Retail and consumer products companies depend on data to run their business. Despite our intuitive understanding of data utilization, there remains a lack of comprehensive, objective information regarding the ways in which typical retailers or consumer packaged goods (CPG) companies employ data. And insights can be limited on how different businesses prioritize use cases for resolution.
Informatica, eTail and WBR Insights came together to conduct a survey to delve into these topics. The survey aimed to assess where retail and consumer products companies are investing in data management and which business use cases are prioritized. It also ventured into how artificial intelligence (AI) fits into future data management investments.
The WBR Insights research team surveyed 200 participants from omnichannel retailers and consumer products companies across North America, Europe, the Middle East, Africa and the Asia-Pacific to generate the results featured in this study. The respondents included director level to C-suite roles across various departments, such as business, supply chain, merchandising, category management, IT and customer experience (CX).
The results are in. Top data management investments across all respondents include:
- Enhancing personalized CX
- Delivering a truly omnichannel shopping experience
- Creating a more sustainable supply chain
From a technological perspective, AI and machine learning (ML) to improve operations and optimize business processes are viewed as important goals for the next two years. The top line read-out is not a big surprise as most consumer-facing companies want to build stronger customer relationships, remove friction from the shopping experience and optimize supply chain operations. The insights are in the details. What does it take to enable game-changing data management to enhance CX, streamline omnichannel commerce and create a more sustainable supply chain?
Retail and CPG’s Number One Challenge: Siloed Data
The key survey question illuminating the list of potential data challenges affecting the two industries is, “How significant are the following data challenges in your efforts to achieve goals?” The answer choices range from “Very significant challenge” to “Not a significant challenge.”
Of the list, “Breaking down data silos” took the top spot as a data challenge faced by most retailers and consumer products companies. A whopping 96% of survey respondents indicated that breaking down data silos is either a “Very significant challenge” (63.5%) or a “Somewhat significant challenge” (32.5%). I would like to meet the 4% that responded with “Not a significant challenge” because that is quite a big accomplishment.
Likewise, another survey question revealed that 66% of respondents say their data management capabilities are only somewhat unified. Considering the typical retail or consumer products company spends roughly 1% of their operational budget on IT, digital transformation and consolidation of systems will take time.
Effectively working across data silos with robust data management is the only way forward for resource-constrained enterprises. Bringing together disparate data sources can help improve agile business practices by powering new data products that solve business problems.
The most surprising survey result was regarding data challenges involving compliance with data privacy regulations. More than 50% of respondents (53.5%) indicated complying with regulations was not a significant data challenge. This is fascinating because new privacy and compliance regulations in general are popping up in different geographies.
If the question was posed specific to the GDPR1 or CCPA2 regulations, then I understand that most respondents who do business in Europe or California are going to have some type of solution in place. However, with the way that regulations are changing across so many different regions, I expected this survey question to result in quite a high number of “Very significant data challenges.”
Unseen AI Revolution: Data’s Vital Role
There is also an AI elephant in the room. How can something be everywhere but nowhere at the same time? AI was already powering processes at retail and consumer products companies way before the ChatGPT craze took off late last year. But most of the AI-powered use cases are found in the back of the house rather than in the front of the house, which is why it can be everywhere yet nowhere. We just don’t see it.
A perfect example is the prevalence of AI-powered robotics in the warehouse that eliminate high-volume manual and error-prone tasks compared to a limited occurrence of robotics in the store serving customers. The results of the survey indicated that automating repeatable processes is the number one goal for AI and data. This indication fits in with how most retailer and consumer products companies were using AI prior to ChatGPT’s appearance.
However, you can see where AI is going to influence CX with data. Respondents surveyed indicated analyzing customer behavior to improve CX is the second biggest priority for retail and consumer products companies. This does not mean replacing frontline workers, but rather empowering digital systems with customer data and personalized recommendations.
Data and recommendations could also flow in near-real time to clienteling systems that empower the frontline worker with information and insights to better serve the customer in the store. It’s no surprise that 77% of respondents said improving data quality is a priority, since clean, trusted data is a critical linchpin to the success of these AI CX initiatives.
ESG Priorities: Catching Up with Urgency
Interestingly when surveyed on ESG priorities, both retail and consumer products companies have big plans for the next two years. While they may be less concerned with data privacy (I am dubious of this result), the results on ESG indicate that value chain due diligence across the circular economy, achieving regulatory compliance for ESG requirements across geographies and integrating ESG data into all business operations are very important over the next two years. This tells me that retailers and CPG companies are playing catch-up on gathering, analyzing and reporting ESG-related information, which is time-bound in many geographies.
What Does it All Mean?
Retail and consumer products companies require data management to power data-driven use cases to serve the modern consumer. However, the big challenges for most retail and CPG companies — according to the survey — are navigating their myriad data silos to unify data for greater accuracy in decision-making and customer personalization.
Enterprise-class data management is a must to address silos and unification. This is true whether the business priority is CX, seamless omnichannel commerce or supply chain sustainability. However, that is still only part of the equation. Companies aren’t exempt from governance and compliance if they have data silos. The time is now to revisit your data management strategy.
Download the full report, “The Future Priorities of Global Retailers and CPG Brands.”
To learn more about Informatica’s solutions for retail and CPG, visit www.informatica.com/retail.