Data is one of the main drivers of commercial efficiency for retailers and the consumer packaged goods (CPG) manufacturers that supply them. Used well, data can provide a detailed 360-degree view of customers, as well as enabling retailers to streamline internal processes and optimise pricing. Data helps retailers and their suppliers reduce costs, boost turnover and maximise profits.
The importance of quality data is increasing as the world gets more complex. Competitive pressures on retailers are increasing as barriers to entry are lowered by technology. Following the pandemic, inflationary pressures are rising, caused by disruption to supply chains and staff shortages. All the while, more and more digital devices are being used, creating ever-increasing quantities of data to be monetised.
The problem for retailers, struggling to make sense of this complexity, is that much of the data they depend on looks back to what happened last quarter or last year. It is often out of date by the time it is available, and it is of little use in providing insight into what is happening right now. Most retailers lack the data to make real-time decisions.
A complex marketplace
Covid-19 caused the shift to e-commerce to accelerate by five years. Isolated at home, many consumers shopped online during the pandemic. And, having discovered the convenience that online shopping brings, they are sticking with it. For example, the US Census Bureau reported that food and beverage e-commerce sales in the fourth quarter of 2020 were $7.3 billion, up 125 per cent from Q4 2019. As a result, many retailers have had to shift their focus to e-commerce to accommodate shoppers’ preferences.
The move to internet shopping isn’t simple, especially in an environment where there is a choice between online and offline shopping. Consumers expect a seamless experience when moving across channels. They demand a wide range of opportunities, including traditional shopping, e-commerce (using web, mobile or social media), click and collect, and even visiting a store to choose an item before buying it online – sometimes while still in the store. Retailers need to manage all these different journeys and ensure that each one fully satisfies customer demands.
In addition, third parties such as Uber Direct, Instacart and Shipt provide even more convenience by allowing customers to purchase items and have them delivered, often in minutes. This adds an additional dimension. Retail is now a very complex environment, requiring far more data to manage it than has been available from traditional sources.
The problem with data
High-quality data allows retailers to build insights into their customer and their business. This in turn allows them to make better decisions about what to stock, how to price it and who to target. However, most retailers only use historic data records to inform their current decisions.
Unfortunately, this data is frequently quite thin. The syndicated data sources used in the industry lack granularity; often they are aggregated at regional or market level. This data also lacks recency, coming with a delay of up to eight weeks. In any fast-moving area influenced by the season, the weather or fast-changing promotions, such as fashion or groceries, it is of limited use.
Retailers that do not have access to real-time data also face another problem: emerging inflation. Staff shortages have been caused by the pandemic and made worse by difficulties with continued training of workers. This in turn has caused disruption to supply chains, with fewer workers available to manufacture packaged goods and fewer drivers available to deliver them. All this drives up costs. This is especially true in the grocery industry. One example is seen in the Consumer Price Index (CPI), which shows the price of meat, poultry, fish and eggs in the US rising by almost 6 per cent between July 2020 and July 2021.
Inflation is a major problem for the retail industry. Consumers, naturally enough, push back against price rises. However, manufacturers want to ensure that cost increases get pushed through to the shopper so they can maintain profitability. Retailers are caught in the middle.
Real-time data for real-time pricing
It’s hard for retailers to respond to changing commercial pressures without adequate data. But many are realising that better data is available online. This includes complex data such as feedback on review sites, articles in the online press and informal chatter on social media – unstructured data that can be analysed through powerful Big Data analytics.
Most importantly, though, it includes the detailed local pricing and availability data that can be found on the websites of competing retailers. This is a source of very real competitive advantage. For instance, in the grocery industry, it can be used with surgical precision for promotions such as two-for-one offers, competitor price matching and loyalty card user discounts. In addition, pricing decisions can be made at a hyperlocal level. It can also be used to manage the new levels of price volatility seen in the retail industry with frequent changes being made on an item-by-item basis.
Shoppers expect pricing consistency, irrespective of the channel they buy through or the location of the shop they visit. Their perception of whether a price is “fair” will help them to a final purchase decision. Having the data necessary to make flexible decisions in real-time will allow retail brands to be far more competitive by pricing products according to what is currently happening in the wider market.
Better data is needed to help retail organisations make business decisions more quickly, smartly and efficiently. In a fast-paced and competitive market, granular, hyper-local and real-time data enables retailers and their suppliers to remain competitive, operate more efficiently and drive up profits.
Datasembly provides access to billions of grocery and retail pricing records from every store at hundreds of retailers, allowing organisations to make business decisions quicker, smarter and more efficiently. Find out more at datasembly.com.