SAP Report: Retailers must get to grips with Big Data in battle to retain customers

Demand from consumers for personalised service means increased pressure for IT to deliver at board level and make the right procurement decisions for long-term success

London,UKA report issued today by SAP (UK) Limited shows the UK retail sector at a crossroads, with 2012 a year of business-critical decisions which will have long term impact on future success. The report finds that customers are more demanding than ever with growing expectations for a personalised service and offers tailored directly for their needs. IT is crucial to delivering this and is firmly on the boardroom agenda.

Industry Insight Retail

However, the report also finds that retailers are compromising their IT investments for 2012 and failing to balance short term customer facing investment with essential long term, back office spend. In particular, retailers are failing to harness new technology to analyse and act upon customer data.

Key findings of the report include:

  • Over three quarters of retailers have seen customers become more responsive to offers, 75% have also reported a rise in demand for a more personalised service
  • Two thirds of retailers are under pressure to provide IT innovation that will improve customer retention and loyalty
  • Just under half of retailers surveyed admit to finding it difficult to turn customer data into insight
  • 7 out of 10 retail companies are more likely to invest in customer facing technology than back office during 2012
  • Just under two thirds (64%) feel under pressure to provide IT innovation to improve customer retention / loyalty

This independent industry report commissioned by SAP, examined plans for technology investment this year amongst 100 retail companies. It was found that Big Data is swamping the industry, with over half of the respondents admitting to having access to more data than they can actually act upon. In addition, 88% of companies surveyed claimed to experience problems gaining valuable insights from customer data.

Chris Osborne, Retail Industry Principal SAP UK and Ireland, said, “The real choice to be made isn’t between front of house or back-office; rather it’s about your business as a whole. What retailers should be striving to achieve is consistency and transparency across their business. Retailers need to get to grips with Big Data now in order to be able to cope with the deluge of data that is available, both on their business and their customers.”

Osborne continues; “The retail industry recognises the need to analyse data whilst improving customer service, but how to achieve that in harmony is clearly where there’s cause for confusion. By investing more heavily in customer facing technology, companies are opening themselves up even wider to receive more data which they are already struggling to utilise effectively.”

The Customer Revolution

Almost two-thirds (64%) of the retail companies surveyed say they are under increasing pressure to provide IT innovation that will improve both customer retention and loyalty. Retention, a buzz word of recent years, is the inevitable priority for companies unable to provide a service level that will satisfy customers. Add to this that over three quarters (78%) of respondents claimed that their customers have become more responsive to offers and 75% reported a rise in customer demand for a more personalised service over the past two years.

“This ‘reaction to action’ attitude is what’s driving a wedge between companies and their customers. We all know data is valuable, it’s why we have spent the past ten years working tirelessly to record as much of it as possible. But without using it, it loses us time, money and the ability to provide good customer service” said Osborne.

As evidenced by the fact that over a third (37%) of retail companies surveyed have seen customers become increasingly reluctant to provide information and just under half (49%) reported that their customers’ expectations for service improvements has been a direct impact of the increased availability of data.

“The more you fail to act on data, the more customers are likely to lose interest and look towards your competitors who are providing a more personalised service” said Osborne.

 Industry Insight – Retail

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All figures quoted are from the SAP Industry Focus Research Report. Methodology: The research, conducted by Loudhouse – an independent research consultancy based in London – is based on 200 telephone interviews with IT decision makers in companies with 250+ employees (100 in Retail, 100 in Finance). The survey took place during November/December 2011.

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