Recently I came across a presentation from Dan Zarrella on "The Science of Retweets. (http://www.slideshare.net/HubSpot/the-science-of-retweets-with-dan-zarrella). It is an insightful, fact-based analysis of how tweets propagate and what makes them successful. The analysis is of course very interesting for those of us interested Tweeting. However, what really caught my attention is how well it illustrates, form a very different angle, some of the issues I am discussing with retailers these days. In particular the opportunities that e-commerce and social media open to those retailers with the appetite and vision to tackle the associated analytical challenges. And these challenges are of course not straightforward.

In his presentation Dan introduces the concept of Observability, I haven't had the opportunity to discuss with Dan his specific definition for the term. However, in practical retail terms, I would say that it means that through social media (and other web channels such as search) we can analyze and track processes by measuring Indicators that were not measurable before. The focus is in identifying patterns across a large number of consumers rather than what a particular individual "Likes".

The potential impact for retailers is huge. It opens the opportunity to monitor changes in consumer preference  and plan the business accordingly. And you can do this almost "real time" rather than through infrequent surveys that provide a "rear view" picture of your consumer behaviour. For instance, you could envision identifying when a particular set of fashion styles are breaking out from the pack, and commit a re-buy. Or you could monitor when the preference for a specific mobile device has declined and hence markdowns should be considered; or how demand for a specific ready-made food typically flows across regions and manage the inventory accordingly. Search, blogging, website and store data may need to be considered in identifying these trends. The data volumes involved are huge (check Andrea Morgan's recent post on "Big Data" in retail) but so are the benefits. As Andrea says, for the first time we can start getting insight into "Why" the business is performing in a certain way rather than just reporting on what is happening. And it is not just about the data volumes. Tackling the challenge also calls for integrated planning systems that can bring data and insight into the context of the Decision Making process Buyers, Merchandisers and Supply Chain managers are following. I strongly believe that only when data and process come together you can move from the anecdotal to systematically improving business performance.

I would love to hear your opinions on these trends and where you think Retail is heading to exploit these topics - please email me: [email protected]