How data-driven decision-making is creating winners and losers in an ever more competitive retail landscape

Traditional retail is in stormy waters.

The first waves of a digital transformation have levelled the playing field for new entrants. They have pushed traditional retailers to choose whether to adapt and survive or be left behind and perish.

The entire retail value chain is under pressure. There is not a single manager in procurement, inventory management, category management or marketing & personalization that is not confronted with shrinking margins and considerable profitability issues.

Be it due to investments in creating and running an omnichannel environment, learning to manage both online and offline supply chains, or as a result of the emergence of the 24/24 shopper. The one that expects a personalized experience, vast assortment, lowest or appropriate pricing and frictionless delivery and returns.

New emerging players are thriving

Each retail category has seen the rise of new behemoths. Powerful organizations that have been able to lever the perks of digital innovations to eat away a substantial amount of market share. They digitized traditional processes into frictionless experiences that removed classic barriers which hindered customers in their shopping experiences. They opened up online stores that eliminated pains, such as secure online payments or easy returns, that used to compel customers to shop in a traditional retail environment.

More importantly, they used the online or omnichannel environment to gather substantial amounts of data. Data that was brought together and analyzed in order to further improve their focus on creating the ultimate customer experience. Driven by that mission these emerging players built data-driven organisations. Grounded in innovative data architecture, enabled by the emergence of affordable cloud storage and cloud computation power, they grew a new kind of culture. A culture of data-driven decision-making which stands in contrast with the gut-feeling infused decision-making that is still found in more traditional retail organizations.

The automation of business decision-making, driven by data & algorithms.

The growth of research in the domains of data science, machine learning and AI enables data-driven organisations to take things even further. These new technologies and techniques enable a new way of extracting patterns from data, of deriving insights from data.

Insights that help data-driven organisations to better understand what is happening and why it happened. Insights that permit a retailer to predict what will happen, anticipate and prescribe actions, applying ever more advanced analytics.

By visualising these insights retail managers are provided with a tool to make better decisions. They receive recommendations to complement their individual knowledge and experience when making business decisions.

This process paves the way for increased automation of decision-making, as a computer system learns from the actions taken by a human decision-maker. Such increased automation is manifesting itself across the entire retail value chain. Automation will be key to address the aforementioned issue of shrinking margins. It will continue to allow for the creation of highly-efficient organisations.

As computer systems perform those task they excel at, people’s jobs will evolve into doing what they do best. Performing non-routine tasks that require social intelligence, complex critical thinking and creative problem-solving in order to create the best customer experience and drive profitable growth.

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Want to hear all about data-driven decision-making in Retail? Schedule a meeting with our Retail experts. They will be happy to explain how emerging players are applying Advanced Analytics and Artificial Intelligence in a Retail environment.