Pop-up shops, brick and mortar, mobile apps, online stores – everything is collecting data now. The problem is, Canadian retailers don’t seem to be doing anything with it.
“What we call the predictive analytics have been underused by a lot of the Canadian retailers,” says Kelly Askew, managing director of the retail strategy division of Accenture, a management consultancy.
“Canadian retailers in particular have lagged in using analytics for anything other than to describe what is happening in particular store.”
This is surprising, given that data analytics are giving global retailers a considerable advantage, helping business leaders decide how they should run their stores.
Some companies, such as Target, have built analytics capabilities in-house. As famously reported in The New York Times, Target used comprehensive analytics to send highly targeted offers to its customers – in one case, it sent baby product discounts to a young woman before her father even knew she was pregnant. And Macy’s, according to a CNBC article from last year, uses commercial analytics software to analyze “tens of millions of terabytes of information every day, including social media, store transactions and even Twitter feeds.”
“Their data is everything now,” says Askew. It has become many retailer’s secret sauce. And the insights that analyzing sales data can reveal – what’s selling, when and where – in conjunction with a retailer’s other sources of data (social media and in-store tracking, for example) is giving global players an edge.
“A lot of customers are obviously trying to get better insights into their customer data. And although a lot of them probably have loyalty programs that are kind of tied into their point-of-sale data, getting value out of that loyalty program is usually the biggest challenge,” says Chris Saniga, a partner in consulting at Deloitte.
Some companies are trying to improve things. One Canadian company called 42 is trying to show clients new value in their POS systems by turning sales data into digestible, easily understandable insights. For storeowners, 42 takes the grunt work out of figuring out, say, just how well a new shipment of shirts is selling, right down the to the size or colour, and how well it might sell in the future. But 42 can also use this data to target repeat customers with personalized, relevant e-mails and offers by calculating that a customer who only ever buys jeans probably isn’t interested in that new shipment of shirts.
The market for such a service is considerable; one Canadian grocer, who Saniga declined to name, told him that, despite what they believe is a successful loyalty program, “they feel like they’re getting virtually no value out of the data their collecting on their customers.”
None of this is to say Canadian retailers don’t understand the importance of predictive data analytics. But for a variety of reasons, shops north of the border have been slow to catch-up to trends in Europe and the U.S.
Part of the problem, as usual, is scale, and Canadian retailers often can’t justify the same level of investment in predictive analytics as larger, global competitors. And even if companies can afford it, they often lack the skills, expertise or wherewithal to get value out of the data they collect.
“There’s a ton of talk and great conversation, and they’re good ideas, but I’m finding the uptake is much slower than you’d expect,” Saniga says. He’s seen pilot projects and proofs of concept, but “real dollars being spent on this stuff? I’m not personally seeing it in the market place yet.”
And he probably won’t until retailers are forced to react.
“Canadian retailers are generally investing in their digital capabilities as a defensive measure,” says Askew. “Our counsel to them would be to think of these things as an offensive measure as well – because when a U.S. retailer is entering the Canadian market solely through digital means, there’s absolutely no reason why a Canadian retailer with a great product and a great offering shouldn’t be doing the exact same thing to the U.S., to Europe, to Asia.”