Retail TouchPoints: Professor Tom Davenport Advises Retailers to Cultivate Potential Benefits of Analytics
Through a special arrangement, presented here for discussion is an excerpt of a current article from the Retail TouchPoints website.
Industry experts and retailers themselves agree that most retail companies have not yet realized the full potential of the breadth of analytics available to them today. Economic climate aside, retailers must strategize for long-term success, and using analytics effectively can go a long way to creating security for businesses on the other side of the economic recovery.
Recently SAS and Teradata commissioned a study on analytics along with Tom Davenport, professor at Babson College and co-author of the book Competing on Analytics. The original plan for the study was to focus on specific themes related to analytics in retail, but Prof. Davenport quickly found out that first the industry needed to take a step back and evaluate all possibilities and potential retail analytics could provide. The recently published study is titled: Realizing the Potential of Retail Analytics.
"I was surprised by the huge potential of retail analytics and the breadth of opportunities retailers have to choose from," said Prof. Davenport. "But I was equally surprised at the lack of coordinated approach coming from retail businesses. It was difficult to find one person in retail who could speak to the broad range of analytical activities."
During interviews with 33 retailers and more than 25 retail analytics experts, Prof. Davenport noted that the same companies came up over and over again when discussing best practices. Companies like Best Buy, Walmart, Target, Kohl's and J.C. Penney have taken the lead in developing successful processes using specific types of analytics. But, he noted, none could speak to the complete realm of analytics resources.
Overall, Prof. Davenport found "companies that have aspirations to be big and successful are focusing most closely on analytics, including department stores, online retailers, and probably most of the large discount retailers."
Increasingly retailers of all stripes are finally recognizing the potential benefits of analytics, and some have very recently changed their outlook regarding analytics. "A few years ago I did some work with TJX and at the time they said: 'We are traditional merchants and are not sure analytics relate to kind of merchandising we do.' But they are not saying that anymore."
While Prof. Davenport began the study before the most severe economic downturn, he hopes that retailers will continue to invest in analytics. "It is pretty clear that the really great, well managed companies continue to invest in analytics, even in a down economy."
Discussion Questions: Do you agree that the retail industry has shown a "lack of coordinated approach" in embracing analytics? If so, why have retailers been slow to explore and capitalize on the full range of retail analytics available?