Brad Banducci (center) and Amitabh Mall (right) of Woolworths at NRF 2023 – Photo: NRF
Does retail need a data-based rebuild?
Australian supermarket Woolworths has succeeded in using analytics to inform and redesign a number of processes core to its business in a short amount of time. In a session at the NRF 2023 Big Show, Brad Banducci, chief executive officer and managing director at Woolworths, and Amitabh Mall, chief analytics officer at Woolworths, explained what the retailer has been doing with its analytics and why other retailers should do likewise.
“We are not about incremental changes,” said Mr. Mall. “We are about looking at the core processes and fundamentally trying to reimagine it.”
Woolworths sees a place for such technology, not just for streamlining customer experience, but for other areas of the business such as buying and merchandising, store ops, replenishment, supply chain and support.
Mr. Banducci and Mr. Mall gave a couple of examples of areas where Woolworths has applied analytics to reimagine core processes.
- Streamlining holiday hiring: Before the data-driven rethink, Woolworths store managers were looking at data points like labor needs, their previous year’s holiday hiring numbers and their budgeting for and hiring of tens of thousands of temps accordingly. After the rethink, the company utilized data on departmental business expectations and skillset needs, implemented predictive modeling to assess potential attrition and churn, and gave store managers more robust, granular information. This gave managers the knowledge, for instance, to ask particular workers if they would work more hours instead of hiring seasonal temps. The retailer reduced seasonal hiring by 50 percent year-over-year, even as business volume increased.
- Reducing energy usage: Through a basic IoT control center that turns things off, the chain reduced energy consumption by one-half percent.
- Pricing optimization: Woolworths formerly ran deals based on a combination of previous sales data and supplier suggestions on pricing, sometimes overwhelming category managers with data. Analytics allowed the retailer to look deeply at how specific promotions performed and predict how they might perform under different circumstances, giving category managers actionable insights.
“We think it’s critically important to reframe the conversation around analytics or it just becomes something you sort of use when you want to use it,” said Mr. Banducci.
Discussion Questions
DISCUSSION QUESTIONS: Do you agree with the claim that most retailers’ core processes need to be fundamentally reimagined using data? Where do you see some of the biggest opportunities (customer experience, merchandising, ops, supply chain, et al) for improvement?
Poll
Loading …BrainTrust
Lisa Goller
B2B Content Strategist
Andrew Blatherwick
Chairman Emeritus, Relex Solutions
In my experience, most retailers are still struggling with consistently making decisions based on data. In order to be useful for decision making, data needs to be compiled in a way that makes it easier for decision makers to make decisions with it. What is the insight the data is informing? Specifically, what decisions can be made with it? Collecting data is easy, but making it usable and formatted to make decisions is a lot harder. Retailers and businesses in general should focus on making their data easier to interpret so that their managers can make better day-to-day decisions with it.
Agreed – do most retailers (or brands in general) even know what they are doing with the data they currently have? Or how to use it effectively or tell a clear story? I’m not sure “more data” is the answer. The question is more around the overall art and science of data.
Data is critical for making informed decisions and using it more effectively — which includes analyzing it properly — is incredibly helpful. It is especially useful in areas like pricing and demand forecasting, provided it is actionable. That said, human input is also needed — especially on the softer side such as range development, store standards, and merchandising. Interestingly, Woolworths is somewhat weak on all of these things: a lot of its stores and products leave a great deal to be desired!
I believe that every retailer should periodically re-engineer their processes. Many retailers focus on the hiring and organizational, the technology and their processes as separate entities but the reality is that best-in-class retailers harmonize the people, process and technology and look at their organization holistically. Business process management tools that allow you to model, simulate and instantiate change are the building blocks necessary to streamline functions, activities, tasks and steps that allow an organization to reinvent itself.
Data has become the heart and soul of retail driving everything from the quality of the customer’s experience to the size of the retailer’s profit margins. As funding becomes harder to obtain and shareholders demand results in shorter and shorter time frames, data is becoming essential to optimizing all aspects of business. Having access to cross departmental data will help brands and retailers make the right investments in people and technology with confidence that the money spent will fuel successful outcomes.
Well of course, retailers must treat data as an asset, one that is thus far underused. My only concern is that creativity in product design must be maintained. And I don’t think older data is the right thing to use for that.
An emphatic yes: retailers must reimagine retail processes with data to make smarter, faster decisions. Actionable, data-driven insights save time and money, and protect customer loyalty.
