Shopping Centers Today is the news magazine of the International Council of Shopping Centers (ICSC)
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trends Futures Laboratory cites is the increasing use of Big Data on the part of beauty brands to further personalize, target and communicate with consum- ers. The report notes beauty company ModiFace's new app, called Beautiful Me — which helps users select makeup, perfectly matched to their skin tone, through scanning some 500 Facebook photos — as an early example of the use of Big Data in cosmetic selection. To show how the phenomenon can also help influence brick-and-mortar de- cisions, the report describes the way e- commerce site Birchbox used customer predilection to design its first physical store: a 4,500-square-foot foot duplex in New York City. "We applied the in- sight and feedback from our hundreds of thousands of customers to better understand what makes them tick and create a customer-first, holistic offline shopping experience," said Birchbox co-founder Katia Beauchamp. What Futures Laboratory con- cluded, overall, is that random, nonana- lytical targeting of consumers no longer works. "Over the rest of this decade, the ability to read the runes in a torrent of data will separate the beauty winners from the brand also-rans," the firm said. Van Rijmenam was more blunt. "Retail- ers, in order to survive, will have to start adapting to this," he said. The idea of using Big Data to better target consumers has excited retailers and companies since the 1990s. Many large companies have long kept tabs on customers — tracking, for instance, any time someone has phoned the customer- service line or redeemed a coupon. The change today involves the amounts and types of data that retailers have access to. "The data sets from which we are trying to learn useful things has just exploded in terms of volume and di- versity," said Vasant Dhar, co-director of the Center for Business Analytics at New York University's Stern School of Business and editor in chief of the journal Big Data. Indeed, the amount of digital data being produced globally is doubling every two years, according to International Data Corp., a Fram- ingham, Mass.–based consulting firm. Meanwhile, the tools, mechanisms and analytics to decipher these reams of data have become more advanced, with large retailers banging down the doors of uni- versity math departments. "It's like an arms race to hire statisticians nowadays," former Amazon.com chief scientist An- dreas Weigend told The New York Times. Walmart was among the first retail- ers to start collecting reams of customer data. "Walmart was using big data even before the term Big Data became known in the industry," said van Rij menam. In 2011 WalmartLabs, the company's innovation lab and research- and-development center, launched Social Genome, a tool to help suggest purchases to customers. Social Genome arrives at these suggestions by combing through customers' social-media posts and collating that information with data it already has in-house. If a customer in New York City tweets that he is hungry and thirsty, the company uses a fast- processing system it calls Muppet to sift through its data collection and discover that this user may love pizza and beer — whereupon the retailer emails him cou- pons redeemable at a nearby store. Amazon is another famous user of Big Data. Whenever an Amazon cus- tomer looks online at a specific item, the company's computer platform auto- matically makes suggestions for similar items of possible interest, based on buy- ing patterns identified among other cus- tomers. Such recommendations have accounted for as much as 20 percent of Amazon's total sales, says Dhar. But this much discovery and revela- tion of personal information can cause trouble and may backfire. In 2012 New York Times reporter Charles Duhigg re- vealed that Target had created an algo- rithm which could, based on a woman's spending patterns, predict with a high degree of accuracy whether that customer was pregnant, and when she was due. Target sent related coupons and ads to all these customers — one of whom turned out to be a teenager in Minnesota whose family had not known she was pregnant. The story went viral, and privacy advo- cates, alarmed over the ways such infor- mation is being collected and used, made a target of Target. In January a law went into effect in California prohibiting on- line companies from compiling or using personal information about minors, and there are about 80 similar bills being con- sidered this year across 32 states, accord- ing to the Data Quality Campaign. But futurists argue that people are yearning for more personalized, targeted marketing, not less. Only people over age 50 care about protecting their privacy, the futurist Sanderson told ICSC's Eu- ropean Conference in April. "I'm a veg- etarian," he said. "In 10 years I've never bought a single meat item. Yet [the gro- cery store I shop in] still hasn't gotten the fact that I am not likely to be tempted by ham or sausage or salami, and is always sending me coupons for these things. It's annoying and makes me think they don't care to learn anything about me." Today most large-scale retail compa- nies are investing in Big Data collection and analytics in some way. But experts 36 S C T / J u l y 2 0 1 5 Futurists argue that people are yearning for more personalized, targeted marketing, not less. Only people over 50 care about privacy, one says.