Black Friday: An early present for data analysts

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Depending on one's perspective, last week's Black Friday, the official beginning of the holiday shopping season, is seen as either a disgusting display of consumerism or a welcome bucket of water for a starving retail sector. But now a new group has its own view of the now national American event: data analysts. To them Black Friday is like an early present.

For the first time, consumers gave more than $1 billion of their hard-earned cash to store owners in one day. Followed by another new phenomenon known as Cyber Monday--which may reach $1.5 billion--retailers, e-tailers and data analysts are whistling while they work.

The National Retail Federation used historical analysis and surveys to project that the average holiday shopper will spend $749.51 this year through the holidays, up from $740.57 last year. It even knows something about how it will spend that money. For example, $421.82 will be spent on children, parents, aunts, uncles and other family members, $75.13 will be spent on friends, $23.48 on co-workers and $28.13 on pets, community members and others, and $28.66 on greeting cards. It also knows that shoppers intend to take a little more for themselves this year from their holiday budgets.

But one thing the NRF can't do with this kind of analysis is say what individuals will do. Ian Fyfe, chief technology evangelist for Pentaho, said in a ZDnet blog last week that this year's winning retailers have a secret weapon that helps them do just that: big data analytics. He said that for the first time, it is technically and economically viable to store and analyze the data generated by web sites, GPS-enabled tablet devices and smart phones, embedded sensors and other data sources to reveal new insights and patterns in order to target customers on a more personal and direct level—not for next year, but this year.

He said retailers can monitor and tweak promotions and campaigns in near real-time to maximize spending during the short holiday shopping window. He added that the year's biggest retail winners will be those that are leveraging big data analytics to optimize revenue during this holiday.

According to Forbes this week, MasterCard is seeing this season the fruits of its MasterCard Audiences program, launched in February, which sells anonymous, aggregated customer transaction information to retailers. MasterCard said it uses big data to identify millions of different consumer segments, such as business travelers, holiday travelers, Black Friday shoppers and Cyber Monday shoppers, and passes that onto retailers.

McKinsey & Company highlighted online fashion retailer Gilt Groupe this month as a company that takes its analytics a level further to target individual customers using big data, mobile and social media. After five years of gathering data, the company this year has been able to analyze patterns and preferences and create over 3,000 versions of its daily marketing messages to go to specific shoppers based on shopping history, patterns and preferences.

One surprising big data statistic came from the social media world: the referral effect of social media--customers being influenced by trends or comments on Twitter and Facebook (NASDAQ: FB) and being converted to sales--was practically zilch. An IBM (NYSE: IBM) Digital Analytics Benchmark report concluded that Shoppers referred from Social Networks such as Facebook, Twitter, LinkedIn, and YouTube generated 0.34 percent of all online sales on Black Friday, a decrease of more than 35 percent from 2011.

For more:
- see National Retail Federation release

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