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”.
Why Data is a Lifeline in Post-COVID Retail
The world of retail has been dramatically shaken by the events of 2020. For many operators, simply keeping their doors open has been a highlight, with the future shrouded in a thick fog. So how can operators come through and adapt to the new normal? The answer, we believe, lies in the ability to control more of the operational variables. By collecting data on shopping behavior, retailers are able to more accurately predict what the future will hold, allowing strategic decisions to be made with greater confidence.
“Data is the foundation for the automation and digital value creation. And there is more data available than ever before as the retail industry becomes Digitized,” said Hawkins, adding, “when thinking about data, many executives go-to product data first, but shopper-related data is mission-critical when looking ahead.”
The bottom line is that operators need to stop searching for the answer when the solution lies within the four walls of their operation. Owning customer and shopping data is the key to guiding the next generation of shopping behavior, and an essential part of surviving this new normal.
Using Data to Make Proactive Decisions
Among the many challenges facing retail operators today is the rapid development of digitization. Consumers are becoming reliant on technology that enables them to control the sales process while making shopping as convenient as possible. This reliance on digital tools may give the shopper more control, but it also opens a golden door for acquiring first-party consumer data. According to Hawkins, this is an opportunity that operators cannot afford to miss out on.
“In the digital world, first-party data – that which the retailer owns – is gold, especially when there is increasing discussion around privacy, and the growing issues with 2nd and 3rd party data. Increasingly, the physical store is becoming digitized and that opens the door to understanding customer behavior inside the store, from traffic flow across aisles to category and purchase conversion rates. There is a massive opportunity to link real shopper behavior from in-store to strategic merchandising activity.”
In addition to the opportunity for collecting first-party data, operators are also able to utilize modern technology to offer superior customer service, all in real-time.
“Real-time inventory data is very important today when linking to the retailer’s online shopping solution, informing online shoppers immediately about the availability of a product – and eliminating downstream problems and inefficiencies related to substituting products or simply not providing the product in the customer’s order. With real-time shopper location data, retailers can also meet the shopper in the parking lot to deliver online orders for pickup.”
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.”