CFO World

SAP retail chief: Why more retailers need to harness data differently

SAP global retail business chief shares how he's seeing the maturity of digitisation in the retail industry and why he believes stores are more important than ever


Digitisation in retail today is less about table stakes capabilities such as ecommerce and omnichannel efficiency and more about how brands innovate their customer experience, particularly in-store, SAP’s retail chief claims.

SAP global head of the retail business unit, Achim Schneider, has been with the enterprise software vendor for nearly 20 years, playing a fundamental role in growing the company’s retail portfolio globally. One of his key achievements was as project lead for the SAP Fashion Management application, used by 25 brands globally. He’s also overseen supply chain for retail, product management, introduced solutions management and sales enablement.

Speaking to CMO on a recent visit to Australia, Schneider agreed retail was once a brand driven, straightforward business.

“Retailers believed they knew what customers want to have. That has changed massively. Without that end-to-end consumer contribution, retailers won’t work and they have to change that mindset,” he said. “They have to change, or be left behind and leave the market.”

Yet with SAP’s 2018 Digital Transformation Executive Study finding just 3 per cent of retailers have completed digital transformation projects, most of which focused on efficiency and cost cutting, there’s clearly still a long way to go before brands successfully harness digital for more disruptive innovation in the retail experience.

“A couple of years ago, everyone was trying to be ready for omnichannel and online business, and many bricks-and-mortars still hadn’t made that step,” Schneider recalled. “Amazon was already there a few years back too, so if you weren’t in the ecommerce world, you were not good enough as a brand to compete. Most retailers were thinking that’s the big investment that must be made for the future.”

“You can’t just have omnichannel capability; it’s about how I better address customers. That’s the key thing in digitisation: What is it I can do to approach my customers in a different way? What can I collect from them and how do I make use of the data I get from customers to be better at service, in personalisation, address that segment of one, and have a real customer experience available?”  

One key step is contextualising online ordering and purchasing so it’s on the consumer’s terms, Schneider said. A related critical piece is ensuring you collect the right data in order to show customers what they want to have.

“It’s what Amazon is strong in – the brand makes something out of data increasingly for the experience component of interaction,” he said. “With in-store retail, it’s then figuring out how to more successfully use data from the ecommerce world to know those physical customers better, and combining this data with data I can collect in-store. That should just be keylog or transactional data, it’s about moving behaviour, how customers look for products, and how many products customers look at before making a purchase.

“There are lots of things to collect in-store which you can combine with ecommerce to truly have that 360-degree view of the customer. Then you can improve the experience in a different way.”

Again, however, only a small percentage of data is being used by retailers in decision making. While these organisations tend to collect as much data as they can, squirrelling away for future use, they’re still not able to ascertain its significance, Schneider agreed.

“As we say in Germany, ‘shit in is shit out’. That often happens with retailers,” he continued. “Also, it’s about how we can help customers by leveraging that data. That’s about having the right analytics, and a set of artificial intelligence [AI] engines to enable retailers to use the right data in a more automated way. Then finally it’s about having the right decision-making data available.

“With such an immense set of data, you need to identify the right technology to deliver those insights. It could be edge computing in-store, or pre-selection based on machine learning and AI to provide best predictions for your planning process. These are where we’re stepping in with as SAP best practices to better support retailers moving forward.”  

Emerging technologies in retail

But as ML and AI come into platforms like SAP’s, Schneider said it’s again about looking at processes retailers can change in order to think differently. One could be using machine learning to improve a planning process.

An example he cited was tapping into CCTV cameras to improve customer interaction. “These have historically been used for threat mitigation but can be used in a more strategic way for customer experience based on what data can be collected,” Schneider said.

An example is Adidas in Russia, which used existing cameras plus RFID readers and RFID tags on garments and products to improve real-time inventory accuracy in its physical store from 60 per cent to 99 per cent. Adidas is now looking to rollout the approach globally.

“That’s an easy approach that improves, using technology, standard processes in your store. This is real-time inventory information,” Schneider said.

SAP is also working with Google to combine data sets to more accurately plan and predict fashion for the next season.

“The question we asked is: How can we engage with customers in collecting the data? To do this, we want not just feedback, but also customers supplying insight into experiences of products, their likes and dislikes,” Schneider explained. “On top of that, we take information online, via Google, on what customers are searching, and combine those data sets with internal systems to predict a much better forecast for next season’s products.

“This has been highly successful and we have three customers now moving on this combination of capabilities, using AI/ML from us together with data collected from these different areas.”

In addition, Schneider pointed to the rise and rise of RFID. “One of our startup partners has developed RFID technology knitted into garments which then allows you to track from the first moment or product design, right down to store level. Then you can combine it with end consumers and feedback on products,” he said.  

“There could also be the opportunity to give feedback while a product is showed to the audience, with information in stored in the product you’re creating. You can track through the entire supply chain, see the changes, and when it comes to final customer touchpoints, have assignment in a serialised way to consumers.”  

It’s something Under Armour is already doing with serialised running shoes and shirts, which have RFID built-in. “You can then have personalised offers or suggestions to end consumers,” Schneider added. “For example, if you bought the purchase a year ago and you used it 20 times, it might be a good time to exchange that product.

“That’s just a way of showing how many new opportunities exist when you have different technologies in play and combine your assets with consumer data.”

To get to that point, there’s clearly a cultural shift. For one, employees have to trust a machine.

“It’s not just the marketer or buyer reading a research paper, seeing the market and making a decision. We call it the combination of ‘outcome data’, which is based on transactional, structured data sets, and the ‘experience’ data, which is unstructured,” Schneider said. “The latter comes from very different points and steps. You need to combine both to make that intelligence happen.”  

Australian retail landscape

It’s for all these reasons Schneider remains optimistic about opportunities existing for Australian retailers, even in the face of Amazon’s arrival on local shores and the demise of a number of a high-profile brands.

“With Amazon coming in, plus the new technology, there’s still opportunity because I know my customers as a retailer personally. It again comes back to data and seeing how to make use of the data in the right way,” he said.  

“This comes back to mindset change, focus and the right usage of technology in an easy way. Don’t boil the ocean, focus on areas to improve. It’s not just about being a competitor, but as a retailer who’s able to bring customers into the store and provide the best experience. That’s the magic.”  

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