Retailers worldwide are turning to service providers for tailored data analytics capabilities to gain an edge on competitors, according to a new research report published today by Information Services Group (ISG) (Nasdaq: III), a leading global technology research and advisory firm.
The 2024 ISG Provider Lens™ global Specialty Analytics Services report for the retail industry, the first in a series of three vertical industry analytics reports from ISG, finds that enterprises and providers are co-developing advanced analytics solutions to improve planning, execution, flexibility and responsiveness to customers and the market.
“Customization is crucial in retail analytics,” said Rajib Datta, partner at ISG. “Off-the-shelf platforms provide many common data capabilities, but retailers need to break away from the pack.”
As e-commerce technologies mature and proliferate, retailers are deriving more tangible benefits from the data generated by online marketing and shopping activities, ISG says. Advanced analytics tools tailored to the retail industry can reveal a customer’s preferences and past behavior, even predicting what they are looking for when they go to a company’s website or store. These insights are helping retailers personalize customer experiences, set prices and fine-tune the supply chain.
Companies are also teaming up with providers to optimize marketing and promotions, ISG says. With customized analytics tools, retailers use data on responses to loyalty programs and advertising to determine which social media platforms and other channels are most effective. This helps retailers find the right mix of channels, maximizing return on investment.
Retailers also are seeking providers with accelerators and pre-built AI and ML models to form the foundation for customized tools, the report says. Most companies favor providers that take an open IP approach, which lets the retailer retain ownership of the IP in the solution.
Providers and retailers are beginning to use generative AI (GenAI) for analytics in centers of excellence and proofs of concept, indicating the technology has strong potential in the field, the report says. Most of these applications are still employee-facing and focused on process efficiency, but several companies are deploying GenAI for customer-facing use cases and creating measurable value. These deployments use components including natural-language processing, computer vision and large language models (LLMs) to solve complex business problems.
“Retailers have learned the value of data and technology,” said Jan Erik Aase, partner and global leader, ISG Provider Lens Research. “Using digital innovation to make processes more efficient is a high priority.”
The report also explores other trends in retail analytics, including retailers’ growing interest in environmental, social and governance (ESG) performance and the rising importance of protecting customer data.
For more insights into retail challenges relevant to advanced analytics, including the difficulty of integrating siloed data and the limitations of off-the-shelf analytics platforms, along with ISG’s advice for addressing these issues, see the ISG Provider Lens™ Focal Points briefing here.
The 2024 ISG Provider Lens™ global Specialty Analytics Services report for the retail industry evaluates the capabilities of 18 providers in one quadrant: Retail.
The report names Fractal Analytics, HARMAN, MathCo, Tiger Analytics and Tredence as Leaders.
In addition, ZS Associates is named as a Rising Star, a company with a “promising portfolio” and “high future potential” by ISG’s definition.
A customized version of the report is available from Tredence.
The 2024 ISG Provider Lens™ global Specialty Analytics Services report for the retail industry is available to subscribers or for one-time purchase on this webpage.
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