Power to the People: A Surprising Retail Shift in the Data-Driven Era

The following is the first in a series of articles recapping my retail-focused takeaways from the IBM Insight conference .

Retailers’ love affair with data-driven insight and action will continue to heat up as advances in behavioral analytics, cognitive computing, and external data integration promise to keep everything fresh and exciting. So enamored with data have retailers become that the human touch that, back in the day, drove everything from product buying to ad spends seemed to be going the way of the cash register (in the case of the latter, it arguably has). Technology and data mastery have also played a role in the recent run of layoff announcements from retailers including Whole Foods, Walmart and Target. The multi-layered merchandising structures that have traditionally powered retail will continue to collapse (or as I like to say, "the retail world is flat") because retailers can do more with fewer people. Against this backdrop, it was refreshing to hear several mentions of the need for balance, and even downright respect being given to imperfect people-based decision-making. 

In her presentation, Using Advanced Analytics Capabilities to Improve Merchandising Decisions, Holly Devine, Urban Outfitters’ executive director of planning, touted the company’s value around integrating art and science, stating that data will “inform, not dictate” its strategies. Urban Outfitters has a well-earned reputation for sniffing out and pouncing on the next big thing in experiential retail, and a people-powered gut instinct still fuels many of its contrarian decisions, including going deep into vinyl, even as others jumped on the digital bandwagon. According to Devine, Urban Outfitter’s primary identity is that of a lifestyle retailer, not an apparel retailer, giving it plenty of room to experiment widely and fail fast if individual tests fall flat. 

Kyle Wierenga, Costco’s manager of advanced analytics backed this sentiment when he spoke of the respect that the company maintains for its buyers and the merchandising instincts they have honed in their industry-defying tenures. If Costco were wielding data to run roughshod over its buyers, they surely wouldn’t have stuck around for, in some cases, more than 20 years on the job. According to Mr. Wierenga, Costco's investments in social analytics and other tools ensure that its buyers can focus on what they do best.

As invested as IBM is in seeing its cutting-edge cognitive solutions infiltrate major industries and companies big and small, its executives consistently promoted the possibilities to augment, not replace, human workforces in service-based businesses such as retail, hospitality, insurance, and healthcare. IBM’s Vice President of Watson, Stephen Gold, outlined the “five E’s” defining the company’s cognitive platform (engagement, expertise, experience, efficiency, and exploration), which collectively read like a modern recipe for retail success. The implications and applications for retailers are clear, particularly as their attention swings back to achieving bricks-based efficiencies in order to fulfill their digital aspirations. Retailers’ growing physical and digital scale is also adding unprecedented complexity to merchandising decisions, and most are attempting to address local opportunities at the same time. Buyers, marketers and operators are by no means obsolete, but they could certainly use some cognitive help to ensure that opportunities aren't left on the table. 

How will the balance between people-power and Big Data continue to shift? 

Check out my second article pivoting off of the Insight conference: Data's Right Brain: Calling all Storytellers.