How Data Can Offer Entrepreneurs and Brands Like Rite Aid a Lifeline in the Face of Bankruptcies

Jeremy Bruck (L) and Douglas B. Laney
Jeremy Bruck (L) and Douglas B. Laney

Following the mass closure of stores across the US earlier this year, reports indicate that retail pharmacy Rite Aid recently filed for bankruptcy after a 50% drop in its stock. For Rite Aid in particular, its heavy financial losses stem from multiple lawsuits coupled with extremely tough economic conditions.

But Rite Aid certainly isn’t alone in this regard. Major retailers across the U.S. are set to close 2,373 stores across the country as they attempt to cut costs and adjust business formats. Meanwhile, 2023 is shaping up to see the highest rates of bankruptcy filings in over a decade. 

For the thousands of other companies with weakened financials, the future looks uncertain. However, while bankruptcy and restructuring processes are complex and multifaceted, it also presents an opportunity to reassess current business strategies and find alternative ways to generate revenue.

The surging data monetization market, set to reach $15.5 billion by the end of this decade, provides one such alternative.

Brands like Rite Aid have data that represents an underutilized resource with the potential to create new revenue streams and improve financial solvency. Yet despite this, only 21% of organizations currently focus on data monetization.

A Rite Aid store in California.
A Rite Aid store in California.Wikipedia

In this article, we’ll explore the types of data assets retailers like Rite Aid have at their disposal to create long-term economic growth and what lessons business and technology leaders can learn from this to monetize their own data.

An untapped data goldmine

Describing data as “the new oil” undersells its potential - data has greater value. Based on Rite Aid’s transaction and product volumes, footprint across thousands of stores and pharmacies, and millions of customers, the company possesses a wealth of datasets that represent near-term realizable economic value for the company.

This data is typically collected as standard by brands and retailers like Rite Aid to manage and optimize sales and operations. This could include marketing and advertising data on customer behavior, e-commerce and website traffic metrics that monitor user habits and sales performance, sales patterns and fluctuations found within order records, personalized customer profiles used in loyalty programs, and supply-chain data that looks at product demand and supplier activity.

While these examples are related to a national retail brand like Rite Aid, it is likely that every company today is collecting valuable data as part of internal reporting and business intelligence initiatives. It i’s simply being underutilized.

What many leaders don’t realize is just how valuable this operational data is as a company asset. In our digital society, 90% of the value of S&P 500 companies now comes from intangible assets.

This means, the majority of companies are actually being undervalued, which can affect everything from ability to access financing to the success of negotiations during M&A activity to stock price.

In addition, the same insights that can help your company run more efficiently and uncover new market opportunities are also highly attractive to a range of external buyers when monetized correctly.

A new class of customer

Rite Aid has access to a vast amount of data related to its business operations both online and in-store. This is likely to appeal to a number of potential buyers.

For example, analysts and investors could be interested in transaction data, loyalty program performance, and e-commerce metrics from Rite Aid that offer insights into general consumer behavior and market trends. Rite Aid could also consider its own suppliers as a potential buyer by offering access to detailed analytics on product performance, inventory turnover rates, and distribution patterns.

Marketing and sales experts aiming to generate new leads would be highly interested in accessing detailed customer profiles derived from Rite Aid’s loyalty programs and transaction data. 

For other companies looking to monetize data, it’s important to think of it like any other product going to market. This means mapping your data against specific buyer personas that will influence the way you target and sell the final product. Although some data may already cater to specific customer segments, it is advisable not to rule any categories out of the process.

For example, let’s say your company operates in the proptech sector. While banks and finance providers are an obvious fit as data buyers, data related to citizen demographics and geo-specific property trends could also be extremely valuable to government agencies and policymakers. Here working with a data aggregator that combines your data sets with those from other providers helps to unlock a much broader range of buyers across industries.

With buyers clearly in mind, the next step needs to focus on having the right tools and infrastructure to deliver marketable data products.

Setting the stage for data monetization

As Rite Aid prepares for a potential restructuring journey, the value of data monetization should not be overlooked. With the right value proposition and technology in place, the company can generate high-value, recurring revenue that will improve overall profitability and strengthen business relationships.

Prior to building data products or investing in technology solutions, Rite Aid should determine the revenue potential of its data assets. This involves determining the market value of the data based on the data products they could create for various markets and the expected pricing and packaging for each product. Ideally, this can be done quickly to establish conviction in data monetization based on the value potential it represents.

Once the estimated value has been determined, the company can look at the roadmap and investments needed to realize the value. Given that up to 85% of grocery retailers globally lack the ability to monetize their data, it’s likely that Rite Aid’s internal systems will need to adapt to support future monetization.

The same is true for businesses across the board. Companies cannot begin monetizing their data without the right data management practices. To get started, companies will often work with a data expert to create the right data infrastructure and also get advice on legal protocols, security standards and privacy regulations at the national and international level.

Data experts can also advise on the most appropriate way to package your data products in relation to target buyers and long-term profitability. The range of options here includes everything from one-off purchases and subscription models through to partnerships and licensed access to interactive reports.

Building resilience with data

In the face of the current economy, improving business resilience is a core part of most contingency plans, whether or not bankruptcy is on the horizon. With the right approach, data monetization can play a powerful role and help companies like Rite Aid transition through highly challenging periods.

Data products create a new, high-margin recurring revenue stream that creates stability through diversification. Over time, monetizing data will positively impact the overall value of the company by converting an internal resource into a bankable company asset that also generates new revenue.

Finally, collaborating with suppliers and partners on data products can build stronger business relations and help to ensure that key collaborators thrive in your direct business ecosystem.

With the right strategies and tools, business leaders can transform data assets into a lifeline during financially uncertain times and improve the overall profitability and value of their companies.

About the Authors:

Doug Laney is the Data and Analytics Strategy Innovation Fellow at West Monroe where he consults to business, data, and analytics leaders on developing new value streams from their data assets. He originated the field of infonomics and authored the bestselling book, “Infonomics: How to Monetize, Manage, and Measure Information as an Asset for Competitive Advantage.” Laney is a three-time Gartner annual Thought Leadership Award recipient, co-chairs the annual MITCDOIQ Symposium, and is also a visiting professor at the University of Illinois Gies College of Business and the Carnegie Mellon University Heinz College. Follow and connect with Doug on Twitter and LinkedIn.

Jeremy Bruck is a Managing Partner at Gulp Data, which provides data valuations, data-backed loans, and data monetization services to enterprise and growth-stage companies. Prior to his role at Gulp Data, Jeremy Bruck was a Partner at West Monroe Partners focused on Private Equity and Analytics. His experience spans data monetization, data strategy, go-to-market, and operating model design to enable companies to generate more value from their data assets. He is a mentor and advisor to growth stage companies via mentorship roles at the Founder Institute and TechStars.

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