Retail has been a champion of data. For decades it has successfully used data to gain customer insight. However, in the last few years the advent of mobile commerce and social media has brought radical transformation in the business. Now retail must use data for a variety of other outcomes in order to remain competitive. For example, can retail use data to improve in-store customer experience or to personalize it? Can it use data to nudge customers towards the discovery of additional products they may need? Can it be used to deliver dynamic product pricing? Can it be used to improve the efficiency of coupon campaigns? Can it help unify customer experience across channels?

The problem is that retail has not changed its approach to data despite the change in the business environment and in customer behavior. A 2013 Economist Intelligence Report called 'The Data Directive' commissioned by Wipro confirms this. The report suggests that unlike other industries, manufacturing (16%) and retail (13%) are the least prepared with data management strategies. In just a few years, retail has fallen from being a leader in the use of data to a laggard. There is urgent need to set this right.

How can retail quickly refresh its understanding of data and capitalize on it? It can perhaps learn from others like financial services – currently leading with the use of data (see figure below from The Data Directive for industry-wise use of data). Both retail and financial services are B2C and it is easy for retail to replicate data management strategies from financial services.

The problem for retail is at the root: our research through the 2013 Economist Intelligence Report shows that "one in ten retailers have no plans of collecting social media data while another 23% are still putting collection plans in place. While one-quarter do collect and analyze such information, this is still well below the rate that both financial services firms and technologies companies do." Clearly, retail has a long way to go. But make no mistake, if it doesn’t begin the journey soon, the consequences can be disastrous.

Investments in data and analytics must see immediate improvement. Luckily, several retailers have recognized the need. Our experie​nce in the industry shows that savvy retailers are upping the game with new investments in data and analytics. These investments are being made with the intent of improving performance on several fronts. The expected improvements range from enhancing customer experience, improving financial decision-making, managing store replenishment, uncovering store requirements, improving ROI on promotion campaigns, and fine tuning and creating visibility into supply chains. For high performance retailers the fundamental focus of investments in data and analytics is on creating real-time insights into customers and the business.

The areas in which data and analytics can have a major strategic impact include:

• Improved margins
• Improved customer satisfaction
• Increased market share
• Improved comparable store sales

On a tactical level, data and analytics are helping retailers improve forecasting and planning accuracy, retention/frequency of loyal customers and conversions for ad/promotion spending.

The key to success with data is to shift the focus of analytics from 'what happened' to 'what is happening now' and 'what will happen next'. To enable this, retail must begin by gathering more granular data from online stores, mobile interactions, CRM, credit card usage, in store video data, social interactions etc and marry it with traditional customer profiles, buying history and demographic data. The challenge is to manage this structured and unstructured data before leveraging it with automated decision-enabling algorithms. Where should your data journey begin? What are the challenges you are likely to face? Where does this journey end? Click here to understand how retail can successfully ride the new data wave.