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Big data and emerging markets

How modern grocers can use data to reach emerging-market consumers

It wasn’t long ago that retail experts feared the expansion of supermarkets and hypermarkets around the world would eventually lead to the demise of small independent local stores and local famers’ markets.

But today local stores and farmers’ markets are thriving—both in developed markets and emerging markets. It is the multinational grocery retailers that, while continuing to be successful in developed countries, are experiencing difficulty gaining market share in developing markets.

A recent report from McKinsey, “Modern grocery and the emerging-market consumer: A complicated courtship” highlights the shortcomings of multinational grocers, from gaps in supply and demand chains to how public policy can prevent these grocers from expanding in these markets.

While the report offers seven highly valid strategies to successfully enter emerging markets, it doesn’t touch on the crucial role that data can play in driving business in these markets. In my mind, that’s a big miss.

While these strategies will certainly help, to be truly successful you need to understand your customers, what they like, what they don’t and how they shop. There are many notable expansions into Canada by US-based and global players that have had different outcome; some still unfolding, that underscore the upside and downside opportunities.

Without question, customer data, such as the data harnessed within a loyalty program, can help to identify marketing, merchandising and store operations development opportunities in emerging markets.  Upon entering into a new market, collecting customer data would allow retailers to better do the following:

Build in-market sensibility: New research from Precima revealed the majority Canadians shoppers want to purchase locally produced products and many are even willing to pay more for it. Similarly, The McKinsey study found that consumers in emerging markets are even more entrenched in this trend since they cook and prepare their meals more often than consumers in developed countries. The key here though is not just isolating the opportunity around ‘local fare’, while it’s an important trend in and of itself; it is more about knowing the habits and behaviours of your consumers in different markets including where there are price sensitivities and margins to be had. Large chain supermarkets and hypermarkets are significantly underleveraging opportunities if analytics are not being used to develop a profile of their local consumer to better understand their shopping habits so they can truly meet their needs.

Recognize: Customer data gives you the opportunity to recognize your best customers every time they enter your store. Recognition can be as simple as knowing their name and greeting them in the store.  Some coffee retailers with repeat customers are incredibly astute at this.  As customers give you more business they will expect you'll go the extra mile. It is important that you understand your consumer and their everyday shopping habits so you can recognize them in a way that fits with their cultures and values, and in some ways, just makes shopping with you that much more “personal”.

Reward: Just because something works well in a developed market, doesn’t mean it is a fit for consumers in emerging markets. This is where the value of a loyalty program comes in. Loyalty programs give you access to new customer data so that you can devise a “locally relevant” rewards, it may be a product, it may be a service, it may be something entirely different that is culturally relevant that may be unique to that market; by using data to mine and leverage this data you can create a rewards offer that makes your customers truly loyal and ambassadors that not only shop your store, but motivates others to do so as well.  What start up can afford to forego that level of amplification?

Delivering retail performance can take a small army of retail specialists in marketing, merchandising, operations, supply chain, employee training and countless other retail activities. Assembling all this talent in a new market can be challenging. But when it comes to understanding shoppers within these markets, data plays a crucial role in giving multinational grocers the deep customer insights required to provide the right mixture of rewards and recognitions that will ultimately lead to customer loyalty.

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