It’s a question I ask after reading an article in Computer Weekly. Titled, “Retailers to invest more in technology throughout 2014,” the piece discusses research published by the law firm, TLT, specifically, the technology investment plans of retailers for 2014.
We all know from reading the news that retailers are struggling – hardly a day goes by without fresh tales of woe from the High Street. Savvy customers are increasingly shopping for the best deals. This is putting added pressure on already tough margins.
Furthermore, after many years of investing in point-of-sale technologies, coupled with postponing the upgrade of core IT infrastructure during the recession, many retailers are now playing catch-up as they compete for the hearts and minds of customers.
However, strangely absent from the investment intentions of retailers is their data plans – just what do they intend to do with all the data collected on their customers?
If there is one industry that can do the most with data: it’s retail.
Retailers have more data than ever about us and what we buy. Yet, most seem to be sitting on an untapped goldmine, and aren’t using it to get closer to customers by offering personalized offers and incentives.
What you see below from the TLT research, is that retailers still see the world through distinct channels. This, to me, is putting the cart before the horse. Retailers should be focused on the customer, understanding the individual: likes and dislikes, and other behaviors. But this insight can only come from the valuable data which retailers already possess, but aren’t tapping into for benefit of customers (and thus treating it as a strategic asset for themselves): Focus on the customer, and revenue will follow.
In a well-received McKinsey report (Big data: The next frontier for innovation, competition, and productivity) published a few years ago, the management consultancy estimated that retailers could increase profit margins by as much as 60% by exploiting big data.
Big or small, without data, a company doesn’t have fuel. It’s like a company without leadership – it’s rudderless.
Retailers are investing in technology but they do so after developing a data strategy centred on how to get closer to customers, including who needs access to the right insight to inform decisions, i.e. sales, marketing and customer care teams.
In a digital era when customers are increasingly using mobile devices to search for and buy goods online, it’s important that retailers capture and connect data based on all the touch points used by customers (such as websites, in-store and call centres). In all likelihood, retailers have the information already; it’s just not connected in any meaningful way to be useful.
Until this happens, retail executives will struggle to engage and win over customers. It also likely organizations will waste a lot of valuable time, resources and money on technology that won’t deliver the results they expect.
My advice is retailers should focus first on their data strategy followed by looking at their technology investment plans.