The Tools for Becoming a Data-Centric Grocer

Across the globe, the retail industry is seeing a new era – one driven by data and getting a shakeup like none ever seen before. From Amazon's purchase of Whole Foods – and thus, its complementary set of customer data – to Alibaba and some experts' opinions that it may hit $1 trillion in market cap before Amazon does, significant occurrences are forcing retailers, including grocers, across the globe to rethink how they define a customer-first strategy in the age of new retail.

“New retail is the integration of online, offline, logistics and data across a single value chain,” noted Jack Ma, founder and executive chairman of Chinese ecommerce company Alibaba Group, in October 2016 – a quote shared in a keynote presentation by Guillaume Bacuvier, CEO of London-based customer science company Dunnhumby, at the company's North America Partner Summit in Chicago on Oct. 30.

According to Bacuvier, offline and online data sets are the fuel of new retail ecosystems, yet most remains untapped. However, offline data strongly supports online data: When targeting is based on previous purchase data, it can become up to 25 times more accurate.

“Data in itself is becoming an increasingly competitive asset,” he said.

For instance, Procter & Gamble recently cut its digital advertising budget by $140 million, and sales rose 2 percent, Bacuvier explained. Given the importance of digital advertising today, one might find this surprising, But in the end, P&G spent tons of money online but wasn't sure what it was buying or what the outcome was. It's ultimately the data behind it that matters – digital is great, but are grocers collecting the data necessary to understand the customer better than they did before?

Competing in the data race isn't easy, Bacuvier assured. Leading companies such as Apple, Alphabet, Microsoft, Amazon and Facebook have tons of data, but they also embrace a culture surrounding the extraction and analysis of data, too.

So what does it take to be a data-centric grocer? Bacuvier suggested that grocers:

1. Get customer data front and center, starting at the top, in the boardroom.

2. Take the data throughout the organization, down to the store level.

3. Make it a rule to involve data at any touch point with a customer. If a grocer is able to make promotions and other customer communications as personalized as they can, then the relevance and impact will be very significant.

4. Develop their own revenue-generating ecosystem. For instance, London-based multinational grocer Tesco has many properties, including media properties, along with data that helps them build ad campaigns that are targeted and whose results can be measured. From that, the retailer has built a sizable business that acts as a pure media operation and has nothing to do with retail. Grocers have to ponder: At what point do they consider that their business is not just retail, and that the data they've acquired is an asset – a source of revenue and a business?

5. Plan for your future customer technology. This involves not only how to use technology to improve the customer experience as a grocer, but also which new types of data technology will allow them to collect to further enrich their data sets. New technology always is an opportunity to build new data sets – take such innovations as Amazon's Alexa-enabled devices, the Samsung Family Hub Smart Refrigerator and other smart devices.

6. Plan and prepare for future customer regulation. How will regulation evolve in their market when it comes to manipulating customer data, and what does that mean from a strategic standpoint? For instance, in Europe, the General Data Protection Regulation aims to give control of customer data back to the customers. This may allow any customer in Europe to be able to request any retailer with their data to hand it over to another retailer in a portable, standardized format, allowing them to, if they wish, switch loyalty programs. If larger companies such as Google or Amazon can convince shoppers to transfer data from other retailers to them, they can gain significant advantages against those retailers. What would it mean in the U.S. market if similar regulations are introduced and enforced?