The latest thinking on disruptive retail trends

‘Big Data’ is the buzz term and there is no doubt that retailers are awash with data. And the mountains that they are currently dealing with are only set to grow as retailers begin to grapple with information thrown off mobile devices and location-based applications.

Don't be drowned by data.

The big problem with big data is that the established retailers are not taking advantage of its potential value, whereas in contrast smaller start-ups are growing up within a data-rich culture and are gaining great insight from the information.

Ahead of chairing a session at the forthcoming WorldRetail Congress 2012 on ‘Learning from the new “retail-preneurs”’ Dharmash Mistry, partner at Balderton Capital and non-executive director at Dixons Retail, ran Retailinsider.com through his thinking on big data and other technology trends in the retail sector.

“Start-ups are using data well. But you need algorithms and Phd scientists to analyse it. It requires an investment in high capability mathematicians and I’m not sure [established] retailers have been willing to make that investment. But it is a big opportunity because great analysis will be a competitive advantage,” he says.

He cites the flash Sales sites such as Vente-privee.com, Gilte Groupe and Achica as undertaking lots of data analysis, which is leading to improved final conversion rates. This is enabling them to market to an individual and to then track at such a level of detail that they can reduce costs and improve overall productivity of their businesses.

“It [big data] comes with the requirements for talent but it’s needed if you believe in big data and personalisation. Start-ups are benefiting as they are beginning with a clean sheet of paper,” says Mistry whose business Balderton is one of the UK’s most influential early stage investors having done deals with the likes of LoveFilm, Betfair, Yoox Group, Achica, Worldstores, and The Hut Group.

Easy.

Mistry sees further potentially disruptive forces to the retail sector from the likes of direct-from-manufacturer businesses including Shoes of Prey – that enables customers to design their own unique footwear – Bathrooms.com, and in Germany Urbanara.

The secret of their success is that they are selling own label goods in categories where often “nobody really knows the brands in these categories, unlike in say fashion”.

What an increasing number of sites have been delivering as part of their models is a high level of editorial that is successfully blending media and retail. Particular examples include Net-A-Porter and Asos along with the flash Sale sites.

Whereas Mistry says magazines were the navigational tools that took customers towards purchases, the digital world has meant that there is now a very fine line between navigation and buying. And many online merchants are taking advantage of this blurring.

He also points to the growth in marketplaces – over and above eBay and Rakuten – where two trends are prevailing. Firstly, there is a ‘verticalising’ taking place with the emergence of the likes of Airbnb, which brings together apartment owners who have rooms for rental and travellers, and also the various car rental propositions that have sprung up.

Secondly, there is growth in the number of platforms giving small producers access to mass audiences, with examples including Tesco and Asos.

The other potentially revolutionary business that interests Mistry is Pinterest. “It’s a visual wish-list of products where the click through to purchase is high as people are pinning up products they want. It’s potentially more valuable [to retailers] than Facebook as it is curated by people you trust and who are your friends,” he suggests.