Revenue Hinges on Real-Time Data. Why are Retailers Hesitating?

Are Traasdahl, CEO, Crisp

Retail sales continue to grow, shooting up 3% in January after the holidays, and the Federal Reserve Bank of New York recently stated that global supply chains have “returned to normal.”

But faced with ongoing pressures from razor thin margins, inflation, potential business disruptions and growing competition, retailers need to push forward to build sustainable and more profitable revenue streams. Amazon’s non-retail revenue and profit margins from data, advertising and their cloud business has put tremendous pressure on the entire retail ecosystem.

Selling food and other packaged goods is no longer the end-all. A growing number of retailers are finding ways to create new sources of revenue and to monetize their valuable data to drive product sales. Companies such as Walmart are seeing record growth despite inflation by investing in data monetization and retail media. But other retailers – the vast majority – need to catch up to compete effectively.

Not all data is equal

The problem most retailers face isn’t a lack of data – it’s the ability to share data in a way that is actionable so they can quickly and efficiently gather insights and adjust to market conditions. This includes knowing when to change prices or inventory to adapt to changing consumer behaviors as inflation persists.

Real-time data on sales velocity and inventory levels is essential for retailers to drive greater product sales and reduce out-of-stocks through rapid responses to market shifts, both in-store and online. But it can unlock valuable new revenue streams, boosting overall financial health.

This includes data subscription services and analytics, where retailers offer their supply chain network access to their proprietary data for a fee. Walmart’s advanced Luminate offering and Kroger’s Collaborative Cloud platform, for example, offer detailed data and analytics capabilities to suppliers to help them understand consumer behaviors and inform their channel strategies through actionable data.

Benefits across the supply chain

The benefits of real-time data extend across the supply chain, bolstering the financial health of retailers and CPG brands alike. Sharing insights not only contributes direct revenue to retailers, but optimizes supply chain performance, product assortment and ultimately improves the shopping experience for consumers.

By sharing real-time data with suppliers, retailers can equip them to stay ahead of evolving consumer behaviors through improved understanding of store conditions in real-time and over time while tracking inventory and product performance. This enables brands to keep shelves stocked and help prevent future disruptions. Collaboration also enables the supply chain to react faster and match supply with demand, which can ultimately lower prices for consumers through increased efficiencies.

Role of artificial intelligence in supply chains of the future

While retailers continue to improve their ability to predict changes in consumer demand and adjust quickly through real-time data, unanticipated supply chain shocks will continue to occur. This is where artificial intelligence (AI) can help.

AI is far faster than any human, can pore through more data, and suggest workarounds that can improve a supply chain. Scenario planning can help retailers and their suppliers analyze potential disruptions and determine a recommended approach based on the impact of potential responses.

But AI is only as smart as the data it’s fed, providing yet another reason for retailers to invest in digital transformation and real-time data-sharing. Retail executives who prioritize accessing data and collaborating will be more nimble, agile and adaptable to weather the next supply chain disruption or economic shift that is inevitable.

 Are Traasdahl is co-founder and CEO of Crisp, an open data platform that connects information and companies across the retail industry.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.