IDC Retail Insights report, “Business Strategy: Big Data and Analytics Lay the Foundation for Revenue Growth,” points to big data and analytics (BDA) as the foundation for revenue growth. The report cites the rise of a new paradigm – participatory commerce – where the sales model that allows shoppers to participate in the design, selection or funding of the products they purchase.
IDC predicts BDA will increase revenue growth through optimized pricing, and create new opportunities to improve assortments, new products, marketing, and other demand generators. Product intelligence creates new facets of market and competitive insight through price discovery in the near term, with broader reach into assortments, private labels, and management of private label and national brands. Within five years in the context of "give-to-get" shoppers, combined with forces like supply chain collaboration among retailers and brands, self-learning intelligent agents, and autonomous event-processing, product intelligence will lead to participatory commerce.
The report noted that in 2013, approximately 50 percent of retailers were aiming BDA at pricing strategies, market intelligence, and customer acquisition. More retailers will join their ranks over the next two to three years.
Price intelligence, a subset of product intelligence, is emerging as the initial set of capabilities aligned to support these BDA initiatives. Beyond discovering prices and supporting better pricing decisions, product intelligence sheds light on competitors' pricing strategies and tactics, assortments, localization, and channel strategies as well as on consumer decision making when combined with psychological techniques.
Price discovery gives retailers a countermeasure in the "spy versus spy" world of price transparency, providing them an analytical advantage but leaving consumers with the edge when comparing prices online in the context of their purchase journeys. Next-best-action analytics remain a seller's key tool against the consumer's contextual advantage.
Supported by price discovery, predictive analytics, and real-time ecommerce price management, IDC says high-speed algorithmic pricing will break constraints on price change cadences and create breakneck "channel chess" competition.
In the context of supply chain collaboration, give-to-get consumers, self-learning intelligent agents, and autonomous event-processing product intelligence will create opportunities for participatory commerce — marketplaces wherein transactions based on the buying, selling, and buying intentions of participating retailers, brands, and consumers will improve merchandise economics, returns on promotional spending, and customer satisfaction.
"In particular, one application of product intelligence, price discovery, gives retailers a countermeasure versus the 'spy versus spy' price transparency of retail today," said Greg Girard, program director at IDC Retail Insights. "Next-generation product intelligence in consumer decision making, competitor tactics, and market conditions will propel BDA-based revenue initiatives beyond pricing further into marketing, assortments, buying, and product development.”