The foundation of retailers’ competitive advantage in 2014 will be information and how they analyse it, according to IBM chief executive Ginni Rometty.
Speaking at the NRF conference in New York during Monday’s keynote session, Rometty claimed thinking strategically about big data “will determine the winners and losers” of the retail industry.
“Information will be your basis of competitive advantage,” she told the audience. “Value is shifting in business, thanks to the explosion of data, which is the world’s vast new natural resource. It is being fuelled by the infusion of technology into all processes, the proliferation of devices and changing expectations from digitally empowered customers and employees.”
Rometty said: “The value of this information is only going to flow to those who actually refine it. There’s going to be a culture of analytics in everything you do.”
While this shift towards data analysis is happening across all industries, it is especially pronounced in retail “where technological progress has amplified consumer engagement and influence in unprecedented ways”. Rometty said 80% of the world’s data has been created in the last two years.
“We’re going to enter a period where stores will be a valuable source of data. We’re going to see intelligence of online, combined with the tactile immediacy of being in-store,” she said.
It’s this big data that will have an enormous impact on retailers’ back office functions and supply chains, Rometty claimed. “It will now be about prediction, scale, real time and precision.”
For Rometty, retailers’ biggest challenge is the range of methods they use to analyse the data. “The hardest thing, but one that makes all the difference, is use of a range of analytics – descriptive, predictive and prescriptive,” she said.
Along with information, Rometty identified cloud computing as one of the principal sources of value for the retail industry.
Retailers who use hybrid clouds will benefit from “speed, agility, security and privacy”, she claimed.
“The placement of data and knowing where it is and what it’s doing will end up being critical. The average retail chain has 450 specialised applications that only run very infrequently but have to run - it’s highly inefficient,” she added.
She said the retail industry is facing a new cognitive era of computing.
“This era is the cognitive era – we’re going to see services and systems that learn, you don’t programme them,” she explained. “These systems are taught, learn by experience and interaction, and get smarter and better at time. It’s not a search engine, it will know the implication of a question and ask one back.”
Rometty closed with an assessment of just how big the impact evolving technology will have on the retail space. “This is not a new era of technology; this will be a new era of commerce,” she said.
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NRF: Big data will reshape retail, says IBM boss