Is Big Data really worth the hype?

by Deepak Sharma on Tuesday, February 26, 2013

Read this:

Wal-Mart Stores, struggling to translate its brick-and-mortar success to the Web, is using free software named after a stuffed elephant to help it gain an edge on in the $165.4 billion U.S. e-commerce market.

With its online sales less than a fifth of Amazon’s last year, Wal-Mart executives have turned to software called Hadoop that helps businesses quickly and cheaply sift through terabytes or even petabytes of Twitter posts, Facebook updates, and other so-called unstructured data. Hadoop, which is customizable and available free online, was created to analyze raw information better than traditional databases like those from Oracle.

“When the amount of data in the world increases at an exponential rate, analyzing that data and producing intelligence from it becomes very important,” says Anand Rajaraman, senior vice-president of global e-commerce at Wal-Mart and head of @WalmartLabs, the retailer’s division charged with improving its use of the Web.

And then read this story from yesterday:

Wal-Mart Expects Flat U.S. Sales This Quarter

Delayed tax refunds in large part contributed to the slow start of the fiscal year, Wal-Mart U.S. Chief Executive Bill Simon said. At this time last year, Wal-Mart had cashed $3 billion in tax-refund and refund-anticipation checks, he said. It has cashed just $1.7 billion this year.

Some of that tax money is typically spent around Super Bowl time for television sets. Now, the retailer doesn't know how the money will be spent, Mr. Simon said.

Isn’t that a classic problem to be solved using Big Data. I would have thought that with as easy problem statements as “What did our customers do when their tax refunds were delayed?” or “what did they do when they did not buy TVs around Super Bowl”, and with history as old as Walmart’s, it would be easy to figure out customer behavior.

Apparently it’s not.

Or is there more than what meets the eye?

Macy’s fighting with JCP over Martha Stewart

by Deepak Sharma on Monday, February 25, 2013

There is something about J.C. Penney mall-within-a-mall strategy that I am not able to see but something Macy’s CEO Terry Lundgren can do and he is really wary about the same.

Macy's CEO testifies in fight over Martha Stewart

Macy's Inc. and J.C. Penney Co. duke it out in court over the partnership with Martha Stewart Living Omnimedia. The trial, which began Wednesday, focuses on whether Macy's has the exclusive right to sell some of Martha Stewart branded products such as cookware, bedding and bath items.

In the home area, exclusivity is key. Lundgren testified on Monday that Macy's had built the Martha Stewart brand to be the biggest in its home business. Sales last year were up 8 percent, double the rate for the entire company.

Lundgren said Macy's has spent 40 percent of its overall marketing on the Martha Stewart brand and other labels in the home area, even though the home category represents 17 percent of total sales. That's because even though the home area is typically slow turning, it drives shoppers to the store.

"I need the Martha Stewart business to be exclusive," Lundgren said. "I don't have a substitute."

The more I think about it, the more it feels that what Ron is trying to build at JCP is a conglomeration of big, well known brands, something which will drive traffic to the store.

Mall-within-a-mall strategy of JCPenney

by Deepak Sharma on Sunday, February 24, 2013

Todd Ganos of Forbes writing about the new store format J.C. Penney is rolling out, the one of multiple stores within JCP store.

If one walks into most any big-name retailer – Macy’s, Nordstrom, etc. – you will typically find the beauty products on the entry level. Whether it is Chanel or Lancome or some other brand, each product maker is “showcased” at its own counter. It turns out that the retailer sub-lets the space to the product maker and the counter is actually staffed by an employee of the product maker, not the retailer. In essence, each of these beauty product counters is a store within a store.

As was mentioned above, the concept of a store within a store has been around for years. The difference for J.C. Penney is that Mr. Johnson is extending the concept to the entire range of products from clothing to bath to housewares. In doing so, one might argue that the retailer has become no more than an operator of real estate . . . simply sub-letting to others. In one sense, this is probably true. Alternatively, there might be a value-add in the way this is accomplished.

Todd cites two reasons why this would be successful, one - staging’s effect of the stores inside JCP on the customer’s experience and two - potential operational benefits as these stores are staffed by product makers themselves lowering overheads for JCP.

As Todd mentions, this is nothing new, we have seen this with the cosmetics counters and space dedicated to known designers. Where it gets confusing is that by doing this, JCP stands to lose its soul to the product makers it harvests. There is no single view of JCP, every product maker designs its store independently. The independently hired staff, if not trained on JCP's core values, speak differently leading to confused buyers. These re-arrangements while a sound strategy in some countries may fall short when it comes to depth of authentic JCP as we have known it.