How Shop Direct is using analytics to transform itself into a digital leader

The retail and financial services company is also exploring the potential of conversational UIs, virtual reality and AI

Shop Direct, which owns Littlewoods and Very.co.uk and is also one of the largest non-bank lenders in the UK, has spent the past six years transforming itself from a catalogue retailer into a "world-class digital leader", according to Neil Chandler, CEO of financial services at the company.

Chandler, who has an IT background and is the executive to whom Shop Direct's group CIO Andy Wolfe reports, reveals that much of this transformation has involved unlocking the value of the business's financial services and retail customer data through the use of a range of tools from SAS.

Over the past four years, Chandler has deployed SAS's Visual Analytics, Cloud Analytics and Customer Intelligence products, with one of his key aims being to personalise and tailor a Shop Direct customer's journey.

One project in this area is the personalised sort order programme, which is designed to target customers with products that fit their purchase history, in a way that best suits their preferred shopping platform.

"On mobile, people aren't going to keep swiping down if they are looking for a black dress and there are a 100 to choose from - they'll probably see nine at best," Chandler explains. "So the aim is to work out how analytics can help to curate and show the best nine black dresses for the customer that are in stock, that match the fashion preferences and are in the right price range.

"Of course, it's easier to do this for users who are logged in to their Shop Direct accounts, as we have more data about them," says Chandler. "However, we can look at the characteristics of people who have come to our site from a Google search term, so it's not solely linked to people who are logged in. We can also look at session IDs and cookie data if people allow that, but of course it isn't as personalised."

SAS and the cloud

Four years ago Shop Direct began moving its ICT systems into the Amazon Web Services (AWS) cloud, but migrating its SAS tools proved to be tricky as they were essentially on-premise products.

"One of our struggles with working out our personalised sort order use case was that we had to deploy SAS products into the cloud with it, and actually this wasn't easy to do two years ago," says Chandler.

But at SAS Global Forum in Las Vegas last month, the vendor unveiled Viya, which is powered by an in-memory analytics capability and can be deployed on-premise or in the cloud. The architecture will support all future SAS products, and Chandler believes this will help Shop Direct.

"The product has been re-architected to live in the cloud and that's going to make it far easier for us; the ability to scale up and scale down the analytical environment and the ability to support our cloud deployment - which is a big thing for us because it had been painful with SAS before," he says.

But the product launch that really grabbed Chandler's attention was Customer Intelligence 360, a digital marketing hub.

He believes this one offering could replace the several different tools the company currently uses to monitor the "customer journey" and ascertain the way particular users like to have product information presented to them.

"It doesn't just need to be the browser journey, it could include the email, SMS, conversational UIs and so on, but having to manage that all in one container, which is what I understand Customer Intelligence 360 to be about, is going to be really interesting," he says.

"Being able to deploy models around your main analytical environment including [customers'] personalised sort order models and making that much more real-time will save us a lot of effort," he adds.

How Shop Direct is using analytics to transform itself into a digital leader

The retail and financial services company is also exploring the potential of conversational UIs, virtual reality and AI

But could opting for this "container" also mean Shop Direct is locked in to using SAS-only products?

Chandler doesn't think so, but adds that in a relatively complex market such as the one Shop Direct operates in, SAS probably has the edge over its rivals anyway.

"When you're trying to look for the 101 use cases, with a few rules and a little bit of tailoring, yes SAS do it well, but so do many others. However, if you take an example like ours - where it's a mix of financial services and retail - it's a complex problem and is perfect for SAS," he says.

To illustrate this complexity, Chandler describes how Shop Direct could offer a specific customer of Very.co.uk a discount on sofas on a particular weekend, with an option of 7.6 per cent APR over three years.

"There are four dimensions to that, and it's going to be complex to build a model like that. You need [analytics] to answer whether the customer is going to respond to a fire sale, [or] are they going to respond to sofas depending on what they're browsing and what they'd like to buy? Are they male or female, and are they going to respond to that kind of financial services offer or have they always just used interest-free with us?"

The future of analytics: artificial intelligence and virtual reality

Chandler believes that AI and virtual reality (VR) will play a huge part in e-commerce and customer support.

"People aren't going to fill in a long form to apply for a credit card in a year or two - they're going to go through a ‘chatty' registration which is powered by an AI engine behind a concept of either a Google or Microsoft bot - Facebook is talking about it too," he says.

And the same engine could be used to help online shoppers by creating a virtual sales assistant.

"I think that is going to revolutionise the way we browse and shop, and those are things we're starting to work with," he says.

Chandler believes that it's only a matter of time before VR and augmented reality (AR) will be widely used by consumers.

"I'm not sure we're all going to wear these big goggles like gamers but once you get these technologies onto glasses or contact lenses [it will go mainstream], and they'll work it out pretty quickly," he says.

Augmented reality, according to Chandler, would enable consumers to see how a sofa would look in their living room, or how they would look wearing a piece of clothing, while VR would allow for an even more personalised approach to shopping.

"No retailer can lay out their store to be personalised for a consumer but in a virtual world, if you have the data and the analytics, you can make sure you can see fashion items in one area and things for the kids in another area," he suggests.

"Where it gets really interesting is when you overlay the tactility challenge. So you get gloves - they're not quite to our level of refinement just yet but they will be soon - where you can reach out and touch a garment and get a sense of what it feels like, whether it be rough or cotton or silk," he adds.

Chandler believes such technology will greatly strengthen the hand of pure-play online retailers like Shop Direct over the next two years.

"I think it's close. If you look at Sony's £349 virtual reality headset which is geared towards gaming, it is pretty good; the technology has accelerated so far in the last 12 to 18 months. And as for the tactile area, the technology is there; they have the prototypes so I don't think it will take them long to start to put that into production - it isn't 10 years away," he says.