for retailers are clear, particularly as their attention swings back to achieving bricks-based efficiencies in order to fulfill their digital aspirations. Retailers’ growing physical and digital scale is also adding unprecedented complexity to merchandising decisions, and most are attempting to address local opportunities at the same time. Buyers, marketers and operators are by no means obsolete, but they could certainly use some cognitive help to ensure that opportunities aren’t left on the table.
How do you see the balance between people-power and Big Data shifting within retail organizations? In what ways does the art versus science debate in retail extend beyond the buying office to other functions, such as marketing and operations?