Most grocery retailers 'missing out on monetising data'

20/11/2019

The vast majority (85%) of grocery retailers lack the capabilities, technology, people and processes to use insights to monetise their data and drive customer experience and are losing out on $200 million in revenue, according to new research.

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The study, from dunnhumby, indicates that despite the apparent barriers, the majority (82%) of UK grocery retailers view growing revenues as their top priority in 2020.

The Future of Retail Revenues Must Be Data Led, a November 2019 commissioned study conducted by Forrester, alsovfound grocery retailers plan to grow revenues by improving their use of data insights to develop customer strategies (78%) and to make business decisions (75%).

“The global grocery market is in a fight for survival against pure play and other non-traditional competitors, who are further squeezing razor-thin margins” said David Clements, Global Retail Director at dunnhumby. “We commissioned this study to better understand why so many retailers aren’t taking advantage of new revenue streams, while improving the shopping experience for their customers. We believe the study findings highlight the growing importance of the role of customer data in attaining sustainable growth.”

According to Forrester’s report How Customer Experience Drives Business Growth, 2018, retailers globally are missing out on more than $200 million in revenue on average, through failing to improve their customer experience.

Just 15% of global grocery retailers are Leaders, differentiated by data-led customer strategies for growth and improved supplier relationships, while the majority are lagging behind.

Forrester uncovered three levels of maturity in grocery retail: leaders (15%), intermediate (55%) and novice (30%). Leaders set themselves apart by showing improved CPG supplier collaboration with 1) sharing customer data insights, 2) providing insights and measurement solutions to support media planning, and 3) negotiating retail media placements as part of their annual trade agreements. Regionally, retailers in the United States, Brazil, Italy, United Kingdom, and Thailand standout as early leaders in developing customer strategies that drive revenue growth.

96% experience challenges trying to use data to develop customer strategies to drive growth. The main concern for retailers in the UK is the lack of data management tools or technology (40%). UK retailers are facing several other obstacles including a lack of accurate, consistent, or complete customer data (37%), an inability to harmonise data and recommendations across channels, banners, brands, and locations (35%) and an inability to tie together internal and external data (30%).

Most grocers globally are not capitalising on the revenue potential of customer data and instore/online media channels. Specifically, in the UK, just over half (57%) of respondents use mobile app data and only 42% use customer data, such as from loyalty programs, to make decisions about customers. Even fewer use other sources such as point-of-sale (37%), promotions data (35%), customer location (43%) and web metric/clickstream data (37%).

The majority of grocers leave money on the table by not monetising media assets. Only 35% of UK grocers are currently selling branding opportunities on their website, 32% are currently selling them for print media whilst only a quarter offer media placements in-store. Globally only 31% of grocers are selling branding opportunities on their mobile apps except for in the UK (37%), Brazil (49%), China (47%), and Spain (38%) where apps are used more frequently.

All UK grocers who offer media opportunities for CPG suppliers on their apps saw an increase in revenue over the last 12 months, with 59% seeing an increase of more than 10%. In addition, 93% of UK firms offering ads and branding opportunities on their websites saw an increase in revenue from this channel.

“Time is of the essence for grocery retailers to activate the data they already have to improve the customer experience and create new revenue streams that can support their businesses into the future,” said Clements. “There is a significant amount of untapped revenue in grocery. Those that unlock the potential of their data and media assets, and improved supplier collaboration, will thrive. Retailers that fail to adapt will fall behind in the increasingly competitive marketplace.”

The full study is available for download here

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