By Michael Haydock
Jewelry sales are set to shine this year and expected to grow more than 11 percent in the second quarter and nine percent overall this year, according to a new Big Data-based retail forecast from IBM.
According to the analysis, improved consumer confidence, lower unemployment and enhanced stock dividends from the fourth quarter of 2012 have combined to leave people ready to start spending on luxury items again, like jewelry.
In addition, key retailers are buttressing the economic landscape and driving sales by leveraging Big Data analytics to better understand and respond to customers and trends. Sterling Jewelers, for example, which owns the popular Jared and Kay brands, overhauled its digital channels to better respond to changing consumer preferences. The move led to an increase in online sales of 49 percent this past holiday season.
Sterling commissioned IBM for research that included a customer segmentation analysis, voice of the customer surveys and in-store observations. With deeper insights into customer needs and distinct shopping scenarios – as well as the capabilities required to support them online – they were able to extend the Kay and Jared in-store shopping experience online and into the mobile channel.
IBM’s retail analytics forecast examines some 22 years of historical retail data from the U.S. Census Bureau, which captures sales observations from over 46,000 retailers monthly from 1992 to the present. It also examines consumer confidence, disposable income, and unemployment data, stock market information, and a long list of other factors. The company then applies patented algorithms to the data to model seasonal peaks and patterns, making IBM’s retail forecasts over 97 percent accurate – four times more accurate than retailers’ own forecasts.
Armed with these hyper-accurate forecasts, retailers can get ahead of trends to ensure that the right product mix in their stores, allocate the best use of advertisement dollars and make sure they have the right number of staff to ride the peaks and valleys ahead.
In addition to the projected spike in jewelry sales, the latest forecast also predicts a boost to in-store consumer electronics sales, which are projected to grow 2.33 percent in the second quarter and 1.58 percent overall for 2013, after five years of decline. Though a modest gain, the news is welcome to an industry that has been challenged by the rising impact of new social retailing phenomena, such as showrooming, in which consumers look at items in a store before ultimately buying them online – usually at lower prices.
IBM is betting that Big Data analytics can be used to help companies unlock new areas of business and better serve clients. Researchers at the new IBM Customer Experience Lab are developing the IBM Virtual Closet, a prototype technology that enables retailers to look at items consumers recently purchased or showed an interest in – whether online, in a physical store or on a social network – and tailor recommendations based on that consumer’s unique taste and style.
The Virtual Closet is a great illustration of how retailers can use Big Data to better serve clients. By using information to provide exceptional customer experiences, whether online or in a store, companies will be able to attract more loyal customers and engage them in an ongoing relationship rather than a series of isolated transactions.
The challenge facing all retailers is how to successfully use Big Data to understand their customers and grow sales. The information is already out there. Now it needs to be optimized, analyzed and leveraged and that will require shifts in how retailers operate. But as the report shows, they’re starting to get it.