Data gives retailers visibility and drives costs out of the supply chain, improving the customer experience and forecasting.
Great points Lisa, especially that the benefit is using data to make smarter, faster decisions. There is often a wealth of data, but the key is connecting it all to have one version of the truth and having the right tools and processes to drive actionable insights.
With the rapid change in technologies, some obviously applicable to retail and some only imaginable to very creative minds, there is enormous opportunity to re-imagine the retail industry. On the obvious side, supply chain management and real-time inventory are critical to meet the increasing expectations of shoppers. Similarly, customer outreach, blending CRM, shopping patterns, data analytics, and demand-based pricing can create and enhance customer/retailer relationships to a seemingly magically-curated level. On the non-obvious side, the shopping experience — in-store, online, and virtual-reality based — can benefit from bringing in the equivalent of Disney’s Imagineers to craft retail immersion and entertainment experiences.
Haven’t we been having this conversation for over a decade? It’s rarely a case of not having enough data to drive better decision making, it’s usually a case of being able to effectively harness the data into insights that lead to better decision making. Processes and technology are what will enable this. I would start with supply chain, since effectively having inventory visibility drives almost everything…
…and it would not surprise me if we continue to have this conversation. The reluctance of retailers to embrace data information is head-scratching.
The key word in this article is “knowledge.” The data was studied and filtered for insights and knowledge. It’s not necessarily about more data. It’s about more insights and knowledge from the data they already have.
Not all retailers need to re-frame their analytics because some are in a more mature analytic state than others. That said, all retailers must continue to ask the “why” question. For every process, for every algorithm, for every report, for every decision, ask the question why, why, why are we doing this and what value is it delivering to the organization? It’s hard to pinpoint the biggest opportunities. There are many. Supply chain likely contains the largest wins from a monetary standpoint because of its sheer size and scope, but CX likely has the biggest impact for immediate behavioral insights. The one area that all companies (not just retailers) find challenging is operationalizing advanced analytics at scale and speed. Depending on what stat you read, a whopping 65 percent to 80 percent of companies are challenged with industrializing analytics across the enterprise for maximum benefit.
Data, like all tech, doesn’t save businesses from themselves. Businesses still require sound business strategies and management. Therefore, the biggest opportunities for data are to provide decision making information for areas that may have been difficult to analyze because of their sheer size or complexity, like consumer behavior. Determining whether you turn lights on or off or hire people is probably something we could have done with green screens, mainframes and a very sharp pencil. I’m not sure that what Woolworths has done constitutes the re-imagination of a fundamental, core business process but it sounds like they are applying data strategically and not because it’s one of today’s tech buzzwords. With solid strategy and management it will make a difference.
Retailers have traditionally been very linear in the use of data as a single sales channel. As retailers become omnichannel and use more advanced marketing and analytics, their approach to master data and transactional data needs to change. Data silos need to be minimized and data needs to be centralized and governed better so you can get the most value out of it. More functional areas and roles need access to the data so everyone can be enabled to do their job and also ensure that everyone is referencing the same data.
Some of the most common use cases include efficient on-boarding of product data and supplier information. Doing this right and efficiently can help retailers more effectively share this information across all channels of commerce to the end-consumer.
Data without the context of the consumer is just numbers. Retail overall has become very numbers driven, often missing the magic of merchandising. Data is great, but it should never take the place of intuition and experience.
You cannot say that data can drive better decisions and processes in isolation. Just providing masses of data will not improve the business. It requires new modern technology that can analyze that data and make recommendations to informed employees who are empowered to take action. Data in isolation is of no value, data used correctly is invaluable to all retailers.
“Reimagined” is a big word. I don’t think we are in a reimagined state yet. I would just like to see retailers imagining how they can use data. Too often, the legacy of the decision-making process trumps the answer that could be given through a robust data process.
One of the challenges the retailers will face is some data will contradict ingrained assumptions. The retailer must continuously ask what the data is telling us that is different from what we think. The data must be processed as a whole, not in the silos the way business is often managed.
Just like the book and film “MoneyBall” depicted, I think there is a lot of value lost because of old processes and thinking. There are still areas for improvement within “back office” functions, however I think the bigger opportunities to leverage are in the customer experience areas, and not just in-store.
So yes, I agree. Use data to improve the customer journey, and keep using it!