Leahy spotlights big data
Former Tesco boss underscores importance of data in support of modern retail businesses, writes Miya Knights, Retail Technology editor
Retailers are overlooking a wealth of knowledge from the increasing amounts of data they process and collect, according to former Tesco chief executive, Sir Terry Leahy.
“Data in business is priceless,” he told delegates attending the JDA Focus Connect 2012 event in Barcelona this week. “But businesses are not even scratching the surface of the wealth of data they have in their organisations to exploit any opportunities to improve the way they run them.”
Sharing experience of success
Having joined Tesco as a marketing director some 20 years ago, Leahy headed the company from 1997-2011 as it became one of the biggest retailers in the world and now shared the “universal lessons” he had learned about running a business.
He joked that Tesco’s Clubcard loyalty scheme was more famous than the retailer itself as pioneering in the way it used customer data to enable insight and personalisation: “It was the first example of using ‘big data,’ where before it was simply too expensive to manage that amount of data.”
But the increasing automation of business processes, coupled with more digital and electronic interaction with the customer, has brought down the cost managing and analysing the large volumes of data produced. “Embed the best way to do things in process that allows real-time data to help manage the business from end to end,” Leahy added.
“Getting product through the supply chain, right through to range management and merchandise planning, can all be centralised digitally, giving you tremendous control. Connect the customer to the supply chain and drive the business that way ‘round. That’s when the data really comes to life.”
Leahy also observed that many traditional businesses struggle to make a profit online because, “they haven’t built their business on data”.
Putting data to work
The Tesco boss is now an investor in a number of different online businesses, including fulfilment platform Metapack, digital voucher specialist Eagle Eye and online retailer The Hut Group. He also recently published Management in 10 Words, from which he distilled the universal lessons he shared during his presentation.
The importance of data followed truth as the first lesson he shared. “Perceiving a common, clear view,” he said. “See yourself as others see you.” But even here, data figured highly in pursuit of such clarity. “Data comes in at the bottom of the organisation and gets filtered by management. So set common goals,” he continued.
In a press conference following his presentation, Retail Technology asked Leahy how management should best “filter” data for maximum success.
He responded: “Tesco became well known for its research – the amount and its quality. And also we developed a big data source, which was a big innovation, through Clubcard. That was quite a big step towards getting new information.
Listening to the customer voice
“I also found that portraying data as the voice of the customer was a very powerful management technique. Other power centres, like buying, IT or finance, can challenge each other.
"But it’s hard for them to challenge the voice of the customer. Also, be very careful about decision-making structures, so that people can be clear where decisions were made on pricing, range or logistics. We made sure the data was there for the decision, bringing it into key decision-making events.”
Leahy concluded: “At the time we wouldn’t have automated decision making. We’re now moving into an environment where, in areas like selection and pricing decisions, some of them can be automated. But you still need to set the parameters and supervise those still strategic decisions that need to be made.”