Monday Dec 17, 2012

Big Data Appliance

Today Oracle announced the next release of it's Big Data Appliance, an engineered system composed of hardware and software targeting the efficient processing of big data.  The solution leverages 288 Intel cores running Cloudera's distribution of Apache Hadoop in 1.1 TB of main memory.  This monster helps companies acquire, organize, and analyze large volumes of structured and un-structured data. Additionally a new versions of the Oracle Big Data Connectors and Oracle NoSQL Database were released.

Why is this important to retailers?  As the infographic below conveys, mobile and social have added even more data to the already huge collections of POS transactions and e-commerce weblogs.  Retailers know that mining that data will help them make better decisions that lead to increased sales, better customer service, and ultimately a successful retail business.

The Retailer’s Guide to Big Data

Monetate

Friday Oct 26, 2012

Analytics in an Omni-Channel World

Retail has been around ever since mankind started bartering.  The earliest transactions were very specific to the individuals buying and selling, then someone had the bright idea to open a store.  Those transactions were a little more generic, but the store owner still knew his customers and what they wanted.  As the chains rolled out, customer intimacy was sacrificed for scale, and retailers began to rely on segments and clusters.  But thanks to the widespread availability of data and the technology to convert said data into information, retailers are getting back to details.

The retail industry is following a maturity model for analytics that is has progressed through five stages, each delivering more value than the previous.

Store Analytics

Brick-and-mortar retailers (and pure-play catalogers as well) that collect anonymous basket-level data are able to get some sense of demand to help with allocation decisions.  Promotions and foot-traffic can be measured to understand marketing effectiveness and perhaps focus groups can help test ideas.  But decisions are influenced by the majority, using faceless customer segments and aggregated industry data points.  Loyalty programs help a little, but in many cases the cost outweighs the benefits.

Web Analytics

The Web made it much easier to collect data on specific, yet still anonymous consumers using cookies to track visits. Clickstreams and product searches are analyzed to understand the purchase journey, gauge demand, and better understand up-selling opportunities.  Personalization begins to allow retailers target market consumers with recommendations.

Cross-Channel Analytics

This phase is a minor one, but where most retailers probably sit today.  They are able to use information from one channel to bolster activities in another. However, there are technical challenges combining data silos so its not an easy task.  But for those retailers that are able to perform analytics on both sources of data, the pay-off is pretty nice.  Revenue per customer begins to go up as customers have a better brand experience.

Mobile & Social Analytics

Big data technologies are enabling a 360-degree view of the customer by incorporating psychographic data from social sites alongside traditional demographic data.  Retailers can track individual preferences, opinions, hobbies, etc. in order to understand a consumer's motivations.  Using mobile devices, consumers can interact with brands anywhere, anytime, accessing deep product information and reviews.  Mobile, combined with a loyalty program, presents an opportunity to put shopping into geographic context, understanding paths to the store, patterns within the store, and be an always-on advertising conduit.

Omni-Channel Analytics

All this data along with the proper technology represents a new paradigm in which the clock is turned back and retail becomes very personal once again.  Rich, individualized data better illuminates demand, allows for highly localized assortments, and helps tailor up-selling.  Interactions with all channels help build an accurate profile of each consumer, and allows retailers to tailor the retail experience to meet the heightened expectations of today's sophisticated shopper.  And of course this culminates in greater customer satisfaction and business profitability.

Wednesday Oct 03, 2012

The State of the Internet -- Retail Edition

Over at Business Insider, there's a great presentation on the State of the Internet done in the Mary Meeker style.  Its 138 slides so I took the liberty of condensing it down to the 15 slides that directly apply to the retail industry.  However, I strongly recommend looking at the entire deck when you have time.  And while you're at it, Business Insider just launched a retail portal that's dedicated to retail industry content.  Please check it out as well.  My take-aways are below after the slide show.

