The Game Has Changed for Retail – or Has it?

The coronavirus has precipitated a blood bath on highstreets across Europe. In the UK almost 70,000 jobs have been lost and 9,000 stores have closed since the start of lockdown. In Germany a recent poll of 400 shops found one in three concerned about their very existence. Similar stories of closures, layoffs and declining revenues are found across the region. Lockdowns and supply chain disruptions have driven the immediate crisis, but in reality, many of the issues facing retailers today have been present for decades. The ongoing incremental, but fundamental, change to the way people shop, and to the balance of power between retailer and customer has been accelerated by COVID-19, but the underlying problems are the same. Short-term solutions to survive the pandemic will not solve these issues. Instead retailers should see this as an opportunity to finally tackle the real problems that have hamstrung growth for years.

As retailers know, success is built on understanding your customer. But for many, even before the crisis, actually building this understanding, and acting upon it day-to-day and minute by minute is hard. Considering the pace of change, the impact of technology on marketing and sales channels and the explosion in retail options for customers, merely keeping up with customer expectations is a full-time challenge. The naturally innovative and growth orientated nature of retail has contributed to this issue. Expansion, globalisation, acquisitions, new brand introductions, new on-line channels – all designed to better serve customers have, as unintended consequences, created disjointed processes, highly complex supply chains and silos of data and insight across retailers. This fragmentation made a unified view of the customer all but impossible in ‘normal’ times let alone under the pressure of a pandemic.

The pandemic has turned up the volume on these existing issues more than it has added new ones. Dealing with unforeseen and rapidly evolving scenarios has highlighted that many retailers have in effect been flying blind for years. Work to extract information from across their organisation to try to understand yesterday’s events and predict today’s has highlighted the shortcomings of processes and systems that were already failing to keep up with the demands of modern retail. Having accurate, timely data in the right place and format to support effective analysis and subsequent action is the difference between those retailers that will weather the storm and flourish, and those that will not.

The retail sector has been talking about and investing in data for decades. In fact retailers are drowning in data; from transaction data to stock figures, order details to delivery performance, customer loyalty schemes to marketing attribution, net-promoter scores to social media likes, today’s retailers collect petabytes of data, so why has it been so hard to put it to effective use? The answer, I believe, is that there remains a disconnect in most retailers between the data and the business. Data has been collected and is used to support existing business processes, typically through manual intervention. Often it is done at a department or functional level. Insights are gained, and processes tweaked but progress goes no further. One aspect of operations is more efficient, faster or more informed, but the overall business process remains the same. Often the improved approach remains product or channel centric - so it works better but does not improve knowledge of the customer.

For most retailers, using data has resulted in incremental improvement of existing processes rather than transforming them or driving entirely new approaches. But this reinvention is what retail needs, and has needed for some time. Becoming truly customer centric, in all operations and in real time is no longer a differentiator – it’s essential.
 
The COVID crisis has dramatically illustrated how important a precise, up-to-the-minute view of the Customer and the whole business is and from now on knowing and acting on data in real-time will be critical. It has also exposed many existing processes as no longer fit for purpose. The game had changed for retail long ago – but it has taken the present crisis for people to notice. It has prompted much needed introspection and analysis from which is emerging a new appreciation for the role of data in the organisation. Data is no longer just the fuel to drive operations, but as a new ‘brain’ analysing, innovating and creating new business processes that better serve the customers.