It’s time to identify where retail analytics can deliver specific, practical benefits to the bottom line and strengthen competitive position. This new report cuts through the vastness of big data's potential and shows how the opportunities stack up based on the results of our recent survey.

1. We help organizations find growth opportunities as traditional and digital food retail converge.
BRICK MEETS CLICK
BIG DATA UPDATE, 4Q 2014
CLEAR DIRECTION ON
USING BIG DATA TO SOLVE
RETAIL PROBLEMS
A look at impact vs. effort

2. ©2014 brick meets click BIG DATA update 2
3 Clear Direction on Solving Retail Problems with Big Data
4 A Look at Impact vs. Effort
5 Top-tier Opportunities and Action Plans
1 Increase spending by your best customers
2 Identify profitable items to promote
3 Refine assortment to drive higher store sales
4 Reduce out-of-stocks on promoted products
9 Second-tier Opportunities and Action Plans
1 Decrease best-customer churn
2 Localize assortment and pricing
11 Third-tier Opportunities and Action Plans
1 Attract new customers who look like your best customers
2 Increase sales per square foot with customer tracking
3 Evaluate competition using social media sentiment.
14 Conclusion: Where do we go from here?
15 Contact Information
CONTENTS
PAGE

3. ©2014 brick meets click BIG DATA update 3
Introduction: Clear Direction
on Solving Retail Problems
with Big Data
Discussions about Big Data and retail often bog down in the vastness of its potential,
leaving retailers with only the vaguest guidance as they try to figure out where and how
to invest in this powerful tool.
Today’s retailers need clear direction on where they can focus to generate the greatest
benefit for the effort expended. For this reason, Brick Meets Click decided to take its
fourth Big Data survey in a practical direction and ask:
WHICH SPECIFIC RETAIL PROBLEMS/CHALLENGES
CAN BIG DATA HELP TO SOLVE TODAY?
To start, we asked a panel of retailing experts to help us identify 12 specific opportunities
for solving retail problems with big data (see the list at right). Then we surveyed a
much larger group of nearly 150 professionals to evaluate those opportunities on two
dimensions:
HOW BIG IS THEIR IMPACT ON THE BUSINESS?
HOW DIFFICULT ARE THEY TO EXECUTE?
The goal of this report is to prioritize big data opportunities by showing which ones have
the greatest near-term potential, which take more effort but may be worth considering,
and which are perceived as hardest to execute today and least certain to produce results.
CUSTOMER
OPPORTUNITIES
1. INCREASE SPENDING BY
YOUR BEST SHOPPERS
2. DECREASE BEST-CUSTOMER CHURN
3. STRENGTHEN OFFERS FOR
UNDER-DEVELOPED SHOPPING OCCASIONS
4. ATTRACT NEW CUSTOMERS WHO
“LOOK LIKE” YOUR BEST CUSTOMERS
5. IMPROVE PROFITABILITY OF
PRICE-SENSITIVE CUSTOMERS
6. EVALUATE COMPETITION USING
SOCIAL MEDIA SENTIMENT
MERCHANDISING
OPPORTUNITIES
7. IDENTIFY PROFITABLE ITEMS TO PROMOTE
8. REDUCE OUT-OF-STOCKS ON
PROMOTED ITEMS
9. REFINE ASSORTMENT TO DRIVE
HIGHER STORE SALES
10. LOCALIZE ASSORTMENT AND PRICING
11. DRIVE SALES BY OPTIMIZING STAFFING
IN SERVICE DEPARTMENTS
12. INCREASE SALES PER SQUARE FOOT
WITH CUSTOMER TRACKING

4. ©2014 brick meets click BIG DATA update 4
REDUCE OUT-OF-STOCKS
ON PROMOTED ITEMS
DRIVE SALES BY OPTIMIZING
STAFFING IN SERVICE DEPARTMENTS*
IMPROVE PROFITABILITY OF
PRICE-SENSITIVE CUSTOMERS*
INCREASE SALES PER SQUARE FOOT
WITH CUSTOMER TRACKING
EVALUATE COMPETITION USING
SOCIAL MEDIA SENTIMENT
IDENTIFY PROFITABLE ITEMS
TO PROMOTE
INCREASE SPENDING BY YOU
BEST SHOPPERS
REFINE ASSORTMENT TO DRIVE
HIGHER STORE SALES
DECREASE BEST CUSTOMER CHURN
LOCALIZE ASSORTMENT AND PRICING
STRENGTHENED OFFERS
FOR UNDERDEVELOPED
SHOPPING OCCASIONS*
ATTRACT NEW CUSTOMERS WHO
LOOK LIKE” YOUR BEST CUSTOMERS
BUSINESS IMPACT
BIG DATA AND RETAIL SCORECARD
LOWER HIGHER
EFFORT EASIER HARDER “
SECOND-TIER
THIRD-TIER
TOP-TIER
A Look at Impact vs. Effort
How much reward for how much effort? This is a crucial question for all managers and
business owners. The chart below shows the varying levels of business impact and effort
that respondents assigned to the 12 areas surveyed. We take a closer look at 9 of them in
the following pages. The remaining three (marked with asterisks) didn’t generate enough
meaningful information to take a deeper dive.

