Too Big to Ignore

CHAPTER 8

Looking Forward: The Future of Big Data

Without Big Data, you are blind and deaf and in the middle of a freeway.

—Geoffrey Moore

For some time now, retail giant Target has taken data mining and Big Data very seriously. Forget the fact that most retailers have had to operate at relatively low margins. For instance, supermarkets historically have been volume businesses. They make profits of approximately three cents on the dollar.1 Adding salt to the wound, retailers like Best Buy, Walmart, and Target these days face an entirely new problem. Connected consumers are visiting traditional retail stores, looking at products, whipping out their smartphones, finding the same products online for lower prices at sites like Amazon.com, and ordering them right in the stores. This process has been termed showrooming2 and it represents a herculean challenge for big-box retailers, especially if the purchase takes place in a state in which Amazon need not pay sales tax. Best Buy management sees the writing on the wall. The company may soon go the way of Tower Records and Blockbuster Video.

Faced with few options, Best Buy announced on October 15, 2012 that it would match Amazon’s prices in its physical stores.3 Whether this will work is anyone’s guess, but competing against Amazon on the basis of price has historically been an exercise in futility. Amazon CEO Jeff Bezos understands the concept of a loss leader and has said repeatedly that he is comfortable operating at “very low margins.” ...