The next mining boom is already underway, but this time it involves the ‘mining’ of data. Generally, data mining (sometimes called data or knowledge discovery) is the process of analysing data from different perspectives and summarising it into useful information – information that can be used to increase revenue, cuts costs, or both.

Data mining software is one of a number of analytical tools for analysing data. It allows users to analyse data from many different dimensions or angles, categorise it, and summarise the relationships identified. Technically, data mining is the process of finding correlations or patterns among dozens of fields in large relational databases.

It should come as no surprise that the ‘traditional’ Australian retailer is doing it tough. The latest downgrades from David Jones and Katmandu simply reinforce that we now operate in a different environment and, yes, the world has changed.

The world of banking is also due for a shake-up but that is to be written about in a future piece. Right here, right now, the world of retail is in a world of hurt pretty much across the board, but there are some success stories and we just need to look to the US to see how retail is undergoing a transition, and this is just the beginning.

Williams Sonoma is a retailer in the US. The first Williams-Sonoma store opened in 1956, selling a small array of cookware imported from France. Since then, the brand has expanded to hundreds of products from around the world, more than 250 stores nationwide, a direct-mail business that distributes millions of catalogs a year, and a highly successful e-commerce site. What has never changed is Williams-Sonoma's dedication to customer service and strong commitment to quality.

Williams-Sonoma uses psychometric segmentation based on big data to market in a tailored fashion to its database, boosting response rates by 10 to 18 times.

Their share price has gone from $10 to $35 in the past three years. How have they done this? Well, read this excerpt from their result released on 12 March. Laura Alber, president and CEO commented, “Fiscal 2011 was a year of milestones – both in terms of operational performance and progress against our long-term growth initiatives. Through strong execution and a superior multi-channel strategy, we delivered record earnings and profitability in a promotional environment, never losing sight of our mission to enhance our customers’ lives at home.”

Alber continued, “In the fourth quarter, comparable brand revenue and non-GAAP diluted earnings per share grew seven per cent and eight per cent, respectively. For the year, comparable brand revenue grew seven per cent and non-GAAP diluted earnings per share climbed 15 per cent to $2.24 – a new record for the company. E-commerce revenues increased a better-than-expected 18 per cent. We ended the year with more than $500 million in cash – after increasing our dividend by 47 per cent and returning $263 million to our shareholders through share repurchases and dividends.”

Alber concluded, “As we look forward to 2012, we continue to be laser-focused on our customers – putting them at the center of everything we do. We will deliver continued sales growth in our brands through innovative product introductions and compelling marketing. We will continue to serve our customer anywhere, anytime by building on the competitive strengths of our multi-channel business. We will ensure the highest levels of service in the industry by investing in our supply chain.

“We will leverage our significant customer insights to develop new businesses within and outside of our brand portfolio, and we will answer the worldwide demand for our products by increasing our global presence. To drive these initiatives, we will increase our capital spending in the following areas: e-commerce capabilities; high-profile store remodels; West Elm retail expansion; direct-to-customer fulfillment; and our multi- channel global IT platform. Capital spending in 2012 is expected to be in the range of $200 million to $220 million versus $130 million in 2011. In addition to this increased capital, we will also be investing an incremental $15 million to $20 million to support our long-term e-commerce, global expansion, and business development growth strategies.”

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