Does data really have the power to transform the retail industry?
Data is a hot topic right now, given all the debate about privacy and security. However, when you think about it, customers are not really against sharing information about themselves or the things they like.
Instead, they’re guarded about their financial data, and don’t want to share data that can be used use to tailor ads that specifically target them. However, when it comes to sharing data to help their favorite brands, shops, and sellers customize the experience, not many are against it.
The fact is, data allows the retail sector to make personalized and informed decisions which ultimately aim to benefit the consumer experience. This is especially true in the digital world, where customers no longer have a friendly, recognizable face to greet them at the door.
In order to help move customers from pre-millennial bricks and mortar stores to an online experience, which is able to learn how they personally like to shop, data plays a critical role.
“The sheer size of data available to retailers offers opportunities to place employees’ effort into the most-impactful work streams. Data allows retailers the knowledge to assess what is working well within there current processes, and more importantly what isn’t working as well,” said ShopDirect Data Scientist, Aidon Blong in an exclusive interview with TechHQ.
The fact is, most retailers today are able to gain meaningful insights from the huge repositories of data available to them. As the volume, velocity, and variety of data are growing all the time, the important question most retailers ask is “what data will provide the most meaningful insight?”.
Large retailers have several teams that focus on data, allowing them to learn from different moments in the customer’s journey.
For example, there are entire product squads dedicated to providing customer level recommendations using data – with the ultimate aim of helping the consumer find what they are looking for.
Smaller retailers/start-ups, on the other hand, may have a wealth of data available – yet only use basic information such as total sales, and customer visits to create insights and make business decisions.
“I still feel that no matter how small or large the retailer is, data-driven decisions can be made to enhance consumer experience or sales – but there still is a lot more data out there which isn’t currently being used to its full potential,” said Blong, who is speaking at the Tech. event next week.
Even behind the scenes, data can play a significant role in helping retailers manage their operations and warehousing functions.
Using data, retailers can optimize their warehousing operations to better distribute products and schedule delivery effectively, thereby improving the customer experience significantly.
One of the reasons Amazon won the hearts of its customers was because its fulfillment centers never failed to delight customers — Amazon always sets reasonable expectations and delivers on time, every time. They’ve set the bar high, and if competitors in the retail industry want to win over customers, they must leverage data to transform their operations.
Obstacles to using data in retail
Just because data is readily available to retailers doesn’t mean using it is easy. There are several things which can hinder retailers using data to transform their business.
The first relates to the storage, cleaning, and maintenance that the data requires. The sheer cost associated with storing terabytes upon terabytes of data will only increase as more and more data becomes available.
If the data isn’t understood well enough, the veracity may impact any data-driven decisions that managers intend to make.
The second involves the technology stack. The sheer volume and variety of data available today means that retailers must either have access to the appropriate server architecture which allows the processing of ‘big data’, or have access to relevant software.
Finally, the recent introduction of GDPR means that retailers have to conform to strict guidelines on how consumer data can be used. Proper guidelines regarding the storage and use of customer data have to be adhered to, failing which the company could be penalized by the authorities and regulators — and even customers.
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