Big Data in Brazil: Embracing analytics in the retail sector
It is no secret that the in-depth analysis of information can a key differentiator to any organisation. However, when the subject is the retail sector, capturing and managing structured or unstructured data can transform business strategies for the better and be a very valuable ally in meeting customer demand - and that could not be different in Brazil.
By creating profiles for each user or consumer through Big Data tools, brand offerings can be targeted to meet the specific needs of each client - and this is something crucial for retailers, since customer contact has become the a clear characteristic of successful retail companies.
Market research firm PSFK Labs released its annual report "The Future of Retail" last month, which outlined what retail heads globally should focus on during 2014. And one of the key considerations is omnichannel - a shopping experience that's seamless across the in-store, online and mobile channels. But this holy grail will only be achieved if Big Data techniques can be used to understand high volumes of customer information.
Brazil is sprinting ahead
How are Brazilian companies in the retail sector adapting to and taking advantage of the latest advancements in Big Data? According Alejandro Padron, the Latin America Retail Leader at IBM Global Business Services, who serves virtually every large retailer in Brazil, Chile and Mexico, local adoption is "a little behind" when compared to other large Latin American countries - but that is changing fast.
"Within Latin America, Chile would be a bit ahead of Brazil, as they have a more dynamic economy in general and a retail sector that is more active than in Brazil. But Brazilian companies are catching up. We have noticed a strong process of corporate modernization and transformation in retail, leveraged the growth of the internal market, which has grown significantly and is expected to grow more," says the consultant.
"These positive changes are bringing a lot of international trade to Brazil and that obviously makes Brazilian companies invest more aggressively in order to stay ahead of this global competition that is coming," he adds.
According to Padron, Brazilian companies have a natural advantage in rolling out new analytics tools, as these organizations only have one market to focus on, whereas multinationals often need to face the challenge of setting a Big Data strategy and implementing it in their home turf, to only then adapt them and roll them out in other countries.
But it is not all plain sailing for Brazilian retailers. The IBM consultant says that the local organizations are also facing a steep learning curve around the adoption of advanced data analytics.
"What you're seeing now is the evolution of companies from the top-down: the presidents of companies are concerned about how information technology and the actual information can be used to increase efficiency and also to draw strategic models that place them ahead of the competition," Padron says.
"This transformation involves changing the mindset of the executives at the top. Then, in the middle management, moving from that very operational format to forming a more forward-thinking kind of team. Technology is advancing fast and the people skills have to follow - but these things don't happen overnight," he points out.
Retail business managers must take charge
Adopting or improving Big Data should not be a technology project: if it is, there is a big change that it will fail, says Padron.
"I have a client here in Brazil, a CEO, who once told me, 'If I was to turn off my Big Data tools, I would stop selling.' That is because the systems tell him what products he is seeling to who and what are the customers he needs to offer discounts and so on - this is why he can't imagine his life without Big Data," the consultant says.
"And we have seen a lot of success whenever the business executive exposes the challenge he or she has to the organization, everyone thinks about the problem as a team, then it is the responsibility of the technology director to suggest a solution to the problem."
As a professional who has worked with line of business managers at several Brazilian retailers, Padron says that he has often come executives who get frustrated due to a mixture of uncertainty and inability to express expected outcomes.
When giving words of advice to any Brazilian business manager needs to take in order to lead an efficient Big Data strategy, Padron mentions that such initiatives require commitment.
"Because a Big Data strategy is something that is labor intensive, requires investment and takes time, there have been many cases where companies failed, the executive is unsure and will say something along the lines of: 'Can we buy something that is ready to use within a week? If so, I'll do it.' But that is obviously not possible, it is a journey," says Padron.
Steps to success
"Typically, the recommendations we give to retailers as consultants are: First of all, adopting a Big Data strategy is a journey of transformation, not a product you bought, like 'give me two pounds of Big Data'. You will have to buy software and equipment, but within a project. We analyze which stage your company is at based on a whole set of methodologies," the consultant adds.
These methodologies include a throrough investigation which includes variables such as which stage the company is in terms of Big Data usage in Brazil considering the competition, as well as the requirements of the organization and the desired level of complexity of the tools to be adopted.
"It all depends on the level of competition that you expect within your market. You do not have to be the best in the world if competitors are way behind the curve; you can be good enough," says Padron.
Once that decision is made, the next step is to analyze where the retailer is today and where it should be considering the evolution of its competitors in Brazilian retail. The organization would then put a plan together, first thinking about the organization's business objectives, evaluating the processes and only then checking what should be in place functionally in terms of the technology that should be deployed.
"It all starts with a few months of consulting work. From that point, you will deploy the applications and infrastructure needed. But don't go out buying things at random. It is important that you are clear about where you are today and where you would like to be, or should be considering your competitors and your market," says Padron.
"With this you will have a clearer target rather than that standard, vanilla answer of buying the best, most advanced system in the world and deploying it - that is not the answer. The answer is connected to your competitors, your market and your strategy: you may have to be the best in the world, or you can have something in between that will serve you well," he adds.
"But the most important element in this equation is people. For sure, you'll have to get more forward-thinking people with analytical skills on board, because you will have some fantastic tools that you will question and they will respond. To get to that stage, you will need to change your processes and deploy new technologies but above all, you will need to change people."
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