The Importance of Data-Based Decision Making in Retail
Despite living in an age of unlimited information and data availability, business operators are still struggling to both capture and utilize data effectively. According to NewVantage Partners, 98.6 percent of executives say their company aspires to have a data-driven culture, while only 32.4 percent say they have succeeded. According to a 2018 IDC survey, businesses have spent trillions of dollars to modernize their operations, but 70% of these efforts fail because they prioritize technological investments over developing an owned data culture to sustain them.
When we look into the retail industry, a very thin-margin business, we see how important data is for everyday decisions. Being able to use owned customer data enables operators to have what is essentially a “cheat code” when strategically planning for the future.
In the words of Gary Hawkins, an industry expert and CEO of the Center for Advancing Retail Technologies, “the only way to (operate, execute, and control costs) is by having data. Good data, and a lot of data”.
What Steps Operators Can Take Today
With so many tools available, it is important that retailers take a moment and reflect on their capabilities before jumping into the deep end. Having too many tools and “solutions” not only distracts from the core strategy, but it can also rob valuable time and investment in what is already a thin-margin business.
“Our work with retailers begins with an assessment of their current primary solutions and capabilities, comparing each to a ‘best-in-class’ and then to what will be needed looking ahead the next few years” said Hawkins. “That assessment then turns into a playbook helping guide the retailer’s investments and resources.”
And while this playbook can vary significantly from retailer to retailer. Hawkins believes they share a common thread which he has studied throughout his substantial work. “Inevitably, we find that retailers have issues around data. Either they have had poor data discipline and their data files are incomplete or filled with ‘garbage’, or they simply are not collecting data that’s required to be successful in retail today.”