Five essentials for any retail data strategy
1. Agree on your tech stack
Retailers will need to build technology stacks that are appropriate to support their data strategies. This involves selecting the hardware and software solutions that can efficiently collect, process, analyze and store data. The tech stack should include tools for data analytics, customer relationship management, inventory management and point-of-sale systems.
It’s important that these tools are compatible with existing systems to ensure a smooth flow of data across different business functions. Line-of-business leaders and IT cannot have these conversations in siloes. Both the business and IT leaders need to align on a roadmap that will rationalize aspirations with current and desired tech capabilities.
2. Ensure data security and compliance
One of the easiest ways to lose customer loyalty is to lose customer trust. That’s why it is so important to implement robust data privacy and security measures to protect consumer information from breaches and cyberattacks. These measures include encryption, secure data storage and regular security audits.
Additionally, compliance with data protection regulations such as GDPR (General Data Protection Regulation) and CCPA (California Consumer Privacy Act) is essential to maintain customer trust and avoid legal penalties.
Beyond compliance, retailers should also consider the ethical implications of data usage. This includes being transparent with customers about how their data is being used and giving them control over their personal information.
3. Implement data quality management
For data to be helpful, it needs to be accurate. Retailers need to establish protocols for data entry, validation and regular cleaning to avoid issues like duplicate records, outdated information and inaccuracies that can lead to poor decision-making.
4. Integrate customer data for a 360-degree view
Integrate customer data from multiple touchpoints, for example, online, in store, mobile and social media. Using data from multiple sources is key to gaining a 360-degree view of the customer. This comprehensive perspective allows for more effective personalization, better customer service and improved targeting in marketing campaigns.
5. Prepare for AI everywhere
Generative AI has been one of the most talked about topics of the year, with transformative potential across various industries. Retailers already look to use generative AI for creative content generation, data synthesis or to personalize customer experiences.
We’re seeing retailers use generative AI to customize product descriptions by using customer data such as age range to tailor descriptions for specific customers.
Retailers need to prepare for the integration of AI technologies by ensuring their data infrastructure can support these advanced applications. This preparation includes training staff in data science and analytics, investing in AI-capable tools and establishing processes for data-driven decision-making.
We are still learning all the ways generative AI will transform the industry. But before retailers can even begin to harness the power of AI, corporate lines of business and IT must come together to rationalize envisioned use cases with the technology foundations they’ll need for them to succeed.
Mikhail Templeton is Vice President and Senior Partner at Kyndryl.