How retailers can use technology to become data driven in a multi-channel world


By Peter Ruffley, Chairman at Zizo.

This article is brought to you by Retail Technology Review: How retailers can use technology to become data driven in a multi-channel world.

The retail market has changed; Amazon et al have transformed customer expectations; digital native millennials have a very different outlook to previous generations; and the influence of external factors such as social media can be both good and bad.

Yet look closely, it is clear that the essence of retailing has not changed. Success demands the right product mix, at the right price, in the right place – irrespective of channel. What has changed, fundamentally, is the timeline. And that is where the difference between traditional and online only retailers really lies. Traditional decision making and response times are no longer adequate in a market influenced by so many diverse factors.

External Factors

Far too few retailers are accurately and proactively tracking sales performance by store to understand whether external factors are influencing profitability. Any fluctuation in a store's revenue should raise an immediate flag for investigation. If revenue is down, has a big employer for the local community closed recently or is a major route into the town temporarily closed? If revenue is up – has there been a local marketing campaign or specific product promotion? If not, what else is driving that change? Has a competitor closed recently, leaving the population with no choice but to use this store? Is a new competitor due to open and, if so, how many of these newly acquired customers are likely to defect?

A retailer failing to explore and consider these external factors is likely to make some serious mistakes. Using standard replenishment models, the initial spike in sales caused by a competitor closing will, over time, result in increased stock levels. The arrival of another competitive retailer and resultant sales dip will lead to a massive overstocking issue and plummeting profitability. And the whole situation will be exacerbated by the inherent delay in reporting and review – the retailer may take upwards of a year to even discover what has occurred. It is this delay in analysis and decision making that is the real risk to retailers in today's marketplace.

Data Driven

Of course, one of the constant challenges raised by retailers is the inability to harness the vast data resources now available to drive value. Traditional data analytics projects, with vast data scientist resources, have not delivered. And, to be frank, the level of management commitment to these projects suggest they were not expected to deliver. The combination of a complex, lengthy and vastly expensive traditional analytics project and a lack of management direction makes it incredibly difficult for retailers to gain the required insight.

A data driven retail model is very different on two fronts. Firstly, organisations should be continuously tracking Key Performance Indicators and flagging up anomalies, such as sales spikes, for immediate investigation. Secondly, the latest generation of cognitive analytics enables retailers to quickly and effectively explore not just the data but, more importantly, business opportunities through that data. Rather than the occasional ideas provided by data scientists from traditional analytics projects, few of which have any relevance, using cognitive analytics a retailer can quickly explore the business potential of hundreds of ideas, and rapidly identify the handful that could deliver real value.

In both cases, it is essential that the data discovery process is backed by a management process to support data driven operational change. Staff need to be empowered to use these insights to make instant decisions. Investigating the spike, then drop in a store's sales outlined above, as soon as the changes occurred, would have enabled the retailer firstly to avoid over stocking and secondly to understand the new competitive landscape, assess which customer group was likely to churn and determine how best to minimise that churn through product mix and promotion. A far better outcome than waiting to discover a store is so unprofitable that the only option is closure.


Without doubt multi-channel retailing is a more complex model than traditional bricks and mortar retailing. Customer expectations are changing and will continue to change; the number of external factors that can affect success are also changing - it is no longer just the arrival of new competitors and shifts in local employment but also the increasing influence on public perception created by social as well as traditional media.

But retailing is still retailing. What has changed is the required speed of response. In the bid to remain competitive and profitable in a multi-channel world, it is not retail science that needs to change, it is the ability to use it in time to react to fluctuating circumstances.

Retailers need to harness that sense of urgency by using new data-driven IT capabilities that enable them to do that at a price-point that makes sense.

A constant awareness of external threats and increased speed of decision-making will enable prompt actions. These are the things that will underpin success over the next decade.

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