Why has retail’s transition to data-driven enterprises been so arduous?
The ability to understand, predict and ideally shape consumer behavior lies at the heart of today’s heightened interest in analytics and the growing appreciation for the huge potential of data-driven insights. The retail data revolution started when Walmart launched Retail Link and data-driven supply chain management more than 20 years ago. This has been carried forward with a vengeance by Amazon, which is leveraging data to understand what prices to list, customer paths to purchase and monetizing insights.
In the recently released “2016 Retail and Consumer Goods Analytics Study” from RIS News, retailers consistently ranked analytics as a strategic priority. Retailers now know that data management is the core foundation of getting things right. They know that uncovering and acting on data-driven consumer insights is essential to stand out in a crowded market place battling for a well informed, highly connected and technology empowered consumer.
However, efforts towards improving analytics maturity are to-date unimpressive and underwhelming. In the RIS News study, retailers are equally split regarding the two primary challenges they claim are keeping them from adapting to analytics and becoming more data-driven:
- Difficulty shifting away from a culture that has relied on intuition rather than data.
- The absence of clearly a articulated analytics strategy in most retail organizations.
The time for retailers to act is now. While access to data scientists is tight, the basic enterprise analytics solutions available are relatively inexpensive compared to the potential return on the investment. Perhaps more importantly, the lack of investment in this critical technology may result in a competitive disadvantage that negatively impacts the company for years.
- Amazon Is Quietly Eliminating List Prices – The New York Times (tiered sub.)
- 2016 Retail and Consumer Goods Analytics Study – RIS News
DISCUSSION QUESTIONS: Do you agree that retailers have been too slow to leverage analytics compared to other industries? Has being data-driven and analytics-focused become operationally essential for retailers looking to compete with Amazon.com and other rivals?