Interview with RSi’s Jim Smits: Disruption in Retail and the Evolution of Data
The highly competitive retail industry is continuing to undergo historic levels of change. From the major shifts in consumer shopping behaviors and tastes, to the relentless influx of technology (like the omnichannel trend), retailers have a lot to keep up with just to survive, no less thrive, in this challenging retail environment.
Jim Smits, RSi’s VP of Retail Development for North America, is no stranger to the transformation retail is facing. With more than 30 years of experience, including executive-level positions at major retailers, Jim is a wealth of retail industry knowledge. In the first piece of this series, Jim outlines his thoughts on the disruption in retail and the effect of the explosive growth in data on the industry.
Based on your decades in the retail industry, what is the biggest challenge for retailers moving forward? The biggest challenge right now is the evolving e-commerce disruption and how each retailer will develop a strategy that best leverages brick-and-mortar along with “click & collect” and “click & deliver.” The biggest change I have seen is the growing volume of online orders generated by “click & collect.” In many cases, this is becoming an even bigger business than delivery.
Visibility into store/item activity and related data has been an important differentiator in the retail industry for decades. What data-related insights are critical for retailers (and their supplier community) to understand, and what is different today? We now live in a world that is data rich and knowledge poor. In fact, in many cases there is little to no real insight derived from the massive volumes of data that flow through retail operations every day. The retailers that have learned to mine the relevant knowledge and insights from massive data pools are the ones that are winning. Pressures on earnings have created the need for both very high on-shelf availability and at the same time strong inventory control. For suppliers, it’s critically important that they have the ability to leverage highly granular levels of data to actively manage their supply chains. This allows them to achieve high service levels with minimal inventory.
A big difference today is the myopic view of inventory from both suppliers and retailers. Most major retailers did not have dedicated supply chain/replenishment teams in play in the past. Now, almost every major retailer has a very active replenishment group that uses the granular data to make better decisions on inventory flow. The companies that don’t use this information struggle with having too much of the wrong inventory in the system and not enough of the right inventory on the shelf.
What is the ideal time frame regarding access to data and insights? The ideal timeframe for data really depends on the group and the need. I think merchandising and marketing teams have a good hold on weekly recaps, but supply chain and replenishment teams must focus on the daily picture. The leading retailers are using AI and machine learning to help with inventory down to the hour and are looking at their stores in terms of “day segment” to ensure the right items are in stock during the part of the day with the highest demand for that particular item.
Retailers are working hard to figure out how to automate the shelf tag, which would then allow them to manage items by the hour. This allows for flash promotions, quick discounts on overstocked items, and many other activities tied to effectively managing total inventory on the shelf. Think about the power of a shelf that understood the “sell by” dates and would use AI to automatically mark the item down prior to it expiring. There’s immense power in technology that can revolutionize the management, analysis and activation of data.