How to use data to lead the retail reinvention
- Posted on November 9, 2022
- Estimated reading time 4 minutes
In turbulent times, adaption is key. This rang true for retailers at the onset of the COVID-19 pandemic. It hit them hard, with some stores being forced to close overnight. But it also presented opportunities; by adopting new channels and adapting product ranges quickly, retailers could meet changing consumer demand.
Even before the pandemic, shifts in customers behaviour were transforming the channel mix and fundamentally changing the nature of retail. However, the pandemic only served to accelerate these trends. In fact, it’s estimated that it has accelerated digital adoption among customers by as much as five years.
Navigating a new retail landscape
There have been clear winners and losers: while some retailers announced record profits, others announced store closures and bankruptcy.
Many of the winners navigated the disruption by building on the foundations of their existing digital strategies that were already well underway. For instance, the international food retailer Pret accelerated plans to embrace new digital channels to reach customers – from establishing new delivery partners to rolling out a coffee subscription service.
Global fashion company Levi’s is another example. The company adapted its business model fast, accelerating their omnichannel presence including initiatives such as curb-side pick-up, enhanced loyalty programs and virtual concierge services. In the third quarter of 2020, the company’s global digital revenues grew by approximately 50% compared with the same period in 2019. And their profits continued to skyrocket in 2021.
Closing the data value gap
What do these organizations have in common? They’ve not just adopted technology; they’ve embedded it at the heart of their business. To release value, you need to think about how the business will actually handle and use data and identify the problems it will help solve. We call it ‘closing the data value gap’.
In our whitepaper, Reinventing Retail by closing the data value gap, we explore the steps to address the gap. Firstly, by building a solid data foundation and secondly, by defining the business use cases you are looking to solve.
First things first, focus on building a solid data foundation
Data can be a huge strategic asset. It can help you uncover opportunities for process improvement, or provide the insights to increase sales. Data modelling enables you to reduce waste in line with sustainability goals and lets you better predict seasonal trends to adapt your strategy. It gives you the power to work more efficiently with logistics, warehousing and delivery partners. And it can help you address problems faster to minimize reputational risk.
To do this effectively means changing your data strategy. Many businesses have centralized data teams, which can create bottlenecks, not just in delivery, but in the expansion of data skills.
Instead, organizations need a decentralized data model, where data is shared, accessed, used and governed through a ‘data mesh’ that connects all areas of the business, throughout the value chain. This mesh, enabled through a cloud-based ‘enterprise data platform’ forms the foundation of the data-driven retail business—allowing you to act and adapt fast. Cloud platforms offer the perfect stage, as they require no hardware investment and operate on a pay-per-use model, providing the ultimate flexibility.
Now, let’s look at defining the business use cases
The next critical step to closing the data value gap involves taking steps towards your data transformation with specific business use-cases in mind. Organizations typically start with a pilot or proof of concept that focusses on inefficiencies or solve existing challenges. For example, you can look to improve inventory accuracy, develop a customer-centric supply chain or customize customer communication.
However, as data usage and data skills become more advanced the process becomes more proactive, allowing you to explore ‘what if?’ scenarios, make predictions or inform live decisions as new developments occur in the market. The biggest impacts can be achieved by scaling use cases throughout the value chain. During this process it is key to share what works and then apply this to different areas of your retail chain.
Start your reinvention
As you are optimizing you cloud data platform, you will be creating the building blocks that enable you to reinvent your business. You will increase your access to the rich data, tools and capacity you need to start creating new business models, new engagement channels and new applications that help your business to predict, act and adapt.
Proactivity is vital. And when applied to data – this means not just reinventing out of a necessity to survive. It means reinventing to shape a better industry, with better outcomes for employees, partners and customers.
To find out how partners Accenture, Avanade, and Microsoft, can help you close the data value gap, read our Reinventing Retail whitepaper.