Retail is remiss in not using customer data to compete better, NRF says

Although most if not all retailers plan to use data on customer behavior to better serve their markets, many are not yet using this data to gain a better understanding of their customers and improve their competitive positions, says the results of a Retail Horizons study co-authored by the National Retail Federation Foundation and consulting firm BearingPoint Inc. "Retailers have massive amounts of data, but few are successful in converting that data to insights and to action," Jerry Blaesing, senior vice president of the retail/wholesale practice at BearingPoint, tells InternetRetailer.com.

The study, announced at the National Retail Federation Annual Convention & Expo in New York today, was based on interviews with all 1,800 members of the NRF. It identified the three top online strategies as providing product information, offering a store-locator and providing basic customer service on how to find and order products.

But more sophisticated uses of technology, such as web site personalization based on past customer buying behavior, were not as common, the study found. "Retailers are not yet using data to its greatest advantage; that is, as a means for gaining a deeper, more granular understanding of their customers, then using that understanding to make better, faster decisions about product assortments, store location and design, pricing and promotion, and as leverages for value-driven process improvement and organizational transformation," the study says.

Blaesing says retailers were expected by now to be further along with using sophisticated b2b strategies such as collaborative planning, replenishment and forecasting and management visibility. Instead, retailers now issue only about 6% of orders to suppliers through CPFR engines, says Ann Raives, senior manager of BearingPoint’s retail practice.

On a more positive note, the study notes that more than half of retailers, or 57%, are integrating their web sales activity with their back-office systems, and that 80% have their sales operations integrated with their fulfillment operations. And on the b2b side, within 12 months 58% plan to use software to support supply chain visibility and 71% plan to use software to support vendor compliance with fulfillment and shipping requirements.

Still, the retail industry has a way to go in maximizing use of data, the study says. "We’ve been hearing for years that customer centricity is close to the top of most retailers’ lists of strategies, but many of them still need to move along the data to knowledge to action continuum," Raives says.