4 Ways Data Collaboration Will Change Retail for the Better
Over the past decade, retailers have committed a multitude of resources to accelerating digital transformation, with a huge emphasis on customer data. For all the progress that has been made, some of these investments are limiting because they were only designed to improve data capabilities within the four walls of the marketing department.
For a long time, retailers have realized the importance and benefits of using data. But converting that data into audiences, with tighter control on security, accessibility, and governance—otherwise known as second-party data—can unlock far greater value to the entire ecosystem of partners, including the CPGs they work with closely. Cloud-based data collaboration tools and retail media networks (RMNs) have been transformational for breaking down those walls, empowering retailers to share and leverage their data with their supplier partners.
The recent emergence of data collaboration platforms comes at a time when retailers are realizing the value of their first-party data, driven in part by their partner brands’ increasing needs for personalization. As retailers continue to accelerate digital transformation, they must prioritize solutions that break down traditional barriers between media, data, and analytics that have long stymied the industry. Only then can retailers work more closely and collaboratively to drive business value for themselves and supplier partners.
While there are countless ways data collaboration can reshape a retailer’s business, there are four standout applications that enable retailers to succeed.
Foster Data Partnerships for Equal Benefit
Facing the demise of third-party cookies, CPG brands have come up with innovative strategies to boost their own first-party data assets. While these practices are a promising first step to building a brand’s data infrastructure, when used alone, they fall short on providing a holistic view of the customer for primarily two reasons. First, even the most data-driven CPG brands have only just recently started establishing these first-party relationships, so data lacks important historical context compared to a retailer’s customer insights. Second, the relationship between CPG brands and consumers provides an incomplete picture of a customer’s shopping habits because consumers are still heavily reliant on retailers to buy their favorite products.
Data collaboration between retailers and their CPG suppliers has transformed, as brands can now carry out marketing campaigns online and in-store while measuring their real end-to-end impact, from forecasting to visibility to sales transactions. The potential insights gained from these activations will only grow and become more sustainable as more data partnerships form and more data is fed into the flywheel. By opening themselves up to data collaboration, retailers hold the key to a true, 360-degree view of customers.
Collaborate Beyond Retail Media Advertising
The first use cases involving data collaboration have mostly focused on retail media. According to eMarketer, U.S. digital retail media advertising is expected to reach $41.37 billion in 2022, growing nearly $10 billion from this year. However, connecting customer data to optimize retail media spend is just the tip of the iceberg.
Retailers and their CPG partners can dream even bigger with real journey analytics, which enable retail and brand marketers to not only better understand certain audiences, but also the customer journeys they embark on. By connecting customer intelligence with trusted partners, marketers and data scientists can map out the customer experience more effectively, which helps expose any gaps along the journey.
These use cases demonstrate why retailers should consider partnering with companies that may not necessarily have obvious audience overlap and affinities, like airlines and hotels. Learning about consumer behavior in other settings through these partnerships can unlock new insights about customers that marketers would otherwise never discover.
Place Privacy and Security Above All Else
Businesses across sectors are increasingly looking to data partnerships to break down silos and improve business outcomes. In today’s privacy-first ecosystem, retailers understand they have an unspoken obligation when approaching data partnerships, as safeguarding consumer data is paramount. It’s one reason why retailers have gravitated towards privacy-enhancing technologies (PETs) such as differential privacy and data federation. These solutions allow query execution across multiple cloud environments, making collaboration safe, seamless, time-efficient, and privacy-first. As a result, retailers and their CPG partners can maintain control over their data and maximize its value.
Safeguarding customer data is only one aspect of data privacy. Retailers, especially those operating across borders, must also ensure legal and regulatory compliance. Layering in protections through PETs, such as a query engine that leverages differential privacy, will not only strengthen data protections but also give retailers the flexibility needed to withstand changing regulations.
Fortify the Media Supply Chain
Retailers that have embraced data collaboration solutions thus far have mostly done so as media suppliers, building out networks in collaborative environments that enable brands to buy advertising inventory. The overwhelming success of RMNs has even inspired the TV industry to experiment with its own iteration of media networks. As TV becomes more and more addressable, players across the ecosystem, including retailers, CPGs, and brands, are driving more collaboration in order to boost their TV campaigns.
With retailers and streaming services now vying to build out their data partnerships, retailers will need to be interoperable for CPG brands at a global scale in order to help them activate across a wide variety of channels, and continually measure the effectiveness of their marketing investments.
Retailers and CPG brands have come a long way since digital transformation first swept the retail industry. Despite its rapid evolution, the innovations and new marketing opportunities are not expected to slow anytime soon. With data collaboration becoming the new standard, retail marketers are poised to provide the type of information and intelligence previously reserved for the tech giants, and a new era in retail has now arrived.
Vihan Sharma is SVP and Managing Director at LiveRamp.