Predictive Analytics: Aisle 3
(Posted by Guest Blogger, and ardent shopaholic, Ian Turvill.)
It's that time of year again, when we're supposed to make predictions about what the New Year will bring us. And apparently, I'm not alone in that belief, since Susan Reda, Executive Editor of The National Retail Federation's "Stores" magazine has compiled a list of seven things she predicts 2007 has "in store" for us.
Alongside greater use of mobile marketing technology, "fast fashion" (you'll have to read the article to see what that is - it's just too much to explain), greater emphasis on green issues, a difficult economy, and pressure on supermarket formats, she highlights two specific trends that appear to have direct relevance to our EDM blog.
First, Susan Reda says that demographics will assume greater power
"Immigration, aging Boomers and a host of other demographic shifts will be shaping and reshaping the retail landscape for years to come. Retailers who set their sights on micro-merchandising and micro-marketing will triumph; those who run with the herd may find themselves getting trampled."
Another win for Enterprise Decision Management, then! EDM's capability to find trends and to apply them at a highly granular level makes it ideally suited to address this particular challenge. If you know of any retailers who are not regular readers of this blog, I recommend pointing them here so that they are best equipped to deal with the challenges of 2007.
Separately, Susan emphasizes the impact of numerous new technologies on the retail industry, including business intelligence, RFID, contactless payment, and biometrics, as well as predictive analytics. I'm very surprised that Susan did not make more of an explicit link between between the issue of the demographics and the application of predictive analytics. However, she does quite aptly state:
"Retail success is about finding the sweet spot. Doing so requires business intelligence -- predictive analytics that allow you to distill key customer information from a sea of data, capture missed opportunities and smooth out sales anomalies."
Of course, I think James and I would probably extend that further and say that what is required is "actionable business intelligence" and the capacity to apply those insights as a core part of all transaction streams and customer interactions. Susan seems to conflate the ideas of BI and predictive analytics, and as regular readers of this blog all know, there are many reasons why BI and EDM are not the same thing. But we'll certainly accept Susan's point, nevertheless.
I predict that James and I will be blogging a whole lot more about the applications of Enterprise Decision Management in the retail industry the New Year. It seems to be an area that is ripe for some good ol' decision automation!