NRF 2020 - customers are generating a gold mine of operational data, and Oracle wants to do something about it

Jon Reed Profile picture for user jreed January 17, 2020
Retailers are reclaiming the power of storefronts. But that's not going to work if they have a data silo problem. Here's what Oracle had to say about these trends at NRF 2020 - and what they're doing about it.

oracle nrf retail booth

Looking for people who agree with you is a truly boring hobby. At shows like NRF 2020, I seek out people who will shake up my intellectual apple cart - or that I actively disagree with.

That's why I opted myself into a problematic demo and discussion of facial recognition last year. This year, I sought out Happy or Not, even though I find their real-time feedback technology troubling at times, for reasons I'll get into in a future piece.

By the time I hit the Oracle booth for my meeting with Jeff Warren, Oracle's VP of Retail Solutions Management, I had already formed views on the revenge of the store, and the impact of AI on retailers. But how does that line up with Warren's views? How has the retail market shifted? Warren led with this:

Our tagline for the show is about how the industry is actually pivoting to customer.

Yes, that might come off as an obvious statement, but as Warren points out, that's actually a sea change in retail thinking:

If you look at the history of retail, retail was always a supply chain driven industry. So you bought stuff to sell stuff. It was product, place and time. Those were the three core components of retail, which all the competencies and processes then kind of grew up around.

"Retailers need to have a much deeper understanding of customer interactions"

Now the story is about which retailers are getting out in front, and which are getting clobbered. Warren emphasized something I noticed  this year also: retailers seem to have turned a corner - or at least rounded first base - in how to approach their store as a data (and customer) asset. Warren:

Retailers are really becoming mature in their strategies of understanding how their customers are actually an asset, and that's part of the differentiation to Amazon. So, not only are their stores a differentiation point, but the customer base is a differentiation.

Which begs the question:

How do I actually involve that customer, and work with that customer to impact the rest of my core operations to my business?

Short answer: get your data act together. Tie customers more directly to assortment planning. Pull info on customers from previously siloed systems, like point of sale:

There are some really interesting trends on how the customer can help impact what the assortment looks like. That's why we have an announcement at the show on being able to take information about your best customers that we're capturing as part of a cloud service, that sits behind our order management or our commerce, or a point of sale system.

Stores are only an asset if they can lead you to a better customer approach.

We need to have a much deeper understanding of the interactions that are taking place with the customers. What are they looking at? What are they buying? What are the attributes of the items that they're buying? What are the attributes of the customer, the frequency in which they shop, where they shop, how they like to shop. And then being able to integrate that in, and relate that to the broader view of the U.S. consumer.

Right - but isn't this where companies like Oracle should be able to help? Indeed:

We're announcing a partnership between Oracle retail in the Oracle data cloud. The Oracle data cloud business had historically been in the business of helping marketers find their audience for running promotions. So if I'm a retailer, I want to run a promotion, I need a list of 100,000 names for customers that, potential customers that would fall into this segment.

But there is more Oracle can do - thus the new announcement.

What we didn't even didn't realize was that we were sitting on a gold mine of operational data to the U.S. consumer spend - data that we can use to help retailers better operationalize. There's 115 million U.S. households in the Oracle data cloud there; there's 120 different product categories, multiple petabytes. Daily transaction data is being uploaded by 1,500 different U.S-based retailers into the Oracle cloud.

Retailers needs data visibility - vendors need to deliver it

Cloud-based data enables "mashups" with external data sources. In this case, with broader consumer data:

We can use information about your best customer, and then look at the broader view of the U.S. consumer spend to help you find your next best customers, or to help you make better decisions about where you should place inventor - or how you should price new products as you bring them to market.

Yes, vendors have to change also - they are overcoming the same obstacles: "It's really interesting, because even inside of Oracle we were still in silos." Another key to retail-as-a-data-business? Working across teams. That theme came up in my interview with Target's CIO, and Warren brought it up here.

So if you think about what's changing inside the retail industry. A lot of the customers that we work with, historically they had a planning organization, they had a supply chain organization. They had a merchandising organization, they had store ops. 

But insular planning never worked that well - and it certainly doesn't work today. Warren: "The job inside of retail was always optimizing inside your four walls." That has to change:

What we're seeing now in the industry is retailers are starting to kind of really re-organize, and go across those different domain barriers, creating these cross-functional teams of planners and allocators and merchants and operations people.

But that requires a new level of data visibility:

What they're coming and asking Oracle is, "I need a platform. I need visibility that spans all of those disciplines so that I can have the marketing view; I can have the supply chain view; I can have the planning view; I can have the merchant view. We can all interact and collaborate and be able to produce a better outcome that's optimized on the whole."

We talked about how the implications of data visibility can be counter-intuitive. Example: you might have an increase, year over year, selling the same type of shirt in a particular store. But what you don't know is that there was an overall surge in the sales of that type of shirt across the region - so your share of sales actually went down.

Not having that visibility to the broader consumer spend [is a problem]. Maybe there's a whole slew of millennials have moved in... and the lifestyle and the expectations we're seeing in that neighborhood are changing. I, as a retailer need to think about changing with them.

Make data actionable, or go home

But vendors can't stop there. It's not enough to provide retailers with data visibility: they expect you to deliver so-called "actionable insights" on that data. What is Oracle doing there?

This is the beautiful part of cloud computing. We're actually embedding this as part of our Insights platform. So for those customers that are already running our Insights, it's just a matter of calling Oracle and turning it on. So to be able to say, "I'm running insights against my own first party data today - I'd like to actually start to match that up against the third party view of the U.S. consumer market." It's not a project; it's not something new I have to buy. It's just a capability that I choose to turn on.

Warren says there is more to do. Getting those insights to flow back into execution systems, via prescriptive actions - that's up next.

Now the next step for us is then making that automatically flow through to the execution systems that we run inside of retail. At the moment, what's happening is: it's visual. We show; we give you a better answer. And then you as a user will go in and adjust an allocation, or adjust a price or adjust my assortment.

What we'll be able to do in short order is to have that flow all the way through, where the system will actually be able to come and say, "Guess what, based on actually what happened in the consumer market as of yesterday, here's our systemic recommendation of how you should change your price, how you should change your allocation, how you should change your assortment."

Giving aggregated customer insights back to customers - embedded inside products - is where SaaS vendors need to head next. I liked that Warren didn't overhype the AI aspects of this, though clearly "AI" is core to delivering what retailers are going to need. At the end of our talk, Warren finally used the AI word:

Ultimately, we have a number of retailers that are talking and coming to us and saying, "If I could get to a completely AI driven assortment, or if I can get to a completely AI-driven price strategy."

One thing retailers know: Amazon isn't going to wait for them to get it together. Amazon isn't going to let Whole Foods stores plug along with the same model as before. But now, retailers believe they can compete. Warren:

Part of my challenge competing against Amazon is when Amazon's creating and as managing the assortment or when they're managing prices, they've got a view to arrange that and consumer spend, that's massive. I only have this, but now we're going to level the playing field.

I'll have more to say on this as my NRF reviews continue.

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