[Source: Business Insider]

Here are a few things I took away from the statistics:

  1. Facebook and Twitter are in their infancy.  While all retailers should have social programs, search is still the driver and therefore should receive the lions share of investment.  Facebook referrals are up 92% year-over-year, but Google still does 80% of the referrals.
  2. E-commerce continues to grow at breakneck speed, but in-store commerce is still king. Stores are not showrooms yet.  And social commerce pure-plays like Gilt and Groupon are tiny but worthy of some attention.
  3. There are more smartphones than PCs on the internet, and the disparity will continue to grow. PC growth will be flat and Tablet use will continue to grow. Mobile accounts for 12% of all internet traffic.
  4. A quarter of smartphone sales come from China, so anyone with a presence there better have a strong mobile strategy.
  5. 38% of people have used their smartphone to make a purchase, and many use their smartphones inside stores.  Smartphones are a critical consumer tool for shopping.
  6. Mobile is starting to drive significant traffic to e-commerce sites, especially tablets.  Tablet strategies are crucial for retailers.
  7. Mobile payments from the likes of Paypal and Square are growing quickly.  It will be interesting to see how NFC plays in this area.
  8. Mobile operating systems are losing market share to iOS and Android.  I wonder in Microsoft can finally make a dent?

The internet is being dominated by mobile devices, and retailers had better have a strong mobile strategy to meet consumer demand.

Tuesday Dec 20, 2011

Retail Strategy for 2012

Earlier this month I reviewed my 2011 predictions and made new ones for 2012.  Of course I wasn't the only one thinking about what's next for retail.  RIS News published their 2012 outlook, Retail Touchpoints has their 2012 insights, and Stores has their 2012 predictions so there's no shortage of opinions.  Reading these articles, its easy to pull out the major themes and they're exactly what you'd expect.  I could write about each theme, but I thought it would be more fun to remove all but the buzzwords.  See if you can still understand my summations...

  • Mobile-- anywhere/anytime commerce, always on consumers, omni-channel, Amazon's showroom, ubiquitous access to product info, QRCodes, online inside, NFC, loyalty, empowered employees, endless aisles, tablets
  • Social-- one-to-marketing, f-commerce, big data, customer analytics, psychographics, contextual offers
  • Cloud-- deployment, management, access data from anywhere, lower TCO, elastic, utility pricing, security, SLAs, SaaS, outage

This shortened version of writing sure saves time!  Here's the point.  Now is a good time to reflect on this year and think about your strategy for next year, which had better address all three mentioned areas.  I'm not saying you need to embrace all three, but you do need to have a point-of-view on how each can affect your business.  As you're reviewing your strategy, here's a little advice for the new year:

Don't get caught up in the buzzwords.  Look past the coolness factor and figure out how things directly impact the business.  A Twitter account might increase sales, but old-fashion supply-chain management might move the needle even more.  Put a little money toward innovation, and invest the rest toward improving the basics.

Skate to where the puck is going.  Your strategy must not only address your customers but also your future customers.  Run ideas past your teenage kids because they will soon be your customers.  This is especially important for matters relating to privacy, which continues to vary greatly by generations.

Measure twice, cut once.  Strategies must be based on data, not gut feelings.  Execute only after you've done the necessary analysis and have metrics in place to assess results. Challenge the statistics and use multiple sources.

Food for thought.  See you next year at NRF!

Monday Dec 05, 2011

2012 Predictions for Retail - Part 1

2012 is less than a month away, so this is the time of year we start seeing annual predictions.Susan Reda at Stores just published her take and I know IDC and Gartner have also released theirs.  Many of last year's predictions could easily move forward to this year's:  we'll continue to see lots of new alternative payment types, more engineered systems, better social analytics, more 2-D barcodes, greater adoption of cloud, and improved f-commerce.

In past years we've seen the rise of Apple, Google, Facebook, and Amazon but 2012 will mark a year of war between these juggernauts on the retail battlefield.  They will fight over NFC, tablets, digital content, and most importantly, trust from consumers.  Retailers must keep a close eye on all four companies.


1. Mobile Loyalty

Often, loyalty cards are just a way for retailers to give away margin in the hopes that consumers will select them as their preferred store.  But strong programs involve a trade-off: consumers get discounts, and in return retailers get to learn more about their customers (and serve them better), and have the opportunity to influence their behavior.  The loyalty card was a blunt instrument that worked well for the consumer, but didn't deliver for most retailers.

The concept of geo-fencing has been around a while, but there are few retailers that have really adopted it. The smartphone, with geo-fencing enabled, needs to become the consumer's loyalty card where retailers can incent, learn from, and communicate with customers.  In 2012, geo-fencing will take off and deliver value for both consumers and retailers.  Look for new loyalty programs built around smartphones.

