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Why data value exchange is important to retailers and brands

A symbiotic relationship between retailers and brands is ideal for addressing growing consumer expectations and delivering experience.

In brief
  • Harnessing data’s complexity can be a challenge yet moving from data collection to data connection can create end-to-end opportunities.
  • If retailers and brands connect their disparate data points a new, holistic, real-time view of the consumer will emerge.
  • Driving impactful consumer experiences is dependent upon a data value exchange between retailers and brands.

Choice. Consumers have more of it than they know what to do with: choice in brand, product, where to purchase and how to purchase. The deciding factor for many consumers centers on their experiences with retailers and brands — who knows them best, who gives them what they want or need when they need it, who makes it easy, who connects the dots. According to the EY Future Consumer Index, the second largest segment of consumers identifies as Experience First (23%) compared with Affordability First (26%), Planet First (21%), Health First (17%) and Society First (13%).

Chart segment

How EY can help

A truly seamless consumer experience requires a symbiotic relationship between retailers and consumer packaged goods (CPG) companies centered around data.

But in today’s environment, complexities of data abound. Costs to transparently acquire, store, manage and safeguard data continue to rise rapidly. Options for sourcing data continue to grow, but many companies struggle with the data they already have, so a true 360-degree view of the consumer eludes many companies. And moving from data capture to actionable insight is the ultimate challenge. But retailers and brands must make it work for them or they run the risk of drowning in their own data lakes.

 

The case for a holistic data ecosystem

 

At present, there’s a tension between lots of data and not enough connection. Connection to the consumer. Connection of experiences. Connection to insights. Connection across the value chain.

The historical tendency for retailers and brands to “stay in their lanes” with respect to data remains the operating assumption. Retailers own the discovery and purchase occasions across the transaction, which include emerging omnichannel and e-commerce behavior. CPG companies own category shopper insights and brand affinity insights, with increased development of first-party data around the consumption and ownership occasion.

To be fair, the last decade has brought significant improvements to the use of collective data. Innovations, such as data exchanges for frequent shopper data, allow for brands and retailers to better target media and promotions. Further, retail media offerings provide greater precision in search, display and off-site media targeting. There are many other examples; however, these improvements are still principally leveraging only one party’s view of the consumer and rarely empower retailers and brands to share intelligence by blending data and insights. The effect is that separately, each party has half of the picture.

Imagine the value to the consumer experience, though, if the discovery, purchase, consumption and ownership occasions were regarded holistically. If companies could answer questions beyond what was researched and purchased, but rather the who and the why behind the buy, they have an opportunity to build more meaningful relationships with consumers pre and post transaction by focusing on connection ahead of conversion. Combining the retailer’s understanding of consumer research and purchase behaviors and the brand’s understanding of consumption provides a more effective, holistic and near real-time view of the experience offered and consumed.

What opportunities do connected data present?

  • Cost mitigation: optimize the significant budget spent on media, trade, price and promotion where there is significant waste and duplication.
  • Improved loyalty: tap into post-purchase opportunities as part of the consumer journey to build lasting relationships.
  • Upsell opportunities: design the optimal product bundling and messaging.
  • Optimized product innovation and merchandising: make more informed decisions about what to make and what to stock.
  • Optimized marketing: target consumers with hyper-personalized messaging in the moment of need.

Ultimately, a holistic data ecosystem creates ideal state consumer experiences and a clearer picture of the required operations to serve the target consumer with increased speed and efficiency.

Imagining the possibilities is one thing, but making it real is another. To achieve this data value exchange, retailers and CPG brands must create a more balanced data relationship. To get started,

Retailers should:

Brands should:
  • Continue to innovate activations and data sets across digital and physical experiences to generate new potential revenue streams.
  • Consider ways to incorporate brand data and insights into the development of new commerce activations and data offerings.
  • Enhance data to be more interoperable with brands and explore “clean room” capabilities to enable better collaboration.
  • Develop strategies and mechanisms to pull existing data from retail partners for a cohesive view.
  • Consider data collaboration use cases and zero-party data strategies to provide value during the consumption and ownership phase of the journey.
  • Enhance data to be more interoperable with retailers and explore “clean room” capabilities to enable better collaboration.

Retailers have made strides in generating value from their data, monetizing the exchange of their insights. However, CPG brands have not yet realized the full opportunity to make effective use of the data they purchase from retailers, but even more in conveying the value of their own data sets. What both sides fail to recognize is the opportunity to create a holistic data ecosystem to better understand consumer behavior and predict their needs more rapidly than ever before.

Summary

Getting the data connection right is fundamentally a growth discipline. And it can bring tremendous value to retailers and brands alike, from increased brand loyalty and more informed decision-making, to cost mitigation, better functional alignment across the business and more predictive tracking of consumer behavior shifts.

The value of data is evident. The value of connected data is the future.

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