Most Retailers Banking on New Data Revenue Will Miss Out, Study Warns

While grocery retailers are determined to drive new revenue streams from monetization of shopper data, an overwhelming majority of them currently lack the capabilities, technology, people and processes to do so, according to new research released this week. The phenomenon could drive a further wedge between the haves and have-nots in the industry who are in pursuit of an estimated $200 million in available revenues, according to the study, which was conducted by Forrester Research on behalf of consumer data science firm Dunnhumby.

The study found that the majority (85%) of global grocery retailers view growing revenues as their top priority in 2020, and plan to do so by improving their use of data insights to develop customer strategies (84%) and to make business decisions (82%), but that 85% of them lack the resources to accomplish that.

Among U.S. food retailers, 81% view revenue growth as a top priority, Dunnhumby said. Among U.S. grocers, the two biggest concerns are an inability to derive insights from cross-channel data, such as online and in-store (39%) and an inability to harmonize data and recommendations across channels, banners, brands and locations (39%). Other challenges for U.S. grocers include a lack of timely data from which to derive actionable insight (34%) and lack of master data or single view of the customer (32%).

“While the vast majority of grocery retailers across the globe agree that increasing their revenues for 2020 is their top priority, it is striking that less than 45 days to the new year, the majority of these retailers lack the capabilities, technology and expertise to use insights to monetize their data,” Jose Gomes, president of North America for Dunnhumby, said in a statement provided to WGB. “But for those retailers who are already monetizing their data, the results are impressive. In fact, Forrester found that U.S. retailers who are effectively monetizing their data saw an average uplift of 96% over the last 12 months.”

According to the study, just 15% of global grocery chains are differentiated by data-led consumer strategies, identifying these grocers as “leaders” that set themselves apart from others though superior supplier collaboration around data insights that can be translated to additional revenues through means such as offering branding opportunities on their websites and other digital properties. Another 55% of retailers are classified as “intermediate” or “novice” in this respect, the study said, and will find themselves less capable of driving revenue through such means.

In other findings:

• A majority (96%) of retailers experience challenges trying to use data to develop customer strategies to drive growth. Retailers are facing several obstacles, including an inability to harmonize data and derive insights across channels (36%), an inability to develop a holistic view of customers (31%) and a lack of necessary technology and skills (31%).

• Most grocers are not capitalizing on the revenue potential of customer data and in-store/online media channels. While 53% of respondents use customer data, such as from loyalty programs, to make decisions about customers, less than half use other sources such as social media (49%), point-of-sale (49%), mobile app (46%), promotions data (46%), customer location (43%) and web metric/clickstream data (43%).

• A majority of grocers leave money on the table by not monetizing media assets. Only 42% of grocers are currently selling branding opportunities on their website and only 37% offer media placements in-store and on their print media. Only 31% of grocers are selling branding opportunities on their mobile apps, except for Brazil (49%), China (47%) and Spain (38%), where apps are used more frequently.

• A majority (96%) of grocers who offer media opportunities for CPG suppliers on their apps saw an increase in revenue over the past 12 months, with 40% seeing an increase of more than 10%. In addition, 92% of firms offering ads and branding opportunities on their websites saw an increase in revenue from this channel.

“The global grocery market is in a fight for survival against pure-play and other nontraditional competitors, who are further squeezing razor-thin margins,” said David Clements, global retail director for Dunnhumby. “We commissioned this study to better understand why so many retailers aren’t taking advantage of new revenue streams while improving the shopping experience for their customers. We believe the study findings highlight the growing importance of the role of customer data in attaining sustainable growth.”