Free busi­ness data is there wait­ing to be mined

UW study finds pub­licly avail­able data can be as use­ful to small busi­nesses as paid con­sult­ing re­ports

The Woolwich Observer - - VENTURE -

IN­FOR­MA­TION, PAR­TIC­U­LARLY VI­TAL DATA about the mar­ket, de­mo­graph­ics and po­ten­tial cus­tomers, is es­sen­tial for small busi­nesses. But rather than spending some­times scarce re­sources ac­quir­ing it, those busi­nesses can read­ily find much of it for free, sug­gests a new re­port from the Uni­ver­sity of Water­loo.

The study, ‘Com­par­i­son of meth­ods for quan­ti­fy­ing con­sumer spending on re­tail us­ing pub­licly avail­able data’, found that pub­licly avail­able in­for­ma­tion could save lo­cal gov­ern­ments and small busi­nesses thou­sands of dol­lars in con­sult­ing and re­search fees.

Con­ducted by Derek Robin­son, a pro­fes­sor of ge­og­ra­phy, along with An­drei Balu­luscu, a for­mer Water­loo mas­ter’s stu­dent, the study was essen­tially a test to see if free, pub­licly avail­able data could be as use­ful as re­ports from a con­sult­ing com­pany, for in­stance. The au­thors looked at the likes of sales data on of­fer to bet­ter help com­pany’s make im­por­tant busi­ness de­ci­sions such as where to open new stores or which ar­eas to mar­ket their prod­ucts.

Work­ing along­side a pri­vate com­pany in the home im­prove­ment re­tail sec­tor in On­tario, they were able to pair the pub­lic con­sumer spending data from Sta­tis­tics Canada along with data from the pri­vate com­pany to see if they would be able to match the sales data on of­fer. By com­bin­ing this in­for­ma­tion, they could eas­ily iden­tify the spa­tial pat­tern of con­sumer spending on home im­prove­ment prod­ucts and iden­tify ge­o­graphic hot spots and cold spots re­lated to peo­ple’s spending habits.

“We tested out ... could we use the spending data at dif­fer­ent lev­els of detail and match what the sales data was say­ing?” Robin­son ex­plained, not­ing that they used four dif­fer­ent cen­sus units rang­ing from fine to larger ar­eas. “When we looked at th­ese four dif­fer­ent lev­els of detail, we found that we were able to match the pro­vin­cial sales data very well with th­ese Stats Can con­sumer data; the in­ter­est­ing piece of that is that there are a lot of com­pa­nies that charge a huge amount for their data. If you look for data from a cou­ple of dif­fer­ent or­ga­ni­za­tions in Canada you may spend up­wards of $50,000 for data – and in many cases those com­pa­nies are aug­ment­ing the Stats Can data.”

Break­ing the prov­ince into some 20,000 units, the study was able to gen­er­ate data on 23 in­di­vid­ual prod­uct cat­e­gories re­lated to home im­prove­ment and how spending in th­ese cat­e­gories varied by house­hold in­come. From there, the in­for­ma­tion was ver­i­fied us­ing pro­pri­etary sales data pro­vided by a big-box in­dus­try part­ner in the home im­prove­ment re­tail sec­tor to show that the es­ti­mates were in­deed ac­cu­rate.

While they fo­cused on the home im­prove­ment mar­ket for this study, their con­clu­sions aren’t ex­clu­sive to that sec­tor.

“This method can be ap­plied to any sec­tor, and could help busi­nesses pick the right lo­ca­tion, based on mar­ket de­mand for new stores, and help to pre­vent the roughly 7,000 busi­nesses that fail each year from hav­ing to close their doors,” said Balulescu. “This tool can help to put smaller busi­nesses on an equal foot­ing with large re­tail­ers, who have more cap­i­tal to spend on gath­er­ing busi­nesses in­tel­li­gence. Fur­ther­more, it could help lo­cal eco­nomic devel­op­ment de­part­ments prove

to com­pa­nies there is both mar­ket and op­por­tu­nity in their re­gion.”

That be­ing said, with the study com­pleted, Robin­son found a few po­ten­tial bar­ri­ers for use of the data.

Firstly, while the cen­sus data are in­cred­i­bly rich and use­ful, there can be a learn­ing curve on how to read and make use of that in­for­ma­tion. He rec­om­mends that it would be ben­e­fi­cial to pro­vide more re­sources for small busi­nesses on how to prop­erly use the po­ten­tial cost-sav­ing and lu­cra­tive tool.

“One thing it points out is that there might be a lack of a pub­licly avail­able tools that could help out small busi­nesses of ten peo­ple or less so that they could bet­ter use the Sta­tis­tics Canada data in this way,” he said. “Publi­ciz­ing the util­ity and on­line tu­to­ri­als on how to use them might be some­thing use­ful.”

Ad­di­tion­ally, hav­ing ex­am­ined the vol­un­tary cen­sus data from 2011 com­par­a­tively to the 2016 cen­sus data, he en­cour­ages that the more peo­ple the fill out this in­for­ma­tion, the more it will help to serve the com­mu­nity they live in.

“The cen­sus work that is done for Stats Canada is in­cred­i­bly im­por­tant for pro­vid­ing busi­ness op­por­tu­ni­ties, pro­vid­ing our politi­cians de­ci­sion­mak­ing ca­pac­i­ties and for pro­vid­ing eco­nomic devel­op­ment plan­ning branches of gov­ern­ment ca­pac­ity for en­tic­ing busi­nesses and demon­strat­ing that there is de­mand for prod­uct and man­u­fac­tur­ers in stores to come to an area.”

Ac­cord­ing to a new study from the Uni­ver­sity of Water­loo, pub­licly avail­able in­for­ma­tion at the tips of busi­ness own­ers’ fin­gers could be a lu­cra­tive re­source.

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