Strength of Small Businesses
How to Benefit from Big Data
The news last week that the U.S. economy added 230,000 jobs in April says a lot about the strength of small business, since about half of all American workers own or are employed by a small business according to the Small Business Association (SBA). But in retail — which is 97 percent small businesses, according to the National Retail Federation — competition and margins remain as tight as ever. To grow their numbers these days, small apparel businesses might want to start thinking big — as in big data.
"Start simple and leverage existing data that you have at your disposal to make data driven decisions that will help fuel the growth of your business."
-Nico du Plessis,
Senior Consultant, FitForCommerce
Big data is no longer the purview of big companies. Small retailers can grow faster and more easily through knowing things like when and which customers best respond to email blasts, the most effective social platform to mention a sale, the right times to have extra staff on hand, or which sizes sell best in different locations.
The strength of small or independent stores and brands was the focus last Friday at the National Small Business Week’s 2015 Awards Ceremony at the White House. Jeff Zients, assistant to the President and director of the National Economic Council, characterized small businesses as the lifeblood of the U.S. economy.
“They create two out of every three new jobs, so the majority of new jobs are created by small businesses,” he said, adding, “They drive innovation and job creation.”
In fact, since 1990, small businesses have created 8 million jobs, according to the SBA. But every business can use help staying competitive and this is where data comes in.
Shelley E. Kohan, vice president of retail consulting at RetailNext, says small firms should look at it as a critical tool, wherein even modest programs are significant.
“Customers expect a loyalty program. But you don’t have to have the infrastructure to set that up on your own — a lot of businesses can do it for you inexpensively,” Kohan says. “Then companies like RetailNext can take information gleaned from a loyalty program and guide the store with data that includes a customer’s repeat visits and sales conversions on in-store opt-in messaging. Also, stores can measure how many people walk by their storefront and how many come in. If they change their window and the capture rate jumps, that’s measurable — and doesn’t cost a lot.”
Little tweaks can make big differences in where consumers shop. On average, consumers spend about $70 on clothes each month, according to Cotton Incorporated’s Lifestyle Monitor™ Survey. Men spend more than women ($80 versus $64), and those making $75,000+ spend far more ($106), especially compared to those earning less than $50,000 ($44.)
Of course, a store or brand’s web store can provide a rich source of measurable data. Today, on average, consumers shop for apparel in-store twice per month and once per month online, the Monitor™ statistics show. They spend about 100 minutes clothes shopping both online and in-store. Although men ultimately spend more, women spend significantly longer amounts of time than men shopping for clothes both in-store (100 minutes versus 85) and online (105 minutes versus 94).
Also, more than 2 in 3 consumers say they write product reviews for clothing (68%), with nearly half of those consumers saying they write reviews for products they are both satisfied and unsatisfied with (47%).
While the data can provide even a mom-and-pop store valuable information, some people still take on the “Moneyball” attitude, wherein they prefer to “go with their gut,” than take guidance from cold numbers. Then there’s the set that are just number averse.
Nico du Plessis, senior consultant at digital retail consultancy FitForCommerce, says small or independent firms shouldn’t be afraid of what data can do to help them.
“Don’t let big data overwhelm you to the point that you are not using any data at all in your decision making,” du Plessis states. “Start simple and leverage existing data that you have at your disposal to make data driven decisions that will help fuel the growth of your business.”
He advises small businesses start with basic segmentation through email campaigns and divide customers based on demographics, lapsed customers, types of buyers, high value customers, etc.
“When you are ready to take the first steps towards personalization, start with your home page and product detail pages, and leverage data from purchasing and browsing behavior to present personalized content and product recommendations,” du Plessis says.
Apparel sales rose a modest 1.2 percent last month according to the U.S. Census Bureau. But most consumers (53%) still “love or enjoy” clothes shopping, according to the Monitor™ data. And it remains their top item of choice to shop for (31%), beating groceries (28%), electronics (21%), and shoes (8%).
Retailers need to identify what, when, and how their shoppers want their products and big data can help them identify that.
Likeable Local’s Meg Riedinger, chief of staff, says big data really allows businesses to make smarter business decisions.
“When you have the right tools in place to track your KPI’s (key performance indicators), data doesn’t need to be difficult or scary,” she says. “Being able to track who visits your website, what they look at, how long they stay, or which blog post drove conversions should be invaluable to a business owner.”
Likeable Local offers analytics for a business’s social media presence. It breaks the analytics up into three categories: looks, likes, and leads.
“Looks indicate social impressions — who is looking at your page,” Riedinger explains. “Likes indicate who is interacting and engaging with your content. Leads indicate the referrals your business has driven through our social advertising. Understanding who you’re reaching and who’s looking at you on social media will help dictate your messaging and strategy.”
Kohan says any business small or large needs to start their data journey by figuring out which questions they want answered. “Whether it’s about employees, sales or online activity, they need to zero in on that and then see what technology can address their needs.”
And small business shouldn’t worry about adopting the sophisticated platforms larger retailers and manufacturers use, du Plessis says.
“Small businesses should take a crawl, walk, and run approach.”