‘The answer does not lie in data, but in the stores’

Data and technology are all the rage in retail these days, but perhaps sometimes it’s hard to see the customers among all the computers crunching their numbers.

Smart use of data has contributed to the transformation of retail, and will no doubt continue to do so, but first principles frequently still apply.

Following a dismal update  - an insipid brew rather than an energising espresso - from coffee giant Starbucks, founder Howard Schultz posted a thoughtful commentary on LinkedIn.

Among his points, Schultz – who these days is Starbucks’ emeritus chair – wrote that as the company seeks to reinvigorate itself, “the answer does not lie in data, but in the stores”.

“Focus on being experiential, not transactional. At Starbucks, culture is the currency of the company and its internal operating system. All roads at Starbucks go through its culture”

He wasn’t being a Luddite. Far from it. He flagged, for instance, the imperative that “one of their first actions should be to reinvent the mobile ordering and payment platform – which Starbucks pioneered – to once again make it the uplifting experience it was designed to be”.

But his main point was all about the need to be close to the business. He maintained: “Senior leaders – including board members – need to spend more time with those who wear the green apron.

“Through it all, focus on being experiential, not transactional. At Starbucks, culture is the currency of the company and its internal operating system. All roads at Starbucks – groundbreaking innovation, relentless execution, years of growth, and outsized financial performance and shareholder value – go through its culture.”

Many retailers on top form, including those that have been through painful turnarounds, will identify with that sentiment. Losing sight of the foundations upon which a business has been built – even if that business has evolved into something quite different from its original incarnation – frequently leads to trouble.

“Tesco Clubcard pioneered the use of customer data in the 1990s and today is piloting the deployment of AI. However, the point of Clubcard remains unchanged – to reward loyal customers”

Data, the shift to omnichannel propositions and, increasingly, AI have opened the door to new opportunities in retail, which the most forward-thinking and agile businesses have seized upon.

But many of the customer-facing innovations that have had the greatest impact have been rooted in retailers’ consumer heritage.

Take Tesco’s Clubcard scheme. Clubcard pioneered the adept use of customer data back in the 1990s and today is piloting the deployment of AI to ‘hyper personalise’ promotions. However, the point of Clubcard remains unchanged – to reward loyal customers, deliver them the value for which Tesco is famous and so deliver commercial success in the process.

At Marks & Spencer, which posts full-year results next week, the sort of approach advocated by Schultz has been behind the retailer’s renaissance in recent years. Nobody would accuse chief executive Stuart Machin of not being close to those wearing the M&S equivalent of Starbucks’ green apron.

M&S too is seeking to leverage the potential of AI. It is, for example, working with Palo Alto-based SymphonyAI and using the technology to compare “images captured of products in stores to store-specific planograms, providing an instant view of compliance on store shelves”. The point is ultimately to improve the in-store experience of shoppers by providing frontline staff with tools to do their jobs better.

And turbo-charged shops are at the heart of M&S’s strategy as it increasingly focuses on ‘bigger, better stores’ that enable everything from larger food assortments to improved click-and-collect services.

“Currys has announced that it is transforming 65 branches – investing in retail fundmentals – to improve the customer experience and deliver value”

M&S isn’t alone. Just this week, electricals giant Currys announced that it is transforming 65 branches to improve the customer experience.

In the words of stores director Matthew Speight: “Investing in our retail fundamentals is critical to delivering value for our customers and, in particular, improving our store layouts and growing in-store ranges.”

As Schultz wrote in his post: “The stores require a maniacal focus on the customer experience, through the eyes of a merchant.”

Data will provide some of the answers, but will never be a substitute for knowing the business, its purpose and crystallising that through empowered green apron wearers – and that must be as true for ecommerce stores as for their bricks-and-mortar counterparts.