BUSINESS STRATEGY : "DATA", The wasted goldmine of Sri Lanka's Organised Retail

Based on an article written by Aubrey Joachim for DailyFT. Original article can be found at FT.LK / Columns 

Every large organisation has around 200 terabytes of internal data (one terabyte is 1,000 gigabytes). In addition every organisation has access to significant amounts of external data. 

Eighty per cent of data is unstructured or semi-structured. Blogs, tweets, Instagram pictures, human movements, etc. are all extremely valuable sources of data that are captured today by a plethora of digital-enabled devices such as sensors, point-of-sale scanners, digital cameras and the like. The proliferation of data in today’s world is a huge opportunity that organisations must exploit. Easier said than done!

This is the big challenge facing most organisations; firstly do they have the required data, and secondly do they know how to employ analytics to derive the insights that will help them gain a competitive advantage. 

Many organisations lack the ambition, sophistication and leadership to use big data. A recent study of Australian organisations indicated that 90% are lagging in their use of data to improve their bottom line. Fifty-six per cent of such organisations have the opportunity to improve their bottom lines by over 50%. It was only in less than 10% of organisations that data and analytics were integrated into all business decisions, including real-time information. If this is the Australian finding what then would be the Sri Lankan situation? 

"A recent study of Australian organisations indicated that 90% are lagging in their use of data to improve their bottom line.

 If this is the Australian finding what then would be the Sri Lankan situation?.." 

A cursory observation of Lankan organisations is sufficient to indicate that the opportunities exploiting big data and analytics are significant. Big data by itself does not deliver outcomes. Something must be done to the data in order to derive insight and generate value. Analytics is what enables data to produce insights. This is why one cannot talk of big data in isolation. Big data AND analytics is the combined formula for success.

Organised Retail - The Sea of Data 

Keells, Arpico, Cargills and everybody else in the organised retail sector has loyalty cards. They are popular as they entitle the holder for special discounts and points are added which can be redeemed. However, it seems that for the retailers, the card is only a means to get people to buy a few discounted items.

But what about the data it funnels into the system? Every-time a loyalty card is used, the retailers POS system (which is I am sure linked to the MIS) collects so much data about the customer;

1. Name, address, phone number is already in the system
2. What was bought is registered
3. Method of payment is registered
4. Probably the credit card / debit card number is recorded as well.

This basic analysis would show them;

1. How often does this person visit the store?
2. The value of an average purchase?
3. What are the frequently bought items?
4. Brand loyalty for each category? - same brand bought in every visit
5. Is the customer a value seeker regularly buying stuff on special discounts?

Even with this simple analysis, 

• The retailer can identify customers who buy a lot as they are really valuable and must be encouraged to visit often and keep them loyal.
• Send special offers for frequently bought categories. If a customer is a heavy buyer of milk power and other nutritional food items - it is a sign that there are children at home. Send them offers for the stuff they regularly buy and give them a chance to save money.
• If the data tells that a family has young kids, this insight could be used to send offers for other stuff that a family with young children needs. E.g. an offer for school stationary during back to the school season.
• Send reminders to by everyday items - If customers by milk, sugar and meats every weekend,  send them a reminder on Friday that they may need to buy milk and there are some offers for the weekend.

Sadly, no retailer seem to be doing this. Instead, they burn money printing glossy special offer categories that few people actually read. What a waste.

The data is already with you ladies and gentlemen - Invest on capability to analyse this data and use it!