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Why people are the key to building trust in how the retail sector uses data

Arron Lock, retail industry go to market lead, EMEA, VMware 

Retailers need to be looking to eke every possible benefit out of the data they encounter, or they’re going to be in trouble very quickly. This is because data and how it is used is the sole measure of their long-term survival. Its influence is exerted in every interaction – from sales to service and discounts to deliveries and even returns to refunds – the brands that are able to manage, dissect, understand and act on it will be the ones still standing in years to come. 

 It is what our latest Digital Frontiers research has examined and, as a result, highlighted some telling findings that will separate the winners and losers in the retail sector in the not-too-distant future. 

 

Retail is awash with data at every stage 

This is because retail is awash with data at every stage from providence of each component/raw material and then through assembly, packaging, distribution, stocking, sale, delivery and customer experience – and now increasingly beyond purchase but to usage and even subscription. But despite this, we’re seeing the gap widen between data leaders and laggards.  According to McKinsey, “the 25 top-performing retailers—most of which epitomise the powerful shift to digital, data, and analytics—represent more than 90% of the sector’s increase in global market capitalisation during the pandemic”. This is the tip of the iceberg. According to Allied Market Research, the global big data analytics in retail market size will grow to more than $25,500 million by 2028 – up from just  $4,854 million in 2020. 

This tells us that, while data in retail is already vast, it’s going to continue to grow massively, exerting an influence to match for those businesses prepared to adopt ways of capitalising on it. For example, Boots, a pharmacy chain in the UK, recently implemented Recite Me assistive and language support technology across its online store – the first retailer in the UK to do so. As more parts of the sector “go digital” it will only create more data capture opportunities which will present retailers with the potential to create a self-perpetuating cycle of improvement, but, as our research found, this doesn’t have 100% buy-in from consumers. 

 

Pushing digital frontiers 

On a positive note – people are excited by innovation in this sector. The research found that a third of consumers would pay more for clothes that have had retail technology analyse and approve their origin. Similarly, 42% would welcome an augmented or virtual reality dressing room, so they can see what the outfit would look like in their size and fit without having to get changed. We’re seeing other innovations landing daily. For instance, ​​Europe is leading the world in the adoption of checkout-free technology according to analyst house RBR, with 18,000 stores in Europe, the Middle East, and Africa (EMEA) allowing customers to scan items via their mobiles as they shop. 

Adaptations like this are revolutionising how we shop and wouldn’t have been possible a few years ago. But, it’s not all one-way traffic. While technology-driven progress is inevitable and wanted, it relies on the sharing of data, particularly who has access to it and how it is used, which consumers are not yet fully on board with, which leads us to the negative aspect of data in retail. 

 

Reservations with data 

When it comes to personal data, our research revealed that only around one in 10 (12%) European consumers are confident in how their data is being used. Indeed, two-thirds (67%) still do not really know who has access to their personal data or how it’s used. So much so that 61% are now increasingly concerned about the security of their online digital footprint, and less than a quarter (23%) see the benefits this technology brings to their lives.  

Our findings also reveal that there are a considerable number of people that have reservations when it comes to how, when, and where technology is being deployed. For example, just 17% of consumers want a fully autonomous check-out experience – a finding that jars with the data from RBR and is indicative of a disconnect between brands and consumers over how, when, and where technology is being used at the expense of human interaction. Just think about the frustrations we all feel as consumers when chatbots are the route put forward to us when we have a problem.  More than three-quarters (77%) of French consumers want to be able to speak with a person (either in chat or on phone) because chatbots can’t provide the level of service they need. Consumers in Germany see shopping as an experience they want to do on their own without technical intervention. Overwhelmingly, shoppers want to stay in control. Just 15% would give over control of their grocery shopping, allowing intelligent technology to select and purchase food and drink based on what’s healthiest for them.  

 

A balancing act for retailers 

It is clear retailers are walking a tightrope of change – one where success requires balance, foresight, and great care. On the one hand, both consumers and retailers can feel the benefits of service improvements, speed and personalisation. Yet this cannot be at any cost. It is a delicate balancing act whereby the more technology retailers integrate into the process, the more we as consumers may crave the human and physical touch – the understanding, empathy and care that only people can give.  

The focus for retailers is to ensure any developments are not, ‘technology for technology’s sake’. Or indeed digital versus physical’. Instead, it must improve the experience for the consumers rather than just make things cheaper or more efficient for everyone else in the supply chain. The challenge is for retailers to identify exactly what they need, what is going to resonate with their customer base and what is going to add value – across all channels. 

 

How Carrefour is caring for customers 

There are many companies out there that are getting this right. One example is the leading global retailer Carrefour, which is betting big on technology. The company is focused on implementing new digital platforms by 2026, adopting the cloud on a massive scale and placing digital and data at the heart of its operations to deliver a true omnichannel experience. According to Damien Cazenave, CTO & CISO at Carrefour France, Our data-centric, digital-first approach helps us to offer customers a more relevant, comfortable and innovative shopping experience, whether they are in a physical shop or online. Whether it’s digital personal assistants when shopping online or eco-friendly checkouts in-store, these technological innovations are really popular with our customers.”  

Technology is, without doubt, perpetuating change in retail, but it’s an ever-spinning wheel that cannot – should not – displace the role of humans. Whether it’s helpful customer service staff, knowledgeable experts or just good, old-fashioned shop assistants there remains a place for people to enable the sector to gradually build consumer trust in its use of data.  

Please contact me at alock@vmware.com if you would like to continue this discussion or discuss all things retail.

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