5. ©2014 brick meets click BIG DATA update 5
Increase spending by your
best customers
PROBLEM
How do you persuade your best customers to spend even more with you?
OPPORTUNITY
To identify your top shoppers and segment them by type: those who shop with you by
choice, and those who shop with you by necessity.
ACTION
Appeal more effectively to each segment with different offers.
• For those who choose to shop with you, building on their positive attitudes is a
proven way to increase spend.
• For those who shop with you out of necessity, offer additional tangible incentives.
HIGHER IMPACT,
EASIER TO DO
TOP-TIER
OPPORTUNITIES
SURVEY PARTICIPANTS IDENTIFIED THESE OPPORTUNITIES AS HAVING
HIGHER BUSINESS IMPACT AND BEING RELATIVELY EASIER TO EXECUTE.
Top-tier Opportunities
and Action Plans
1

6. ©2014 brick meets click BIG DATA update 6
Identify profitable items
to promote
PROBLEM
Today, most promoted products don’t grow category sales or store profits; and unless
they attract profitable new traffic, they actually lower the store’s performance.
OPPORTUNITY
To identify which promotions make positive contributions to store performance by
analyzing item and category sales and gross profit dollars over a long period of time
for all promoted items (from main features to TPRs).
ACTION
Build a list of “most-profitable promotion items” for the chain and for advertising zones
where it’s possible to offer a unique ad. Increase the percentage of items from this list
that are promoted each week.
2
HIGHER IMPACT,
EASIER TO DO
TOP-TIER
OPPORTUNITIES

7. ©2014 brick meets click BIG DATA update 7
Refine assortment to drive
higher store sales
PROBLEM
Most store assortments don’t reflect current customer purchasing/desires, because
of the time and labor required to evaluate item sales, convert the information into new
plan-o-grams, and then rearrange the shelves.
OPPORTUNITY
To identify which items are selling at a significantly different rate than suggested by the
real estate they occupy in the plan-o-gram. Which items deviate most ( positively or
negatively) from expectations?
ACTION
Reallocate space to faster selling items when:
• The increase in facings for new items and fast-movers roughly matches the decrease
in facings for slow-movers.
• The reduction in facings for slow-moving items is large enough to justify the effort.
3
HIGHER IMPACT,
EASIER TO DO
TOP-TIER
OPPORTUNITIES

8. ©2014 brick meets click BIG DATA update 8
Reduce out-of-stocks on
promoted products
PROBLEM
Studies indicate that promoted products often have twice the level of out-of-stocks
compared to regularly priced products — up to 15% of sales — creating a significant loss
of sales for the store and a disappointing experience for shoppers.
OPPORTUNITY
Analyze the accuracy of the promotion forecast by tracking sales for the first hours or
day of a promotion to see if sales for each product match the forecast (either in total
or by store).
ACTION
Adjust and refine the forecast based on the analysis, and identify and fix/correct supply
chain issues that can cause products to be unavailable even when they’re in the store
(like poor positioning of inventory that’s supposed to support the promotion).
4
LOWER IMPACT,
EASIER TO DO
TOP-TIER
OPPORTUNITIES

9. ©2014 brick meets click BIG DATA update 9
Decrease best-customer churn
PROBLEM
Customer turnover is a fact of life, but can you manage it more effectively? By the time
you make offers to shoppers who’ve already left you, it’s usually too late.
OPPORTUNITY
To analyze your best customers’ spending patterns so you can identify whether declines
are due to changes in life stage (children leaving home, for instance) or spending at
another retailer. Segment your best customers by life stage so you can anticipate how
their spending is likely to shift over time.
ACTION
Address specific customer declines in spending when they are detected.
• Talk with the shopper to learn why their behavior is changing and what you can do
to win the business back or to address their changing needs.
• Develop a list of actions proven to win back lost sales for different sets of needs
uncovered in the conversation.
TWO MEDIUM-DIFFICULTY OPPORTUNITIES WERE ALSO JUDGED TO HAVE
RELATIVELY HIGH POTENTIAL BUSINESS IMPACT.
Second-tier Opportunities
and Action Plans
1
HIGHER IMPACT,
MEDIUM DIFFICULTY
SECOND-TIER
OPPORTUNITIES

