RBTE 2016: Data must be used to drive retail business growth

Big data must be used to drive retail business decisions, said Luke Jensen, former group development director at Sainsbury’s.

Speaking at RBTE 2016 in London this week, he said: “In 5-10 years’ time we won’t even think of the concept of running a business which isn’t driving its most fundamental decisions off customer-specific transaction data.”

Jensen said big data is self-evident, using the Sainsbury’s and Tesco loyalty cards as examples of analysing transaction data.

“But Morrisons and Asda can’t, and they’ve been blind-sighted on more than one occasion because they can’t see this data.”

Historically, Sainsbury’s Nectar Card holders would receive 1% back on their spend for many years. Jensen explained the grocer tried to halve the value of points about seven years ago, but had a “mini revolution” in its test area. But when the grocer started using its data to offer personalised offers via coupons at the tills or money-off online, this provided critical value to customers.

“About six months ago, Sainsbury’s divided the value of Nectar points by two and there wasn’t a whimper, and Sainsbury’s still continued to outperform the big four,” said Jensen. “If you have £20 billion of turnover and 75% of transactions go through Nectar, that’s a lot of money if you can take down half a percent and it’s only possible because we started using data smartly to give value individually which is worth more to customers than the half percent of points.”

He added: “There’s real value in this, by using data well, you can effectively save £100 million on the marketing budget.”

But Jensen is not a fan of the term “big data”.

“Of course it’s big, every time you handle data there’s lot of it and we have smart machines which can handle this stuff.”

He said retailers get scared of the term. “It’s deeply unhelpful – it’s been invented as a term by IT people to scare the shit out of normal people like us.”

Also speaking on the RBTE panel was Simon Roberts, president of Boots, which launched its Advantage Card loyalty programme in 1997 and now has 15.5 million customers signed up.

“We talk a lot about personalisation,” he said. “But in a world moving faster and faster, the speed of convenience won’t be the differentiator, the individual connection with the customer will be point of difference – it’s the customer experience which creates value.”

Roberts said its online offering is becoming increasingly connected to the store with three quarters of orders being fulfilled through Click & Collect.