Instrumented Interconnecteds Intelligent

by Jill Puleri, IBM GBS Retail Leader

We grew up hearing the story of Hansel and Gretel, but it’s not until recently that the moral became applicable to the business world. According to the story, Hansel leaves a trail of breadcrumbs so the duo can find their way home, but they get lost after the birds make the bread their dinner. As the IBM GBS Retail Leader, I’ve taken a lesson or two from Hansel’s mishap — it’s that if you don’t watch the breadcrumbs carefully, you’ll never find your way to the prize.

Tuesday IBM launched a new suite of Smarter Analytics solutions. In a world filled with too much data, analytics helps convert data – which is collected from a variety of digital devices– into valuable insight. IBM’s research has found that 90 percent of the data that exists in ‘cyberspace’ was created in the last two years.  Whether through online social channels or transactions, these bits of information give clues that businesses can use to determine who their customers are and how they behave. I often tell people that it’s not about running the numbers to see how many people clicked on a link or tweeted about a particular shopping item, but it’s about uncovering insight and then applying this insight for a competitive advantage.

The use of analytics is a journey. Sometimes, the whole story may not be visible at first glance, and it may require some trial and error to determine the appropriate course of action.

For example, after conducting an extensive analysis of its product sales, a grocery store decided to eliminate slow-moving items, such as Cream of Tartar.  What the grocer didn’t anticipate, however, is that local bakers would be up in arms if this staple ingredient was no longer available. The grocer found itself in jeopardy of losing a portion of its customer base if the item wasn’t re-stocked.

A journey that began with the question “What products should we remove off the shelves?” inevitably led to the question “Who is the customer we want to reach?”

Similarly, for one UK bakery, the answer was not to eliminate product, but rather, to deliver personalized offerings for their customers. A team of IBM analytics experts noticed that on rainy days customers were more likely to purchase cakes, while on sunny days the choice food was paninis. We couldn’t have guessed this by looking at the weather and sales reports separately, but together, we uncovered a new outcome.  Now the bakery knows what to bake based on the weather forecast.

Next week IBM will release a home furnishings retail forecast. With the help of our experts, we’ve picked up the breadcrumbs consumers have left behind and made connections and correlations allowing us to forecast sales. We can now project retail sales in this category with a 97% confidence over the next three months, and because of this, retailers can ensure that they stock the right products, and at the right quantities, and schedule the right amount of staff in their stores.

Big data really changed the game for businesses, and analytics has enabled us to play the game well. Analytics has gone from a business initiative two decades ago to business imperative today. It has shed light on what was once possible to what now can be proven.

No one wants to be lost in the woods looking for their way home.  We all want to be able to pick up the crumbs on the trail to find what awaits us at the end. Analytics can now make the ideal fairytale become a constant reality.

Join Jill April 4 on the People for a Smarter Planet Facebook page where she’ll be discussing Smarter Retail from 9:00 AM EST- 1:00 PM EST. 

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