2. Facebook Levels Off, Google+ Stalls, Groupon Withers, Amazon on Fire

To put Facebook's 800 million users in perspective, that the same number of people that were using the internet in 2004 worldwide, which incidentally is when Facebook got its start.  Only India and China have bigger populations. That kind of growth just can't continue, nor do I think engagement can increase. The novelty is wearing off, so while there are lots of users, I believe the engagement of those users will wane.

Some of those users will feel more at home with Google+, but I seriously doubt many will close their Facebook accounts and make a permanent move.  Google+ may continue to grow is user base, but users will spend more time on Facebook.  Google will continue to dip its toes in retail with more small stores, a possible free-shipping program (similar to Amazon Prime), and of course Google Wallet and Google Offers.  Other than Wallet, these efforts will go nowhere.

The potency of Groupon offers will dilute with all the "me-toos" that pop up, and retailers will learn that their exchange of profits for new, disloyal customers isn't sustainable.  Not taking $5.75 billion from Google will down in history as a huge mistake.

Amazon's success with the Kindle will translate into more Prime customers and greater loyalty.  The trend for shoppers to skip Google searches and go directly to amazon.com will continue, and Amazon will get more aggressive with books, movies, and music. Look for Amazon to acquire in the digital content area.  Also, expect Amazon to have another AWS hiccup that gives retailers pause about using the cloud, but overall AWS usage continues to grow.

3. Apple Payments

With all the news about alternate payments, this isn't a stretch at all.  Apple will finally release the iPhone 5 with NFC support and start to leverage their iTunes customer base for payments in non-Apple stores. I don't see how this will be financially viable with both Apple and credit cards taking a cut of each sale, so look for Apple to push customers toward ACH (debit/checking) as PayPal does.  Look for Apple to start a loyalty program to incent consumers to use the new payment vehicle.

While we're on the subject of Apple, I'm betting they will release a new Apple TV product in 2012.  Retailers should care because it will eventually allow viewers to "click on commercials" to get more details on products and sales.

4. Mobile Self-Checkout

Self-checkout, especially at grocery stores, has been around for a while.  Some love it, and some don't.  Smartphones now make it possible to simulate an e-commerce experience in the physical store.  As you add items to your physical cart, you can scan them into your transaction, then pay and walk out the store.  No need to stand in line at all.

Retailers are already putting mobile POS in the hands of its associates, so its not a huge step to expose that functionality directory to customers.  As Apple leads the way, look for grocery chains to quickly add the capability followed by home improvement stores.



More predictions in my next post.

Wednesday Nov 23, 2011

Reviewing Retail Predictions for 2011

I've been busy thinking about what 2012 and beyond will look like for retail, and I have some interesting predictions to share.  But before I go there, let’s first review this year’s predictions before making new ones for 2012.

1. Alternate Payments
We've seen several alternate payment schemes emerge over the last two years, and 2011 may be the year one of them takes hold. Any competition that can drive down fees will be good for everyone. I'm betting that Apple will add NFC chips to their next version of the iPhone, then enable payments in stores using iTunes accounts on the backend. Paypal will continue to make inroads, and Isis will announce a pilot.

The iPhone 4S did not contain an NFC chip, so we’ll have to continuing waiting for the iPhone 5. PayPal announced its moving into in-store payments, and Google launched its wallet in selected cities.  Overall I think the payment scene is heating up and that trend will continue.

2. Engineered Systems
The industry is moving toward purpose-built appliances that are optimized across the entire stack. Oracle calls these "engineered systems" and the first two examples are Exadata and Exalogic, but there are other examples from other vendors. These are particularly important to the retail industry because of the volume of data that must be processed. There should be continued adoption in 2011.

Oracle reports that Exadata is its fasting growing product, and at the recent OpenWorld it announced the SuperCluster and Exalytics products, both continuing the engineered systems trend. SAP’s HANA continues to receive attention, and IBM also seems to be moving in this direction.

3. Social Analytics
There are lots of tools that provide insight into how a brand is perceived across popular internet sites, but as far as I know, these tools are not industry specific. The next step needs to mine the data and determine how it should influence retail operations. The data needs to help retailers determine how they create promotions, which products to stock, and how to keep consumers engaged. Social data alone does not provide the answers, but its one more data point that will help retailers make better decisions. Look for some vendor consolidation to help make this happen.

In March, Salesforce.com acquired leading social monitoring vendor Radian6 and followed up with acquisitions of Heroku and Model Metrics. The notion of Social CRM seems to be going more mainstream now.

