According to the Digital Leaders study conducted by BearingPoint, the Retail industry performs well, ranking as the number one industry with a score of 3.07 (out of 5.0), which suggests that the industry has come far within digitalization and that the retail industry companies are focusing on this matter. We believe that having a digitalization focus is helpful on the journey towards becoming a data driven organization.
To succeed in an increasingly competitive retail landscape, you will need to outperform your competitors’ ability to handle the unpredictable. The way you act towards the unpredictable future will decide if your company can keep up with the pace of tomorrow.
We at BearingPoint believe what was unpredictable in the past, is now possible to predict by using data science, AI algorithms and data lakes. Getting personalized product recommendations, more efficient supply chain management and better cross functional transparency are examples of what is made possible by becoming increasingly data driven.
Data has been a key asset for retailers for years and data management is already a critical success factor within the retail industry. This article will discuss how the key to remain competitive is moving from being merely data curious (using data retrospectively) to being truly data driven: using data for strategic and operational decision. For the retail industry, being data driven enables companies’ huge customer service opportunities. To be competitive, retailers must be able personalize customer offers, respond to customer needs with unique assortment and have a clear understanding of retentions rates.
Therefore, we believe retailers must focus on 4 key activities:
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Ensure active participation in any technology developments.
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Have data governance in place.
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Spread and cultivate a data culture among your employees.
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Ensure the quality of your data is first class.
Technological trends and technologies on everyone’s lips
Retailers are currently on a journey, going from data curious to becoming fully data driven. This transformation requires, in addition to data governance, data quality and data culture, implementing the right technologies.
Top data technology trends:
- Self-service BI
- Data base and Data lakes
- Block Chain & Phygital Auto ID technologies
- Data warehouses
- Data Science & AI algorithms
The most discussed technologies are:
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Databases, cloud and data lakes are becoming increasingly important for retail companies and data extraction and analysis technologies, such as data warehouses, are becoming more and more common.
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Data science and artificial intelligence algorithms allowing predictivity such as machine learning and deep learning creates potential in improving classification, optimization and forecasting within the retail industry.
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Data collection technologies, whether digital (blockchain) or phygital (Auto-ID, IOT & cameras technologies collecting data in real time by analyzing products on the shelves and capturing customer interactions) helps in creating transparent and flexible supply chains to meet the transparency and sustainability demands that are more common amongst customers today.
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Self-service BI data visualization technologies for retail companies to empower employees to use data in decision making and to share real time data across the organization.
These technological trends will help in becoming increasingly data driven, but the technology alone will not get you there.
Solely technological implementations will not get you there…
Advancing in data management and taking the journey towards a more data driven organization is not only about new technology implementation. For this transformation, organizational changes and establishing a data culture is also vital. The technologies alone will not transform your organization to a data driven one.
Starbucks refer to this as data democratization. Data transparency, how to get the right data points to the right leaders, at the right time and to the right team, is also of great importance according to Starbucks (The future of analytics: adapting to drive innovation and connection, 19th of January 2021, NRF Retail’s Big show).
Data governance, including data quality, are important aspects that need to be addressed. Poor data quality will lead to weak predictions and possible bad decision making. In the past, data specialists were managing the data, whereas in a data driven organization, data is handled by everybody with the support from data coaches.
Benefits of being data driven
As the ability to handle and act on data insight will be even more critical in the future, advancement towards becoming data driven is of great importance for future retailers. As reported from Dell, AI not only drives revenue growth, but also profitability (Driving agility in retail with AI produced by Dell – 13th of January 2021, NRF Retail’s Big show). AI can help reduce costs by shrinkage reduction and improved forecasts and stock allocation. AI driven top-line growth comes from improved customer experience and making relevant product suggestions to the customer. (Driving agility in retail with AI produced by Dell – 13th of January 2021, NRF Retail’s Big show)
Based on our experience and knowledge in the retail industry, we listed the most valuable data driven use cases on the map below. This list is a key component to impulse a Data driven retail strategy.
3.07
There has been a great digital progression for many industries in 2020, driven by the Covid-19 pandemic, and the retail industry is no exception. If your company is still looking at data in retrospect, then it is time to start taking the steps to becoming data curious and finally advance to being data driven.
