Last holiday season, the La Jolla Group, a California retailer and apparel licensing firm that manages surfing brands O’Neill and Rusty, and motocross brand Metal Mulisha, plunged into big data in a big way.
Too big, it turned out. La Jolla ran a lot of online sweepstakes to capture social graph data about its online customers. “We over-engineered it,” says Daniel Neukomm, who handles corporate strategy and development for the company. “We were never able to fully digest and respond to that data. That speaks to the theory that Big Data is only as good as your ability to use it.”
As the crucial holiday selling season ramps up this year, the La Jolla Group is less concerned with the sheer volume of data it collects than in integrating that data with other channels, such as email and mobile. “We are focusing on things we know work—and not trying to be overly flashy and overly technical,” Neukomm says. “We are taking a step back so we can go two or three steps further. We want to be surgical and sniper-focused, rather than shoot from the hip.”
In a time of “Big Data” hype, such sentiments are not commonly espoused—but they are smart. Many retailers are in a period of digesting the concepts of analyzing large and different datasets to gain new insights about customers and markets.
While 80 percent of retailers say they’ve heard of “Big Data,” less than half understand how to apply it to their business, according to a recent survey by retail research firm Edgell Knowledge Network.
Companies that are leading the charge, like the La Jolla Group, are focusing on social media efforts that can have a tangible impact—especially during the crucial holiday selling season, which can mean the difference between a year in the black and the red. Neukomm points to the La Jolla Group’s use of ReadyPulse‘s Social Testimonial platform, a beta stage behavioral analysis provider that curates online testimonials. The technology brings enthusiastic comments from Facebook and Twitter to the appropriate place on the company’s web site.
“That lifts the page relevance without us spending any more,” he says. “The traffic on the page is more relevant to the viewer, and the [user’s] stay on the page is longer and conversion is higher. This is especially important during the holidays, because those eyeballs are worth more.”
Targeting Time-Strapped Consumers
That perspective dovetails with IBM Enterprise Marketing Management’s 5th Annual Online Retail Holiday Readiness Report, which was released in August. The yearly report notes that mobile usage by consumers is exacerbating the trend of “surgical shopping,” where time pressed consumers are zeroing in on the products and services they want. The declining consumer attention, the report notes, is a clarion call for retailers to make site visits relevant, personalized and engaging to the individual consumer—a sweet spot for big data.
“This year, social media playing in the analytics mix that marketers are much more attuned to social sentiment for not just brands, also the campaigns and holiday promotions,” says Jay Henderson, IBM’s global strategy program director for enterprise marketing management. Henderson says he’s noticed that this holiday season retailers are analyzing their data more frequently. “They might look at an analytics report once quarter or once a month the rest of year,” he says. During the holidays, they now want real-time monitoring. This is a big change in that historically retailers locked down for that retail period. “Now they realize they need to be more agile,” he says.
For such reasons, online retailers, who are able to easily implement changes on the fly, have embraced analytics systems more quickly than their brick-and-mortar counterparts. Consider RetailNext, which produces a system for retailers and manufacturers that combines video analytics, on-shelf sensors, and data from point-of-sale systems. Retailers can find how long a consumer spends in front of a particular display and test ways to tweak layouts and products.
“This provides actionable information that allows retailers to test concepts quickly,” says Shelley E. Kohan, vice president of retail consulting of retail consulting at RetailNext. “They could test a concept on Saturday, and make a change on Monday.”
Using this information, a retailer could coax store traffic in ways that leads to a slight uptick in sales. Multiply that across 100 stores in a retail chain during the business holiday season, and the aggregate sales could be significant.
The Goal of an ‘Omnichannel Experience’
Kohan says that compared to online-only merchants, the brick-and-mortar retailers want to see a greater amount of data over time before they make in-store adjustments. “As they become more accustomed to analytics and Big Data, we anticipate their comfort level in making quick changes become higher,” she says. “Right now the mindset, especially with specialty retailers, is let’s make sure.”
That said, there is more movement to bring big data applications offline to the brick-and-mortar stores to forge a true “omnichannel experience” in retail parlance. This holiday season, the La Jolla Group, which also runs its own retail stores, is partnering with a new company called Swarm, which has developed a way to send targeted push notifications advertising custom deals and programs to shoppers’ smart phones without them ever downloading an app or even opening their browser. The system detects a customer’s wireless antennae when he walks in the store and prompts your browser to open up, giving him the option to explore the platform. “We are using that platform to capture walk-by traffic in a way we’ve never been able to do before,” Neukomm says.
During the holiday season, the La Jolla Group will use the system to tinker with in-store promotions, such as adding a gift with purchase to bump sales. Neukomm stresses the approach—like everything the company is doing with big data—will be highly targeted.
“The ultimate goal of any industry is to put the right product in front of the right customer at the right time,” he says. “Big data is an almost unavoidable competitive requirement in retail today. But we need to be nimble and play smartly. We need to pluck and choose the technology, and go beyond traditional vendor-retailer relationships. We are coming in on the ground level—there is no formula. We are the sandbox, the testing ground where we will refine and scale the technology.”
Joe Mullich, a freelance writer based in Los Angeles, can be reached at email@example.com.