Data will be the key for retail recovery

By Kevin O’Farrell, Associate Vice-President at Analytic Partners

The Covid-19 crisis has seen retailers forced to rapidly adjust their business and marketing plans, revising expectations as shops across the nation were required to close.

But now as we ease out of lockdown, the shift from crisis to recovery will require retailers to dig deep into the data – to gain insight into consumer mobility and purchase habits, media supply and demand, the economic downturn and the public health crisis. All these factors will affect the way people shop.

It took four years for the economy to recover after the 2008 recession – so while short-term panic may have gripped many in the retail sector, they must now think longer term and determine what it is they need to measure, to support strategies to overcome lockdown decline and changing purchasing behaviour.

There are many measurement challenges with so many forces at play including how to use historical data to predict future outcomes and how long it will take to move through stabilisation, recovery and revitalisation phases? Isolating the impact of Covid-19, when it’s such a huge anomaly, is particularly challenging.

Scenario planning allows retailers to assess budget cuts, changing channel mix, messaging, as well as operational factors such as store closures and consumer demand shifts. In most scenarios, spend is dropping, often accompanied by changing media channels or delivery channels in the case of QSR brands. Commercial mix modelling can look at best and worst-case scenarios.

Commercial Mix Modelling incorporates controllable and non-controllable drivers and considers marketing such as media and promotions; non-marketing including store openings, pricing and sales channel effects; and macro factors like the weather, seasons and consumer trends.

As retailers accommodate purchase behaviour changes and routes to market – the continued shift to ecommerce looks inevitable – they need to understand not just the marketing drivers for each sales channel but also the operational, competitive and other non-controllable factors.

In terms of measurement there are many variables for retailers – the size and location of stores, the sector they are in, to what degree they’ve embraced omnichannel strategies, what time frame they are considering and specific brand dynamics such as the percentage of sales impacted or geographic footprint.

The aim for retailers is to identify where the Covid-19 impact may be and gauge the order of magnitude compared with the expectation. Models will help retailers monitor their business performance continually. Retailers must track and monitor with ongoing data feeds, frequent measurement, A/B testing of new strategies, and continuous scenario planning.

The extraordinary nature of this crisis means many companies do not believe there is anything to learn from this period, but we believe there is – it just requires the right data, predictive analytics, real-time targeting, and supply-chain optimisation.

Covid-19 has disrupted retail to a very large extent, and we do not know how our high streets and retail parks will look in a year’s time. But to help market their way out of the crisis, it has never been more important for retailers to link media targeting and spend with customer data.

Comments are closed.

    Inspired Lighting Skyscraper – Nov 19
    Recolight right-hand skyscraper April 20
    PSL right-hand skyscraper April 2020
    Perspex right-hand skyscraper April 20
  • A1 Retail Twitter

  • Search