4. 2-D Barcodes
Look for more QRCodes on shelf-tags, in newspaper circulars, and on billboards. It's a great portal from the physical world into the digital one that buys us time until augmented reality matures further. Nobody wants to type "www", backslash, and ".com" on their phones.

QRCodes are everywhere. ‘Nuff said.

5. In the words of Microsoft, "To the Cloud!"
My favorite "cloud application" is Evernote. If you take notes on your work laptop, you will inevitably need those notes on your home PC. And if you manage to solve that problem, you'll need to access them from your mobile phone. Evernote stores your notes in the cloud and provides easy ways to access them. Being able to access a service from anywhere and not having to worry about backups, upgrades, etc. is great. Retailers will start to rely on cloud services, both public and private, in the coming year.

There were no shortage of announcements in this area: Amazon’s cloud-based Kindle Fire, Apple’s iCloud, Oracle’s Public Cloud, etc. I saw an interesting presentation showing how BevMo moved their systems to the cloud.  Seems like retailers are starting to consider the cloud for specific uses.

6. F-CommerceTop of Form

Move over "E" and "M" so we can introduce "F-Commerce," which should go mainstream in 2011. Already several retailers have created small stores on Facebook, and it won't be long before Facebook becomes a full-fledged channel in the omni-channel world of retail. The battle between Facebook and Google will heat up over retail, where both stand to make lots of money.

JCPenney and ASOS both put their entire catalogs on Facebook, and lots of other retailers have connected Facebook to their e-commerce site. I still think selling from the newsfeed is the best approach, and several retailers are trying that approach as well. I just don’t see Google+ as a threat to Facebook, so I think that battle is over.  I called 2011 The Year of F-Commerce, and that was probably accurate.

Its good to look back at predictions, but we also have to think about what was missed.  I didn't see Amazon entering the tablet business with such a splash, although in hindsight it was obvious. Nor did I think HP would fall so far so fast.  Look for my 2012 predictions coming soon.

Monday Aug 15, 2011

Emerging Technology and Retail

Gartner recently released their 2011 Hype Cycle for Emerging Technology, and there are several items that impact the retail industry, many of which we've been studying carefully. The hype-cycle diagram is below, and for those that haven't seen one of these, technologies start on the left and move toward the right as they mature.

Source:  Gartner, “Hype Cycle for Emerging Technologies, 2011,” July 28, 2011

I have a few comments to make, starting with the mainstream and moving back towards the triggers.

Location Aware Apps- Foursquare and the like are pretty commonplace now days, and I believe there must be some consolidation coming.  We can't expect consumers to use multiple check-in apps, so I'm betting that Facebook will emerge as the winner with ShopKick sticking around as well.  Apps that find products in nearby stores will also flourish.

Predictive Analytics- Predicting demand is key to running a profitable business, so this is pretty mainstream with tier-1 retailers now.  Adding data sources like social networks to better predict trends should be coming soon.

Biometric Authentication- We added biometric authentication to our POS, but we haven't seen much interest from retailers.  I would guess not having to worry about passwords would be a big cost savings over the long run.

QR Codes- We added the printing of QR Codes on shelf-labels so consumers armed with smartphones can access detailed information.  This seems to be catching on with consumers, and I'm seeing QR Codes everywhere.

Consumerization- As I understand it, this trend means technology gets adopted at home first then makes its way into the business environment.  That's certainly what happened with the iPhone and iPad, Facebook and Twitter, and many Web 2.0 technologies.  These types of technologies will continue to follow young employees into retail stores.

Mesh Networks- RFID buzz died off for a while but seems to be making a comeback.  We've had several retailers express renewed interest in tightening their supply chain using tags that are getting cheaper.

In-Memory Database- Over the past three years we've seen the rise of engineered systems where the software and hardware are engineered to work together yielding better performance.  Memory continues to be cheap, so moving as much data into faster memory makes perfect sense.  In addition to Exadata, look for more on this topic from Oracle in the near future.  Open World is just around the corner.

Cloud Computing- I'm a big fan of utility computing regardless of where the resources are located (private, public, hybrid), which is why I really like Amazon's EC2.  But I'm just not sure retailers are ready to give up so much control.  After all, it only takes one hiccup on Black Friday to ruin a year.

Augmented Reality- The software libraries to support augmented reality apps are finally maturing, so we've started exploring uses in retail.  Get ready to think of advertising and reporting in new ways.

