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A recent university study finds many retailers are still using “very basic tools” rather than advanced analytics partly because the analytics function is “often run by people who do not really understand” the retail business.
The study was based on interviews with 24 retail executives in the Americas, Europe and Asia, and found employees seeking solutions from analytics teams often tune out after realizing they don’t understand their problems.
The researchers, led by the University of Chicago, told the Harvard Business Review, that executives “told us they face a critical lack of employees with the right skills to design and use analytics tools. What they need most are employees who can bridge functional gaps — translators, that is, between analytics and the business.”
Other inhibitors include a risk-averse culture with unclear goals and an increasing number of employees considering their work as “more art than science."
Retailers that better utilize analytics embrace the mantra “Think big, start small, and scale fast” and celebrate experimentation. The researchers wrote, “Specifically, leaders can spearhead an internal campaign emphasizing that analytics are meant to empower decision-makers, not replace them.”
Also recommended was developing in-house training programs to either teach business-domain knowledge to those on the analytics team or analytics fundamentals to others.
New tool sets are required with insufficient resources, legacy systems and siloed data among non-personal issues holding retailers from more fully embracing analytics. Developing “the know-how to exploit the new tools” often slows adoption.
The researchers wrote, “There weren’t many electricians around at the start of Thomas Edison’s career, and the Wright Brothers were bicycle mechanics. In this respect, the data analytics revolution is no different. What is different is the speed with which these new tools are being designed. In the age of data abundance, those who learn to profit from its insights first are almost certain to gain a powerful operational advantage over their competitors.”
A recent McKinsey study found organizational maturity to be a barrier to retailers’ realizing analytics’ full potential. McKinsey stated, “Organizational maturity encompasses both processes to technically embed and continually improve use cases, as well as constant change management with the users of the analytical insights.”