As retailers turn their focus to reaching consumers in the most effective ways possible, big data is becoming a key tool for companies like The Gap, Inc., President and CEO Art Peck told CNBC.
"We've really been building back-end big data analytic capabilities now for a couple of years, and data is a huge asset for us," Peck said on Wednesday in an interview with "Mad Money" host Jim Cramer. "It's surprising to me that more people in our space aren't talking about it."
Gap, the parent company of Old Navy, Banana Republic and Athleta, among other brands, handily beat earnings estimates in March thanks in part to the strength of its brands, Peck said.
While shares of Gap are down just over 10 percent year to date as of Wednesday's close, they have climbed over 24 percent in the last 12 months.
The retail giant, which sees two billion customer visits a year between its websites and its stores, also gets a boost from using the data it collects to market to consumers.
"We know a lot about our customers. We can see their lifetime value. We know who our most valuable customer is," Peck told Cramer. "Structurally, because we have multiple brands and multi-channels, we've got something not a lot of other apparel companies have."
Leveraging consumer data pays dividends in several ways, Peck said. It helps Gap direct its advertising dollars in the most effective way to get the best returns; it gives the company insights into what consumers want in a company; and it helps pinpoint where the value is.
n statistics, abstract math meets real life. To find meaning in unruly sets of raw numbers, statisticians like Donald Richardsfirst look for associations: statistical links between, say, smoking and lung cancer, or the closing values of the New York Stock Exchange one day and the Tokyo exchange the next. Further study can then probe whether one phenomenon causes the other, or if both have common causes.
“Statistics is a way of analyzing data and discovering the inner hidden secrets being concealed by the data,” Richards said over Skype from his home in Pennsylvania in January. “Can we find patterns that tell us that climate change is underway? Can we find patterns that suggest that bitcoin has topped out? That’s what we’re constantly searching for — patterns.”
The patterns can be subtle. However, the search for them is not esoteric, in his view, but rather “the only thing that anybody with brains should be doing with their life.”
In the lilt of his native Jamaica, Richards, 63, describes statisticians as innovators, ever in search of new mathematical tools for finding hidden associations between phenomena, and thus furthering the ancient quest to link causes and effects. How, for example, did people first figure out what they could eat? “In Jamaica there’s a tree called the ackee tree,” he said. “When the ackee fruit is not ripe, it’s highly poisonous, but [as a deadly search for correlations must have revealed] when it’s ripe, if cleaned properly it can be cooked and eaten.”
Throughout a career that has taken him to the universities of the West Indies, North Carolina, Wyoming, Virginia and Pennsylvania State University in State College, where he is currently a professor, Richards has derived many new mathematical formulas for use in statistics. He has also applied them to sleuth out correlations in real data, such as galaxy surveys, financial derivatives, agricultural data and the Affordable Care Act insurance market. A formula that he proved with his mentor and longtime collaborator, Kenneth Gross, in the 1980s assisted in the development of cellphone data transmission protocols that made calls statistically less likely to drop. “Every time I see someone using a cellphone I wonder if I can get them to fork over just one cent,” he joked.
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