NFC Payment- The technology has been ready for years, but until recently there haven't been big sponsors.  Now we have Google and Isis with competing approaches.  This will take-off, but it will take a while for all stores to be retrofitted with readers.

Social Analytics-  I keep hearing that social for retail is overblown, but I truly believe it should be part of any retailers marketing activities.  Yes the ROI isn't very clear, but since when has marketing had a clear ROI?

Gamification- People are competitive so using games to drive behavior is a natural fit, especially for the younger generation that is never far from an XBox, Wii, PS3, or DS.  Look for more retail tie-ins with games from Zynga.

Big Data- I'm surprised this wasn't placed further along on the chart as I believe the technology is pretty mature, with several competing platforms.  The key is to make Big Data and traditional database systems work together.  This is how retailers will move from segments to individuals and achieve one-to-one marketing.

Video Analytics- As bandwidth and storage continue to get cheaper, video becomes more accessible to retailers.  There's so much information we can gleam from customers by watching how they shop.  Look for interesting combinations of video and location-based applications.

Overall, I believe the major emerging technologies are well represented on the chart.  I can't think of anything that's missing, can you?

Tuesday May 24, 2011

News Feed Optimization

Although the term "news feed optimization" has been around since 2007, I didn't realize its importance until talking with Wade Gerten of 8th Bridge.  Getting people to Like your brand is only the first step.  Next the brand must leverage that relationship, typically via the news feed.  But without some work, those fans will never see what's posted in their news feed.  That's where news feed optimization comes in.  NFO is to Facebook as SEO is to Google.  

You'll notice at the top of your Facebook page there are two choices for your news feed: Top News and Most Recent, with Top News being the default.  Facebook uses a secret ranking system, called EdgeRank, to determine which stories belong in your Top News, and of course many people have attempted to reserve engineer the algorithm.

While the exact algorithm is not known, Facebook has shared the basics of EdgeRank, the algorithm behind Top News.  For any story, there are three things that determine its score: affinity, weight, and recency.  The affinity is based on the closeness of the reader and the poster.  Every time you like or comment on an item, that increases your affinity with that item and/or person.  So if you comment on Bob's postings a lot, Bob's postings will score higher and be more likely to show on your news feed.

Posting types are weighted differently based on their level of engagement.  Photos tend to be weighted higher than shared links or status updates because they have a higher engagement.  Ever wonder why Coke posts tons of images?  Things that have more comments are weighted higher than things with lots of Likes.  It takes more time to read a comment, and thus the engagement level is higher.

Of course no one wants a stale news feed, so as postings age their rank decreases.  But something that has very high engagement may linger on your news feed as people continue to comment, for example.

Just as retailers have learned how to manipulate PageRank to move up in Google search, they need to also think about EdgeRank so their social media efforts in Facebook pay off.  That means using more images, getting fans to engage with comments and not just Likes, and keeping the posting fresh and relevant.

Monday May 16, 2011

Social Blueprint for Retail

The Association for Retail Technology Standards (ARTS), a division of the NRF, has three primary objectives for helping retailers: build standards, produce RFP templates, and educate.  Lately I've been focused on the education aspects, helping with the SOA Blueprint, Mobile Blueprint, and Cloud Computing whitepapers.  Our next endeavor will be a whitepaper that discusses the use of social media in retail.

This will be an interesting project since social media is relatively young and fluid.  In my discussions with retailers, most generally understand the value of mobile right away, but the jury is still out on social.  Therefore, this paper will focus on classifying the different types of social media campaigns and programs, examples specific to retail, and advice on ways to get started.  Regular readers of this blog know there are many interesting examples, and retailers will benefit from having them easily accessible in a single document.

Unlike the NRF Mobile Blueprint, this project is sponsored by ARTS and therefore requires ARTS membership.  Big names like IBM, SAP, Oracle, and Pier 1 Imports are already signed-on along with others to create a healthy mix of vendors and retailers.  If you are interested in joining ARTS and participating on the sub-committee, please contact Richard Mader (maderr@nrf.com).  There will be several conference calls leading up to our next face-to-face in Minneapolis, July 25-27.

Tuesday Apr 19, 2011

@WalmartLabs

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Thursday Feb 17, 2011

Can you Trust Search?

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David Dorf, Sr Director Technology Strategy for Oracle Retail, shares news and ideas about the retail industry with a focus on innovation and emerging technologies.


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