The retail industry is on the brink of another seismic change.
The massive amounts of data being collected and analyzed today can fundamentally change the way retailers interact with customers. Data can help retailers understand the habits and preferences of their customers, engage with them, establish loyalty and market their products more effectively. Yet in order to capitalize on this trend, retailers must put in place leadership teams that are open to change, appreciate the value of data and can effectively leverage this asset through human capital and technology to provide a highly personalized customer experience.
This is not the first massive shift in retail in recent history. Fewer than 10 years ago, we were looking at an industry which had fallen out of sync with the customer. Inventories across channels weren’t talking to each other. There was no single view of the customer. And there weren’t technology platforms to enable the advances necessary. It wasn’t meeting the needs of the new Internet-driven, mobile customer.
Retail leaders understood this change and made the investments required to service every customer anywhere, any time and any way that they preferreda. Many leaders and companies had to change. They had to understand the impact of this strategic shift and the technology needed, but they also had to know how to lead cultural changes necessary within the organization. The advent of omnichannel would change retail forever.
But retail leaders need to be careful how long they look in the rearview mirror. Change is happening again. We are sitting on the cusp of yet another wave of transformational change. New technologies and expectations are emerging and an evolving consumer is looking for a fully personalized shopping experience. These lofty expectations are setting fire to another, potentially bigger, wave of innovation in retail: data and analytics.
Massive amounts of data are already available, and hold the promise of being able to inform the brand or retailer about each customer’s size, preferences, past purchase history, loyalty status and other relevant data points that significantly enhance engagement and the overall customer journey.
While this information presents a massive opportunity for brands and retailers, hurdles still exist. In many instances, retailers are just simply overwhelmed by the massive amount of data, aren’t able to analyze it effectively or simply don’t have the capacity or the culture to benefit from it. This is not unlike what we faced in the early days leading to omnichannel retail.
The next wave of innovation will require retail leaders to adapt their organizational design and culture to continue to succeed in this data-driven new world. Whether it is through predictive analytics, artificial intelligence, augmented or virtual reality, reality mirrors, facial recognition or more, each company’s approach will be different, and tailored to customers based on a deep understanding of their behavior and preferences.
Much like with omnichannel, retail leaders will need new ideas and an organization with skilled teams that are able to interpret data to affect decisions across the value chain, from marketing and loyalty to product development and beyond.
As we sit on this precipice of the next wave of retail transformation, here are questions retail leaders need to be asking right now:
- What skills and tools should we be embedding into our organization, analytics team and product development process?
- What kind of analytics group do we need to have? What partners can help us ask the right questions?
- How are we using analytics to drive product?
- How progressive are we in marketing, and to what extent are we using analytics in the development of our customer segments?
- When it comes to customer behavior inside and outside of the store, how are we customizing and personalizing experiences at every consumer touchpoint? How can data affect this behavior?
- What are we doing to become more fact-based, and rely less on intuition or assumptions about our customers?
- How are we using our data to better understand motivations, what our customers are buying, where and how often? How is this being used in decision-making from the merchant to the marketer?
Looking back over the last few years, it’s hard to believe that omnichannel was once a radical idea. Through strategic vision, organizational guidance and investment decisions, retail leaders have driven transformative change that sustained the retail industry. It should be commended. As the next wave of innovation gains momentum, it will be critical that industry leaders remain steadfast in their focus on innovating to meet consumers expectations, this time through data and analytics, if they are to secure their futures in the new world of retail.
Stephen Sadove is former chairman and chief executive officer of Saks Inc. and is the principal at Stephen Sadove and Associates. Sadove is also a member of the Retail Influencer Network.