Retailers 'yet to unlock full potential of customer data'

Retailers might talk the talk when it comes to embracing a data-driven strategy but few are walking the walk with the vast majority (85%) lacking the capabilities, technology, people and processes to use insights to monetise their data and drive customer experience.

So says a new study of the estimated $5.9 trillion worldwide grocery retail market from DunnHumby, carried out by Forrester Consulting. It quizzed decision makers involved in data analytics and customer strategies at companies in the UK, the US, France, Spain, Germany, Italy, Brazil, China, Thailand, Japan and Australia.

Forrester uncovered three levels of maturity in grocery retail, differentiated by data-led customer strategies for growth and improved supplier relationships: leaders (which accounted for just 15% of companies), intermediate (55%) and novice (30%).

Leaders set themselves apart by showing improved collaboration with consumer packaged goods companies through sharing customer data insights, providing insights and measurement solutions to support media planning, and negotiating retail media placements as part of their annual trade agreements.

UK retailers are among the early leaders in developing customer strategies that drive revenue growth. Perhaps unsurprisingly, the vast majority (82%) of British stores view growing revenues as their top priority in 2020, and plan to do so by improving their use of data insights to develop customer strategies (78%) and to make business decisions (75%). Over the past year, nearly all major UK food retailers – including Tesco, Sainsbury’s, Waitrose and even Marks & Spencer – have been investing heavily in their data capabilities.

However, even leaders still have plenty of issues to tackle, the report states, with the main concern among UK retailers being the lack of data management tools or technology (40%).

UK retailers are facing several other obstacles including a lack of accurate, consistent, or complete customer data (37%), an inability to harmonise data and recommendations across channels, banners, brands, and locations (35%) and an inability to tie together internal and external data (30%).

Most grocers are not capitalising on the revenue potential of customer data and instore/online channels. Specifically, in the UK, just over half (57%) of respondents use mobile app data and only 42% use customer data, such as from loyalty programmes, to make decisions about actual customers.

Even fewer use other sources such as point-of-sale (37%), promotions data (35%), customer location (43%) and web metric/clickstream information (37%).

The report also returns to the theme of an earlier DunnHumby report, published this summer, which claimed that grocers leave money on the table by not monetising media assets.

Only 35% of UK grocers are currently selling branding opportunities on their website, 32% are currently selling them for print media whilst only a quarter offer media placements in-store; only 37% sell branding opportunities on their mobile apps.

The report claims that UK grocers which have offered media opportunities for packaged goods brands on their apps saw an increase in revenue over the last 12 months, with 59% seeing an increase of more than 10%. In addition, 93% of UK firms offering ads and branding opportunities on their websites saw an increase in revenue from this channel.

DunnHumby global retail director David Clements said: “Time is of the essence for grocery retailers to activate the data they already have to improve the customer experience and create new revenue streams that can support their businesses into the future.

“There is a significant amount of untapped revenue in grocery. Those that unlock the full potential of their data and media assets, and improved supplier collaboration, will thrive. Retailers that fail to adapt will fall behind in the increasingly competitive marketplace.”