Today's retail businesses are collecting more information about customers than ever before. From loyalty programs that know a shopper's age, shoe size and foundation shade, to mobile apps which can track exactly where a shopper is standing inside a store and send her a coupon for her favorite brand of jeans, retailers have become experts at gathering info thats paint a picture of shopper behavior—otherwise known as "big data."
According to Ginni Rometty, CEO of IBM, 80 percent of the world's data has been created in the last two years. How retailers use big data will be a huge basis for competitive advantage, thus the topic has come up everywhere here at Retail's BIG Show, from breakout sessions to briefings. And for good reason. But first, what exactly is big data?
To put it plainly, big data refers to the volume, velocity and variety of information that retailers are continuously collecting about shopper behavior. There's a massive amount of information coming in (volume) at a rapid pace (velocity) that shares a wide array of facts regarding shoppers (variety). Retailers are discovering that big data can be a big help, but it can also be a big challenge.
"It is a difficult challenge when you think about the amount of data that is out there for retailers," said Phil Burroughs, vice president of retail and hospitality at Verizon. "Retailers have a tremendous amount of data from loyalty programs to product warranty information. They know who is buying what, but the mashup of the data is a code that is hard to crack."
While the idea of big data has been top of mind for retailers over the past two years, the industry has been thinking about the wide range of information stores collect for nearly a decade.
"Big data needs to be actionable. We have been talking about this for 10 years and the code has not been cracked yet. But we are getting there, especially from a cloud computing point of view," added Burroughs.
Not only does big data pose a challenge for retailers, but it's on the mind of shoppers, too. In the wake of the recent data breaches at Target and Neiman Marcus, retailers can expect to find more customers leery about oversharing at the places they shop. The solution? Retailers must continue building trust among consumers. Shoppers share a lot of their personal information with stores and brands they trust, and stores that use this information have to start an open dialogue with shoppers about where that data is going.
"It's all about building trust with the consumer first," said Chetan Ghai, chief product officer at ShopperTrak, a firm that offers retail traffic analysis. "The consumer needs to be aware of how we can use the information we collect."
Ginni Rometty, CEO of IBM echoed this point during her keynote chat on stage with Terry Lundgren, CEO of Macy's.
"It all boils down to three things. Transparency and being authentic; controlling your data and giving consumers control over what they share with you; and trust which comes through behavior. Give people more value and you will get more trust."
Click here for more FierceRetail coverage from Retail's BIG Show hosted by the NRF!
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