It’s no news to anyone that the retail sector is currently going through amazing change. Yet recent events are telling of things to come. Amazon’s purchase of Wholefoods has flipped the coin to ask the question “which online retailers will become brick and mortar grocers?”, not “which traditional grocers will become online retailers?”. On an even greater scale than Amazon, Jack Ma with Alibaba is combining online retail businesses with aggressive investments in physical retail. Their rapidly expanding range of Hema stores in China embody his ‘new retail’ concept, with “the integration of online, offline, logistics and data across a single value chain”.
The key asset here in this equation is transactional data from in-store purchases. As Alibaba and Amazon have realised, to truly understand your customers, you need both online and offline data – and physical transactional data is gold-dust. Retailers from the traditional grocery world have a huge data asset, which if leveraged in the right way, can be used for competitive advantage. It’s not about digital disruption, it’s about data disruption. And the retailers who will win are those who embrace a data-driven approach to doing business which puts the customer first.
But it’s not easy to compete in the data race. You need to build a culture which is data-driven. You need to ensure your business has a solid data strategy. Having worked with retailers around the world for 28 years, dunnhumby has a good perspective on what it takes to succeed with data-driven marketing in retail.
Here are our 6 principles of what it takes to be a data-driven retailer:
- Bring the customer to the boardroom – the priorities of many retailers are more driven by company structure than by what matters to customers. How do you organise and use your data around what is right for your customers? Does the business have the right tech roadmap to make this happen?
- Transform commercial and store decision making – how do you make sure what’s happening in-store every day is supported by data? How do retailers get data into the hands of store managers and those on the ground running the stores day-to-day? How can non-data scientists absorb and use data in an effective way to make a difference?
- Every customer interaction should be data-driven – all actions and strategies should be supported by customer data – including pricing, promotion, and personalised communications. As has been proven time and time again, this drives higher ROI and strong LFL sales growth.
- Develop your own revenue-generating ecosystem – making data a business in itself should be a key element to your data strategy. The Amazon model drives many people to its site, which creates data that allows them to open up different revenue streams (like advertising) which are nothing to do with retail. Amazon Web Services (AWS) profits can be offset against pricing in retail which drives more traffic and creates greater data sets. With one of our major retail partners, we’ve built something differentiated and compelling - a profitable media business – covering digital channels, TV targeting, partnering with Facebook and instore media. How many traditional grocery retailers are sitting on unrealised income in the form of media inventory?
- Plan for your future customer technology – customer technology is coming, are you ready for it? New channels like voice-ordering and chat-bots are not gimmicks. Think about the new data sets that could be built out of voice interaction platforms, beyond just facilitating a transaction. What does that mean for your business and what new opportunities does it create?
- Plan for your future customer regulation – looking beyond compliance, what does this mean in terms of opportunities for retailers? Legislation like GDPR will make it easier for consumers and other retailers to access your data asset. We’ll soon see what appetite consumers have for taking up their right to data access. If adopted on a wider scale, it will become a new business model which will shake up the definition of the value of data. What does this mean for data-driven marketing and the value-exchange with customers?
The role of data in retail success has moved way beyond the “data is the new oil” metaphor. The lifeblood, the oxygen – whatever you choose to call it – of data and data science is essential for retailers who want to survive the rapid transformation of the customer experience and thrive in the new era of data-driven retail.
Get in touch if you would like to know how we can partner with you to win in the new era of data-driven retail.