In May, RIS News and Consumer Goods Technology (CGT) published findings from their joint “Analytics Study 2017,” an annual look at how retailers and consumer goods companies are faring in their effort to build insights-driven organizations. In today’s blog post, we’ll explore the findings from the report, which – unsurprisingly – found that most retailers and CG companies are struggling to improve their analytics in the face of rapid marketplace change. In fact, roughly one-third of retailers and CG companies alike indicate they have only basic analytics in place, and only 26% of retailers and 27% of CG companies say they are doing basic reporting.
While it appears that small to mid-size CG companies are generally further along in analytics, the three overarching obstacles all organizations face are: finding ways to collect better data; cleaning and managing the data; and onboarding the right tools, talent and processes to make better, data-driven decisions. Overcoming these obstacles means addressing the following challenges, according to the report:
- Hiring the Right Talent:
Both CG companies and retailers struggle with bringing together the right professionals with skill sets that help them get a handle on their data. There are two parts to the equation, the first being that the companies do not have enough of the right people to analyze the data. The second is that even if all the data is being collected, retailers and CG organizations may not have the right talent in place to translate it into actionable insights. Despite this setback, the study found that onboarding the right people remains a low priority in 2017, with 68% of retailers and 83% of CG companies indicating they have no immediate plans to hire a chief analytics/insights officer to help close the talent gap. Nor are most retailers (57%) and CG companies (62%) planning to hire statisticians anytime soon.
- Addressing Decentralization:
Currently, both CG companies and retailers place oversight of analytical resources within the departments that use them instead of viewing them as a shared service. This can result in an increase in shadow spending, with 48% of CG companies and 26% of retailers reporting that they purchased analytics software outside the IT budget in 2016. As such, a centralized analytics approach with unified spending not only ensures all departments are working off the same set of data, it can result in a financial gain for the company.
- Expanding data sharing capabilities:
This year’s study shows that both retailers and CG companies both agree that inventory, promotion performance and POS data is the most widely shared, and that weekly or daily sharing is most common. The report suggests that while the sharing of these well-established data types is becoming an industry standard, the focus – and the biggest challenge – for retailers and CG companies is figuring out how to use data to better understand their customers. Despite the widely acknowledged benefits that data sharing can have – from better demand forecasts to lower inventory levels to better on-shelf availability –some retailers are still skeptical about sharing data or prefer to charge their partners a fee for access to it. Fully 70% of retailers do not share online customer behavior data, and just over half do not part with loyalty/CRM, pricing and online sales data.
There is hope for CG companies, however: a McKinsey survey mentioned in the RIS News and CGT report found that CG leaders in their categories are far more likely to receive full-basket and shopper-panel data from their retail partners – and some even receive loyalty-card and coupon-redemption information. This speaks volumes about the power that digitally empowered consumers wield when it comes to disrupting traditional approaches to managing the supply chain. Although retailers and CG companies are undoubtedly working hard to keep up with a moving target, they are continuously challenged to adapt to new demands.
In my next blog post, we’ll further explore how far retailers, in particular, have come over the last year in overhauling their analytics approach. Spoiler alert: they’ve made progress across the board, especially in terms of data management, data quality and analytics tools. In the meantime, check out the full RIS News and CGT study here. Contact us today to learn how our data-driven, fully integrated suite of planning solutions supports many of the world’s foremost retailers.