As multichannel shopping continues to evolve, sources of customer data are multiplying. Rebecca Thomson looks at how to cope with the developments and what they could mean for retailers

How data is changing

  • In the bricks-and-mortar-only world, it was loyalty cards that mattered. Now, in-store data is equally important to online transactional data and information on how people use mobiles to research goods
  • Customer profiles will be more in-depth as a result of this proliferation in data, and marketing offers will be more targeted
  • New forms of data will illustrate not only what people buy, but how they decide to buy it
  • Collaboration between the online and offline world is likely to be important in achieving this

Use of customer data has come a long way since the first loyalty cards were launched. Gone are the days when a retailer relied on a store card for purchase information – now, data comes from websites, stores and mobile phones, and retailers must figure out how to turn it into something coherent.

Not only are the sources of data increasing, so are the types of data which are of use to retailers. While a record of past purchases is useful for frequently-bought goods – it is straight-forward to predict someone will buy apples if it has been on their online shopping list for weeks – non-food items present a new challenge. Knowing that a customer bought a camera in November 2010 doesn’t really help predict when they might buy a new one, or what they might buy next. Access to search data will become a priority, and building up a picture of how customers shop instead of simply listing what they buy will be the norm.

Customer profiles will be where the money is, says David Hogg, retail executive at John Lewis’ data analytics firm Sterling Commerce. Once you have an in-depth picture of how a person shops, you can target marketing offers at them, time your approaches correctly and stock what people want to buy. And while customer data will continue to be the central part of this, accurate and timely product data will also be needed.

There are several options available when analysing data, but retailers must contend with legacy systems if they are going to be able to do it well. Integrating disparate databases is one main challenge many are already working on. To tackle this, there are systems available that sit in the middle of different databases and platforms, bringing all the data into one place and making it manageable. There are also business intelligence systems that can draw data from different places and analyse it without the need for an integrated infrastructure. But for a truly data-driven business, full integration is likely to be the eventual aim.

Open to options

Once this is achieved, the possibilities are exciting, says Max Jolly, head of digital at Tesco Clubcard provider Dunnhumby. Mobile and online data will help retailers understand the decision-making process. Before online retailing, he says, you would have had to tag a trolley to work out where a customer is stopping as they wander around the store. Now, search and browsing data shows you every step of the customer journey.

“Mobile and online data open up opportunities of knowing not just what people buy, but how they buy,” he says.This could have big implications for bricks and mortar retailers, when you consider that in the future the majority of purchases are expected to be researched online but bought in-store.

All this makes search data valuable. Retailers have access to their own website’s online browsing history, and if they start offering free Wi-Fi in stores, they will be able to track what people do there too. But it is search engines that could hold the key to what many retailers will want. Sainsbury’s is certainly keen on search data – the grocer has recently launched a scheme with Yahoo! called Consumer Connect. It links offline purchase data from the grocer with online behavioural data provided by Yahoo!, and the aim is to improving online advert targeting. Sainsbury’s director of insight Andrew Mann said at an event in March run by LMG, which provides data analytics for Nectar, that the data generated by the loyalty card has helped make sure all parts of the business are going in the same direction over the last decade – it’s now possible to predict around 75% of purchases, he said.

The grocer’s next steps, as with other big retailers, will be to use data to slowly start connecting the online and offline worlds. The potential is so big it can seem overwhelming, but retailers are on their toes when it comes to making the most of data. As multichannel retailing develops, it will be increasingly instrumental in keeping ahead of the competition.