The Analytics Imperative: Breaking Down the Borders for Seamless Retailing in 2014
By Dave Richards, Accenture Retail
We shop almost every day – picking something up at the drug store or buying lunch, clothes shopping or getting groceries, looking for a gift or checking out a promotion – and we are doing this on the way to work, at work, at night while watching TV, online, at a store and increasingly across mobile devices. There is one thing that unites consumers in all of these instances: we expect the experience to be unified, personalized, constant, connected and, above all, seamless.
The reality is today’s customer is a non-stop shopper who wants and expects to move seamlessly across channels regardless of time, place, ethnicity, demographics or economic status. According to Accenture’s Seamless Retail research, that means customers expect to be recognized and respected no matter where, when or in which channel she or he surfaces. The survey also found that part of that experience is consistency, and a growing number of shoppers expect a retailer’s product offerings (51%), promotions (57%) and prices (69%) to be the same across channels.
In today’s fast-moving markets, a seamless retail experience is becoming a prerequisite for any retailer that wants to remain relevant. In tomorrow’s markets, seamless retailing will be indispensable.
Understandably, many retailers feel overwhelmed. The advent, adoption and maturation of analytics as a business discipline promised the tools and solutions required to support that seamless experience. But where does the actual implementation of retail analytics stand? How are retailers using this potent new capability? And is the practice delivering on the promise?
As retail enterprises put analytics to work today, they are motivated by a number of imperatives:
1. The Insights Imperative: The need for sharper customer insights using master data management is understood, but at least half the retailing industry is still searching for a solution. Once retailers solve the puzzle of mining data to develop sharper insights into customer wants and needs, they will discover that integrated data is the most direct path to creation of a seamless customer experience across all channels.
Example: One online retail group sells to consumers primarily through web sites and catalogues. The goal is to use data analytics to manage multiple accounts of a single customer as one holistic relationship, a prerequisite for developing a truly seamless retail experience. Using analytics online has greatly improved the company’s effectiveness in tracking customers’ pre-purchase activities, and optimizing product positioning accordingly. As a result, the company now has more sales, bigger orders and better sales conversion.
2. The Actions Imperative: Retailers must find ways to turn insights into decisive actions at speed and at scale. Accenture’s research found that the ability to check product availability online before traveling to a store is the service that would most improve the shopping experience, according to 31% of U.S. shoppers. Further, the vast majority of respondents (88%) said they would either travel to a store to make a purchase or buy online if retailers offered real-time information on product availability. The goal in collecting and analyzing data is to harvest the rich insights that will help retailers shape a seamless and successful experience for the customer, guiding smarter decisions about which products to stock, what prices to charge and which offers to make to whichever customer you as a retailer interact with at this moment in time.
Example: As a niche player in the luxury market, fast, fact-based dynamic decision- making is critical to drive sales from current customers and to identify new growth opportunities for the enterprise.
Using advanced analytics capabilities, the retailer collects and filters massive amounts of online data from news, business and social networking sites, blogs and forums. With the results displayed in user-friendly dashboard reports, the company can leverage real-time business intelligence and trend analysis to make informed decisions that target consumer purchase preferences and product needs from a geographic perspective.
3. The Outcomes Imperative: Retailers must engineer the links across their enterprises that tie decisions and actions with the outcomes desired. Of the three imperatives, this is arguably the most critical of all, as well as the most difficult for retailers to achieve.
Example: Two major grocery retailers merged their operations, uniting a strong footprint in North American markets with a presence in other markets around the world. Both go to market via well-established discount brands, but their online operations were miniscule compared with their brick-and-mortar businesses. Analytics is being used to gain insight into the strongest elements of the established brand identities so that everything can be unified under a single powerful brand, and the customer experience will be consistent regardless of channel. Analytics are also being used to develop customer-level metrics and track profit per household, rather than profit per square foot of retail space. With the insights gained from this data, customer marketing initiatives are being adapted to achieve personalized interaction and a faster, more focused customer experience overall.
Behind all three imperatives is a single seismic shift: every customer is increasingly digital, and so every retailer must increasingly become a digital business.
Leading retailers have adapted to the new reality, customizing their offerings, in context and across channels to forge relationships with shoppers as individuals. They are consolidating functions and developing the skills needed to ensure a seamless customer experience. They are building the IT platforms and integrated data services needed to support such seamless experience.
But others are still striving to take an integrated enterprise-wide approach to analytics. For this reason, it is perhaps unsurprising that a large percentage of retail analytics practitioners have not yet seen an adequate return on their analytics investment. Recognizing and responding to the imperatives revealed will be critical for retailers who seek to turn analytics into a competitive advantage.
Many retailers stand at a vital juncture in the journey toward Return on Investment. Those in the competitive set of the future are already using analytics to take a holistic view of the customer and to make decisions based on the customer experience, rather than on price plays, inventory issues or product-based considerations. They are integrating data from across channels to shape a seamless customer experience as the core of their digital enterprise. Everyone else has a choice to make. They can either respond in kind, embracing analytics to focus relentlessly on the insights, actions and outcomes they need to meet the competitive challenge, or continue with business as usual.
The choice is clear; the digital marketplace is the future, and the decisive difference is analytics.
Dave Richards is Global Managing Director of Accenture Retail. He can be reached at [email protected].