Published by MBA Skool Team, Published on March 13, 2014
Angela Ahrendts, the CEO of Burberry seemed relaxed on a busy day at London. Revamping the flagship store had finally paid off with delighted new customers flocking the store. Burberry, the luxury British fashion house was established in 1856 boasts some of the most innovative menswear, women's wear and has over 500 stores in over 50 countries. It also remains one of the most lauded fashion houses in adopting new technologies.
Fashion industry, for years had remained dynamic with higher and lower end players adopting different strategies to beat the market and sustain their market share. With the luxury fashion market relying on the brand equity by not cutting prices during recession, creating that differentiating factor for attracting and retaining customers became a challenge.
At such an era of cut throat competition, Ahrendts wanted to implement inferences from the interesting case of Grand bazaar in Istanbul where rug merchants employ big data analytics for business. Grand bazaar, existing since the Ottoman Empire, is 700 years old and has 400000 visitors each day. Their rug division is popular among tourists and is well known for high quality Turkish rugs. Turkish rug merchants impress customers by striking a conversation with them about their personal background and thereby gathering useful data about them. They had a microcosm of today's 'databases' and analysed the 'big data' to arrive at customer preferences. They had asked questions like "Welcome to Istanbul! Which hotel are you staying at?", "Which city are you from?" to assess the customer characteristics from the income level and the city they come from. According to the information gathered from historical data of customers having similar characteristics, they served new customers by showing the rugs that they most likely are to buy.
Burberry gave a thought to going the Istanbul way for impressing customers. Ahrendts wanted it to be a personal experience for customers while they walk in to the store. She arranged for a meeting with John Douglas, the chief technology officer at Burberry to come out with a solution to make Burberry the place where customers can get anything they want. They had an agenda of 12 months to come up with an innovative solution to beat the market.
After having discussion with different vendors and developers, a plan was finally set in place. At the end of 12 months, a program named Customer 360 was launched. Through Customer 360, every customer can digitally share their shopping preferences, experiences and likes. The whole of the program runs on SAP HANA platform which analyses data in real time. The information of a particular customer visiting the store can therefore be delivered to the employees' tablets in real time which creates a grand bazaar type of experience.
In addition, there also planned to add a RFID tag to every garment which will show the customer, a video of where and how the product was made. It also transmits data to the customer's file, which will show what type of garments the customer has tried on.
The employee at Burberry can therefore greet a customer by their name, show them garments based on their history of shopping, predictive analytics and posts on twitter and other social networks. It will be a digitally integrated showroom that surprises a customer who walks in.
Though it is true that this idea had changed the world of retail business model upside down, time would let us know the actual success rate of this model. The extent to which customers would enjoy the fact that their shopping trends are being noticed remains a question. Although the RFID tags give a personal touch through videos, the thought of their preferences being monitored may come across as being intimidating for some not-so tech savvy customers. On the other hand, for the early adopters of fashion trends, it well seems like a blessing to have Burberry find exactly what they want.
Real time application of Big-data in retail also gives some cues on improving e-marketing strategies and targeting the right product to the consumer. Using SAP HANA to create suggestions in real time can hugely improve the usage of predictive analytics and big data in the future. The implications for Business Suite customers migrating to SAP HANA are going to be huge in the near future, changing the face of retail.
(Source: 'Vendor Insight: In Brief SAP HANA for both transactional and analytic workloads – when does it make sense?' by Helena Schwenk, MWD advisors, January 2013)
This article has been authored by Kavea Madhanagopal and Abhishek Ramchandran from TAPMI
i. Burberry. (2013). Available: http://uk.burberry.com/. Last accessed 1 Dec 2013
ii. Forbes. (2013). Big Data At Work In The Grand Bazaar Of Istanbul.Available: http://www.forbes.com/sites/sap/2013/10/16/big-data-at-work-in-the-great-bazar-of-istanbul/. Last accessed 2 Dec 2013.
iii. Forbes. (2013). How Retailers Use Big Data To Spot Hot Shopping Trends. Available: http://www.forbes.com/sites/sap/2013/11/25/how-retailers-use-big-data-to-spot-hot-shopping-trends/. Last accessed 2 Dec 2013.
iv. Jay Liebowitz (2013). Big Data and Business Analytics. Florida: Auerbach Publishers Inc.
v. Reza Soudagar. (2013). Grand Bazaar of the Future in the Heart of London. Available: http://scn.sap.com/community/business-trends/blog/2013/10/22/grand-bazaar-of-the-future-in-the-heart-of-london. Last accessed 2 Dec 2013
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