The Insight-Driven Revolution in Grocery Retail

By Channie Mize, Sector General Manager, Retail, at Periscope, a McKinsey solution

Channie MizeWith the advent of Omni-channel retailing, consumers can shop for the best offers from the comfort of their living room, in a store, or via their mobile device. Retailers – more than ever before – need to recognise the importance of big data and analytics in understanding consumer behaviour across channels in order to deliver the best customer service, choice and price, thereby increasing customer loyalty, which ultimately provides enhanced productivity and profitability to stay ahead of their competitors.

Grocers know that their competitors are finding insights and making advances, and many have already seen their own pilot projects in big data and analytics deliver measurable gains in marketing efficiency, sales or margins. Data-driven insights can create value across the business, helping managers tailor assortments at the store level, simultaneously enhancing the customer experience and improving unit economics. A few companies have pushed ahead and gained clear advantages. Using just one or two levers, some are boosting sales by 1 to 3%, and margins by 100 to 500 basis points—a significant improvement for many retailers. Using multiple levers across the organisation could improve revenue growth by 2 to 7% and profit by 10 to 20%.

However, if it were easy, everyone would do it. Given the complexity and variety of activities in the retail business, grocers can’t move quickly enough from where they are today to where they want to be. They increase their chances of success by taking small steps, each big enough to make a difference in performance, but small enough to be embedded and scaled within the organisation.

Senior management also needs to look beyond pricing or promotions toward broad revenue management, which means changing the way they run the business and becoming more insight-driven. Because this is a human journey that marries art and science, it will be different at each company. A successful programme will use data at the right scale and pace for the organisation to deliver strong forecast accuracy and better decision-making.

Each grocery retailer must develop its own programme for gathering, sifting and using data. Companies investing in the right approaches and committing to a strategic vision supported with the right team, technology, and data can be enormously successful. While daunting, this strategic journey can lead to a more optimal way of making assortment or promotion decisions in less than a year.

Periscope’s unique combination of data management, insights creation, software tools and tailored capability building enables organisations to kick-off and sustain commercial transformation.
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