With retailers and FMCG suppliers alike looking to extract more value from their data, dunnhumby believes that data monetisation could not only open the door to new ways of working collaboratively, but also result in an enhanced shopping experience for customers.
At the recent Consumer Goods Forum Global Summit in Vancouver, dunnhumby chief executive Guillaume Bacuvier gave a presentation on why data monetisation could be a ‘win win’ for the sector.
ESM editor Stephen Wynne-Jones caught up with him.
ESM: Why do you believe data monetisation could be a double win for the retail and CPG industries?
Guillaume Bacuvier: Right now, there’s a lot of talk about ways to create new revenue streams from data and using data as an asset; something that dunnhumby has been party to for some time. We have been active in assisting retailers to build up their business by commercialising their insights, their customer data in particular.
As we have done this, we have sought to encourage retailers to move away from a simple ‘transactional approach’ to data monetisation, and towards a bigger picture solution that can be a ‘win win’.
On the one hand, you could look at data monetisation as a way to just flog your data – to try to get more money from suppliers, increase your profits, and offset the fact that you are facing price pressures. We are of the argument that if you do that in the long run, it’s probably self-defeating, in the sense that it’s probably enhancing tensions with brands, for one thing, or is seen as a new ‘tax’ on brand owners.
The other way to look at it is from a collaboration perspective. Even if there’s a commercial transaction involved, in terms of one party buying insights from the other, it’s important that collaborative benefits are there, in terms of increasing transparency and having a common view of the customer.
It’s about both parties talking the same language and the same data, with the same metrics. From that, developing collaborative category management that’s also shopper-focused.
Potential Roadblocks
ESM: In terms of retailer-supplier collaboration, though, obviously you will have several brands in one category that will have different approaches and/or agendas. Could this present a roadblock?
Guillaume Bacuvier: The way we encourage retailers to look at it, is to give brands the option to contribute to the category, rather than just focus on their own brand as the source of proposals and ideas. Therefore, to work with the retailer, not just with their own brand in mind, but also examine how can they help build the category, which in most circumstances will be beneficial to the brand as well.
It’s about fostering a constructive debate – some things might make sense and others might not, and not everybody wins. But it should be an open, debate-driven environment that’s built on the same understanding of data.
ESM: Traditionally, retailers have sought to ‘take ownership’ of the relationship with suppliers – what incentive is there to change things in a situation where data is monetised?
Guillaume Bacuvier: It’s to some degree a conscious decision to rebalance the dynamic – move away from a ‘win-lose’ negotiation model to one that’s generally ‘win-win’. With that in mind, it’s not just about setting up tools and data and a commercial process – it’s also a cultural change.
In many cases a retailer’s commercial team is coming from a culture of keeping information for itself, particularly around the transactional relationship with its suppliers, and it takes a while to change that. But the benefits are clear; those retailers that embrace collaboration end up outperforming the market.
If you’re a retailer and you’re going to sell data to your supplier base or even beyond, it can’t be just to make money. It needs to be driven by shopper insights, and you’ve got to have a CPG brand that can also see the benefits, and achieve proven results.
If you can keep all of these things in balance, then you’ve got a sustainable business. If you try to build new data revenue streams, again just by flogging stuff, it eventually collapses in on itself.
Importance Of Personalisation
ESM: Personalisation is a hot topic in retail and CPG at the moment; can this approach also help retailers and brands develop more bespoke offerings for customers?
Guillaume Bacuvier: Absolutely. And that’s something that is certainly not new to dunnhumby; it’s been part of our infrastructure for many years.
I think what has changed, though, is that the tools of the trade have evolved. Increasingly, today, the smartphone is the engine for the loyalty programme – enabling shoppers to know what promotions are in store, to receive coupons and so forth.
Traditional platforms, such as loyalty mailouts or flyers, are increasingly being digitised, which in turn increases the opportunity for more personalisation.
ESM: That ties in with the growing blurring of the lines between online and offline retail?
Guillaume Bacuvier: Yes. But historically, in the retail and food environments, each channel has been managed independently when it comes to running ad campaigns and promotions. They’re optimised within their own channel, but there has been relatively little work done to understand the optimal allocation between traditional offline channels and online channels.
That’s another element of the work we have been doing – using science to build models and make the whole thing more efficient. When we start working with a retailer, for instance, we look at all of the promotions that retailer has implemented over the past few years.
Which ones have actually created value? What retailers discover is that many promotions actually run at a loss, or cannibalise sales of another product.
A 'New Normal'
ESM: People in the industry have talked about collaboration for many years, and data collaboration is the next big topic. But time and time again, competitive pressures get in the way. Is it reasonable to think that within the next five years, data monetisation and data collaboration will be the ‘new normal’ for retailers and suppliers?
Guillaume Bacuvier: It’s hard to speculate, because there are two sides to collaboration. One is this supplier-retailer, CPG-retailer collaboration model, which is a standard model, and some suppliers are more equipped for it than others.
The other is around retailers creating data amongst themselves and pooling it. Recognising that on an individual basis, for many of them are too small to have a data asset that’s attractive enough for material monetisation, especially against some of the big tech companies, Amazon most prominently. In retail, this isn’t something that necessarily comes naturally, whereas in other industries, it’s a more standard position – the idea of ‘coopetition’.
Nonetheless, retailers can see it as something that’s coming down the line. Particularly in countries where the retail market is highly fragmented and everybody has a small market share, no one retailer can do data monetisation successfully on its own.
© 2019 European Supermarket Magazine – your source for the latest retail news. Article by Stephen Wynne-Jones. Click subscribe to sign up to ESM: European Supermarket Magazine.