10. ©2014 brick meets click BIG DATA update 10
Localize assortment and pricing
PROBLEM
Even when assortment and price differ by geographic zone or cluster, there’s a good
chance that each store’s offering can be improved to better serve the needs of shoppers
in that trade area.
OPPORTUNITY
To identify categories where local store sales penetration is significantly higher or lower
than chain averages. Compare this with competitive price and assortment data from the
area to identify changes that can improve performance.
ACTION
Visit each store to investigate and evaluate the under- and over-performing categories
and plan adjustments accordingly.
• If underperforming categories aren’t being merchandised well or properly,
fix the problems.
• Find out more about what’s driving over-performers and make sure they have
enough inventory to avoid out-of-stocks.
• Adjust the offering to better match local sales trends.
2
HIGHER IMPACT,
MEDIUM DIFFICULTY
SECOND-TIER
OPPORTUNITIES

11. ©2014 brick meets click BIG DATA update 11
Attract new customers who
“look like” your best customers
PROBLEM
Most retailers don’t have a data-driven process for customer acquisition. This puts them
at a disadvantage vs. online retailers and others with direct marketing capabilities.
OPPORTUNITY
With all the data now available on households located around every store, it’s beginning
to be possible to identify individual households who “look like” they could find your
store appealing, and to use that data to develop and implement customer acquisition
strategies that increase store sales and have a measurable ROI.
ACTION
Identify a set of stores where the trade area includes a solid base of customers that
“look like” your customers, and work with a provider of geodemographic and lifestyle
data to develop and test a targeted customer acquisition strategy.
SEVERAL AREAS ARE JUDGED MORE DIFFICULT TO EXECUTE. THEIR BENEFITS
ARE ALSO LESS CERTAIN TODAY, BUT WITH ADDITIONAL DISCOVERY AND
WORK, THEY HAVE THE POTENTIAL TO OPEN EXCITING OPPORTUNITIES TO
IMPROVE RETAIL PERFORMANCE.
Third-tier Opportunities
and Action Plans
1
HIGHER IMPACT,
MOST CHALLENGING
THIRD-TIER
OPPORTUNITIES

12. ©2014 brick meets click BIG DATA update 12
$ $
2Increase sales per square foot
with customer tracking
PROBLEM
Retailers are watching sales-per-square-foot decline, but few tools are a capable of
systematically measuring improvements in merchandising effectiveness. Translating
customer tracking insights into useful actions is difficult.
OPPORTUNITY
To convert the information that’s available to every retailer from POS and tracking
systems into a measure of merchandising effectiveness in the aisle. John Crimmins
of RetailNext, one of the experts we consulted early in the project, shared his formula.
(Develop each metric on a time basis, per hour or per day.)
Sales per shopper = (# of items purchased / # of shoppers) X (Sales / # of items purchased)
ACTION
Identify a set of stores where you know that sales lag in some aisles or sections even
though there’s adequate traffic. Then apply this method to:
• Establish baseline sales per shopper.
• Measure sales per shopper after merchandising changes to see if they’ve improved.
HIGHER IMPACT,
MOST CHALLENGING
THIRD-TIER
OPPORTUNITIES

13. ©2014 brick meets click BIG DATA update 13
Evaluate competition using
social media sentiment.
PROBLEM
Every retailer wants to better understand the strengths and vulnerabilities of their
competition. Now social media is creating a wealth of commentary about shopping
experiences. These have the potential to increase the speed and depth of learning
dramatically.
OPPORTUNITY
To analyze social media sentiment to identify and exploit the vulnerabilities of your
competition and to minimize your own vulnerabilities. A number of service providers
now track and store tremendous amounts of social media content.
ACTION
Begin now to evaluate suppliers who track and store social media content, and who
have “cracked the code” in generating solid insights and useful information from it.
3
HIGHER IMPACT,
MOST CHALLENGING
THIRD-TIER
OPPORTUNITIES

14. ©2014 brick meets click BIG DATA update 14
Where do we go from here?
It’s time to stop being int imidated by the “big” in “big data” and focus on using
it to improve business performance. To build confidence in t he new analytic tools,
concentrate first on immediate opportunities to solve problems that you know
will have a significant impact on sales and pr ofit. Then you can move on to mor e
complicated applications.
As retailers evaluate how these opportunities relate to current business practices,
they should also make a number of ad justments to prepare for taking advantage of
“new” data opportunities.
• Start seeking out partnerships with data service pr oviders. Learn about their
capabilities and how those capabilities can support your business strategy.
• Begin to build your own organizational capabilities. Add more analytical
capability to your team and identify the people in your organization who have
analytical skills and talents and bring t hem into the process.
• Shorten the time needed to implement change and captur e the benefits from
that change. This may require changing the existing culture, and/or putting new
capabilities in place either within the organization or outsourced to a partner.
• Adopt a test-and-learn approach to innovation so you can move fr om insight to
action more quickly. Copy and learn from successful innovators. Adopt a fact-driven
approach to decision making.
CONCLUSION

15. ©2014 brick meets click BIG DATA update 15
BRICK MEETS CLICK
We help organizations find growth opportunities as traditional and digital food
retail converge.
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Learn more about our research and how we can help you succeed.
CONTACT Steve Bishop
773-593-3836