Why retailers are the future powerhouses

That data is the new gold is now an established truth. This can be seen in marketing, not least, in a shift from a creatively driven process to an increasingly data-driven one. As a result, we are facing a development where the owners of first-hand data – retailers – will soon be the new power holders. This will require establishing an infrastructure for effective data management, and if this can be achieved, there is a unique opportunity. The only question is which of the marketing managers at Swedish retailers will be the first to see the potential?

In recent years, we have seen a global trend that suggests retailers have realized how they can capitalize on information about their customers’ buying behavior, with more and more retailers choosing to buy or partner with companies in the advertising supply chain.

Establishing their own media networks in this way not only frees these retailers from intermediaries, but also creates parallel – albeit secondary – revenues to complement the core business. Not a bad thing for an increasingly competitive industry.

The trend is most evident in the US market, where giants such as Walmart and Target have secured expertise through acquisitions to better leverage the companies’ respective customer data. Similar trends are also evident in the UK with the acquisition of Nectar by Sainsbury’s. Whereas Amazon’s contribution to the overall development hardly needs to be mentioned in this context.

Thus, there is much to suggest that we are amid a shift in the increasingly digitalized marketing landscape – by all accounts, a shift that will also reach the Swedish market. This is clearly something that will have consequences, although different ones for different players.

For example, for media agencies it will be a matter of reviewing how to remain relevant, and future-proof their business, through access to data. For some, the answer will be to seek partnerships with retailers, and for those with the right skills to interpret the data, a new palette of customer insights will become available.

For Swedish retailers, it will similarly be a matter of relating to the new reality that awaits. Being the first to take a position in which they exploit the full potential of their first-hand data is not only interesting from a brand perspective, but it also enables new revenue streams in an industry with shrinking margins and thus a competitive advantage.

To succeed with this, retailers need to:

  • Create conditions for high-quality and accessible data

Data quantity is important, but it is the quality of the data that determines how effectively it can be used. This requires a solid understanding of how to analyze the data and a systematized and automated process for drawing conclusions. Insights are best made available both internally within the organization and externally, via appropriate tools.

  • Ensure competence and prioritization of the issue

Expertise in data analytics, systems administration and AI/machine learning is critical to building an offering around data and insights. This is expertise that can either be built directly within the company or attached to the organization through partnerships or acquisitions. Either way, the corresponding expertise needs to be represented at the highest level – for example via the CTO in the management team – to ensure that the issue is given priority.

  • Build an ecosystem or seek partnerships

Your own data has even greater potential if it becomes part of a context. Daring to seek partnerships with other players who also have valuable data can therefore be a first step towards creating an attractive and unique advertising product. The more creativity that characterizes the composition of the network, the more likely it is to be a winner.

Tomorrow, especially in these times, may seem far away. But those who want to realize the potential of this development need to start now.

Gustaf Höök, Partner and Jessica Winberg, Project Manager

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