Data Management Will Be Crucial to the Next Stage in Retail Evolution

Just two years after COVID-19 upended the retail industry, a new set of headwinds are reshaping the sector. Soaring costs and energy security concerns are combining with the supply-chain disruptions and labor shortages sparked by the pandemic. 

Retailers are having to rethink their strategies again, and what’s clear this time is that digitalization will no longer be a differentiator — it will be a lifesaver.

After migrating a large proportion of sales online to overcome the closure of stores and other outlets as part of worldwide COVID-mitigation measures, retailers are now looking for salvation in the data generated by their newly digitized operations. They’re focusing more heavily on mining insights from that information to do more than just sell goods online — they’re looking for ways to offer better experiences to their customers, streamline their back-office processes, and better manage their regulatory and legal compliance workflows.

And that’s all happening as retailers renew their focus on their physical stores after the relaxation of lockdowns drew shoppers back to Main Street. 

This data-led omnichannel approach will require clean, accurate, timely and well-managed data. Without treating data as an asset whose value can be unlocked, retailers will find themselves at a competitive disadvantage at a time when they need to build resilience.

Hard Times

The next few years are expected to be tough for retailers globally. 

Pandemic lockdowns in parts of the world, particularly China, will almost certainly continue to exert a deleterious influence over the global economy as supply chains remain in flux and bottlenecks to world trade intensify. Labor pools will remain depleted as the “Great Resignation” rolls into another year, deepening shortages that have hit the retail sector hard.

And now retailers must factor rising prices — especially for energy — and the prospect of a global recession into their calculus. This impact is likely to be more pronounced in economies, such as the UK’s, that lack self-sufficient power-generation capacity.  

Civil unrest is possible, too, as austerity measures taken by governments to heal the impact of the pandemic unfold over time.

Meanwhile, the increasingly apparent impacts of climate change seen in record temperatures and violent weather events during 2022 will trouble business planners over a far greater time horizon.

Insight-Driven

The omnichannel future that’s emerging in response will rely on insights found within retailers’ own data.

By harnessing sophisticated digital tools such as artificial intelligence, machine learning, and natural language processing, they’ll be able to unlock information that will help them make better-informed decisions across the enterprise.

The computing power of AI can help identify weak links in supply chains and offer solutions to fix them. Predictive software can go one better and forecast where and when those bottlenecks are likely to happen next.

In this way, retailers can ensure orders and inventory are processed and distributed properly so that customers won’t have to be turned away and their business lost. Additionally, it brings cost-reduction benefits to inventory control. 

These are vital because they all help ease the pressure on margins that are already razor-thin.

More than that, data derived from sales transactions, footfall studies, sales and returns patterns — anything that happens on a retailer’s digital or physical properties — can surface new marketing opportunities and sales strategies. By building a 360-degree view of their customers, companies can tailor campaigns to attract new patrons and retain existing ones. 

Additionally, sentiment analysis, which uses natural language processing to scan social media for what consumers like and dislike, can inform purchasing managers as they plan their next season’s sales lines and even optimize store layouts.

Unsurprisingly, Amazon clearly illustrates the benefits of adaptation led by data-derived insights. A recent study found that 35% of the e-commerce behemoth’s revenue was generated via its data-powered recommendation engine.

Digitalization has also brought the potential to improve and streamline retailers’ business operations. Product pricing can be better planned through trend and spending analyses to maximize profits from each item sold. Similar models can help predict optimum store location strategies, integrate payment systems, and automate end-of-day settlement of transactions to ensure they happen precisely and on time.

Technology can also automate and manage data usage to ensure that retailers use their information lawfully. 

Data privacy laws limit what can be done with the data collected on individuals. States and nations differ in their application of these laws, requiring additional vigilance by national and international retailers. They need to ensure they do not breach a rule in one jurisdiction that they need not observe in another. Those processes can be automated within corporate compliance teams to ensure they operate optimally across all markets and shield the company from legal transgressions.

The possibilities that technology offers retailers at their physical premises have been recognized already. A recent Gartner survey found that physical stores will be the beneficiaries of a huge amount of technological investment in the coming year.

There’s a macroeconomic rationale behind this; evidence suggests that companies that invest during a recession emerge stronger for longer.

Management Imperative

All of this depends on properly managed data, especially as the growing use of technology generates more and more information that can be crucial to individual retailers’ future prosperity.

Managing data to that scale requires expertise to ensure the endless tide of digital information is clean, ordered, and accurate enough for the analytical tools that will produce those critical insights. It must be stored in a way that prevents its loss, corruption, or misuse. At the same time, it must be governed precisely to ensure it is accessible by the corporate teams that can do most with it.

Technology has not traditionally been core to retailers’ operations, and so many may struggle to meet the latest data challenges. Even early adopters may be ill-equipped for the next stage in the digitalization of the industry. Their data may be tied up in on-prem legacy systems that can’t be expanded. They may lack the computing power to crunch through the volumes of data needed to drive future retail operations, and they may be tied into software licenses that are outdated and not upgradeable.

Without the right skills, companies may find their transitions make matters worse. There can be no place for the “lift and shift” concept here, where the adage “garbage in, garbage out” is likely to ring true.

There are solutions. Outsourcing the transition process and data management to third-party experts is on the increase as the complexity of data usage increases. And cloud-based managed services are also providing the expertise and infrastructure needed to make the change. Cloud has the capacity to scale operations and in-built analytical tools to pull insights from potentially limitless pools of data.

In a cost-constrained environment, retailers must seize the opportunities inherent in their processes and the data they generate. It’s a process that will require an across-the-enterprise evolution, but it will better position them for a newly austere trading future.

About the Author

Ramesh Shurma is the founder and CEO of Orion Governance Inc. Before starting Orion, Shurma developed his expertise by working in data-intensive environments as an enterprise architect, application architect, and senior consultant and programmer with a strong business and business and technology focus.

His vertical market experience spans financial services, health care, retail, and electronic design automation. Shurma’s Silicon Valley roots taught him valuable lessons in innovation and customer service.

The motivation behind Orion was to solve a real-world need that most of the other companies had overlooked in favor of an unreliable manual approach. The road less traveled, where people dared to tread but took in the spirit of innovation — that is Orion Governance today. With Shurma’s hard work, the team has grown to multiple millions in revenue in a short time. He is fluent in multiple languages, including French, Hindi and English. His hobbies include aviation, traveling, and having his three dogs take him on daily walks.