Retailers turn to data to ride out economic woes
- Can retailers weather the storm as the cost of living starts to bite? Richard Cudd of Confluent looks at the actions being taken by senior execs at big retailers who are getting the most from their data.
It’s a tricky time for retailers. Increases in the cost of living are starting to bite. And wavering consumer confidence is forcing people to rethink household budgets and tighten their purse strings.
Every now and then, a story hits the headlines to provide some respite to the seemingly endless wave of bad news. But in the main, the once optimistic post-pandemic forecasts from retail analysts are being trimmed to reflect changing conditions.
Yet retailers are a resilient bunch. Adjusting to the rise and fall of economic tides while meeting the ever-changing demands of customers — all while securing supply lines — is in their DNA.
And while the economic news may not be rosy, retailers with long-term ambitions aren’t simply prepared to ride out the economic storm and hope for the best. I’m seeing many larger retailers investing in product development, suppliers, logistics, and more to ensure they have the products people want at a price they can afford.
Ongoing economic uncertainty is the only certainty
Retailers have also been turning to technology to help improve the retail experience — both in store and behind the scenes of an online window. Whether it’s introducing virtual shopping assistants, click-and-collect, or same-day delivery – what links them all is data.
Speaking to senior execs at big retailers, we found many have accumulated huge volumes of data in areas such as customer behaviour, spending patterns, the supply chain, and inventory. The more data you have, the better you can respond to price fluctuations, supply-chain constraints, and new entrants that bring the capability to shake up traditional sectors overnight with their disruptive business models.
And yet, the problem is that many retailers simply aren’t able to unleash the true value of all that data to help cut costs, ensure shelves are stocked, increase sales and drive profitability. Simply amassing vast quantities of information is no use unless it can be accessed easily and processed quickly to deliver real business insights and dynamic customer experiences.
Data unlocks business insights
For example, Picnic is Europe’s fastest-growing online-only supermarket – currently operating in the Netherlands, France, and Germany – that relies heavily on data-driven decisions to provide the lowest price guarantee to its customers.
Upon a successful series B funding round and the company’s huge growth, it was looking for a better performing and more reliable data streaming platform, as well as improved streaming analytics capabilities.
Opting for an ecosystem of tools to source and sink data from data streams, Picnic has saved time and money by reducing operational overhead and allowing for real-time processing. It found it was able to easily scale event data, reduce infrastructure costs by 40%, as well as eliminating data loss which is so important to the core of its business. By future-proofing its architecture, it is on the right path to unleashing the true value of its real time data.
Boden – the British fashion retailer selling primarily online, mail order, and catalog - has also made its data work harder after it realized that legacy IT systems from its original catalog-based business were struggling to keep up with the company's omnichannel, digital-first approach.
Its self-built e-commerce platform - which had been used successfully for years - was no longer able to provide the real-time responsiveness needed by the business. Instead, it opted for the introduction of a new set of core business systems to modernize essential processes, such as order management, and led the way for the final shift from Boden’s catalog-based business model to online sales.
Crucially, instead of running batch reports overnight, real-time data processing gave the leadership team to-the-second visibility as to what was happening online. And that’s important. A real-time view of inventory that spans stores and distribution centers means that the management team can see the status of every order.
The constant flow of data means that consumers visiting its websites receive personalized clothing referrals and suggest alternative products if something is out of stock matched with accurate delivery times.
The result is a much-improved customer experience and business with full sight of changing clothing demands while optimizing supply chain availability.
Retailers must not lose themselves in the data triangle
What links both Picnic and Boden– and just about every other major retailer – are three key data points.
They want to know about their customers, their preferences, and their habits so they can personalize their service.
With so many sales now online, retailers are increasingly focused on the order management process, from the very first click-through to sale, delivery, and even return.
And, of course, they need full sight of their supply chain.
Although all three are essential to a successful retail operation, the supply chain issues of the last couple of years still haunt retailers. And it’s the challenge of smoothing out the interruptions to the free flow of global supply chains that are currently occupying the minds of CIOs.
A hangover of the global shutdown during the pandemic, supply chain bottlenecks (despite seeing some improvements in recent months) continue to dog the retail sector, causing headaches around availability and pricing. As work continues to address all three data points outlined, it is increasingly being done against a backdrop of economic uncertainty.
How retailers adapt to trading conditions over the next couple of years – and the role that data plays in allowing them to operate more successfully – is definitely worth watching. And as we approach what we often refer to as the golden quarter for retailers, it is more important than ever that companies use data in order to stand out from the crowd and accelerate their capabilities.