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Breathing new life into retail with data analytics.
Retail is a data rich environment that thrives on its ability to identify, anticipate and execute on market and customer opportunities.
The sector’s focus on customer experience and the so-called “end-to-end journey” should be contributing to the transformation effort. The customer has touch points at every stage through the retail process, with opportunities for high-quality data collection at every one of those points (physical store, website, mobile app, call center, newsletters, loyalty card scheme). Done right, this can deliver considerable, and valuable, data about the customer. This includes their preferences and habits, as well as overall market trends, buying history and where they do their shopping.
Yet, there is more the sector can do to modernize and unlock value from its extensive data sources. This is why it is pushing for more digital transformation and evolving its existing business intelligence (BI) processes, strategies and technologies into modern, broader and more valuable data analytics (DA).
A recently commissioned major study looks at the state of BI to DA transformation, with a focus on the retail sector. The findings are stark, showing retail’s aggressive use of data to drive the business. With nine out of 10 retailers more reliant today on data insights than they were just five years ago, and 54% specifically focused on using data to better know the customer, it would seem that the sector is embracing the challenge. Yet, there remains considerable scope to do more.
This is most prevalent in the fact that while two thirds of retailers surveyed have a strategy to reposition their organization to be even more data-centric over the next two years, they’re trailing behind other verticals, such as the technology and services sectors (consumer services and professional services specifically), in their rate of progression.
What’s more, on average, only 57% of retail sector decision-making overall is currently data-driven, underlining how much more can be done to push data into the heart of operations and planning.
Pricing and financial forecasting are – as expected – two of the biggest use cases where data-driven decision-making benefits retailers (64% each). Yet just over half are using it to bolster supply chain decisions, and only 48% for shaping their customer communications. This alone shows the opportunity for data analytics to deliver a more personalized customer experience.
Clear ownership of Data Strategy is also critical to success in a fast-moving space such as retail. What we see is that Data Strategy for retailers is largely spread between the CIO (32%) and the CEO (18%), with other C-suite influencers – including the CTO – having little control (2%). Most surprisingly, 14% of retail businesses reported that the Chief Operations Officer (COO) owned the Data Strategy, while 12% said the CFO was in charge of this. This greatly differs to other verticals, where the COO and CFO were in charge of the Data Strategy for 7% and 8% of organizations respectively, highlighting that the main data consumers within retail organizations are often finance, sales and operations.
Moving from BI to DA, bringing with it the analytical tools and processes to make data work even harder, will deliver a much wider range of pre-emptive business insights. These will help the retail sector to maximize its opportunities, work smarter and be more anticipatory at a time when all are facing challenging trading conditions online and offline, amid rapidly shifting customer expectations.