As the fallout from the Christmas shopping season crystallises, City commentators have not held back in lamenting the state of the UK high street after a difficult festive period. In fact, the British Retail Consortium has dubbed 2018 as retailer’s worst Christmas in a decade. Thus, ended a turbulent year for the industry, which saw weak growth thanks to pressures on consumer spending. This was not helped by influences ranging from terrible weather, which delayed summer purchases, to a Football World Cup and Royal Wedding which spawned latent demand.

Multiple factors defined the most recent shopping bonanza, most notably a dilution of activity. Last year, consumers extended the typical Christmas shopping period to include November and Black Friday, shopping in a savvy way and using multiple channels (such as via click and collect) to find the best deals. Whichever way you look at it, the month spanning Black Friday and Christmas is pivotal for retailers of all types. Instead of mourning the high street, however, they should see its evolution as a chance for their own transformation.

Online brings new opportunities

Otherwise, the key shopping period in the UK was characterised by a shift to online retail. In fact, many outfits such as Next were saved at Christmas by a boost in online sales. This is having a profound impact on the industry, as increased digital revenue, and falling spending at bricks and mortar stores, combined with factors such as changing taxation, business rates and consumer wages, are forcing retailers to seriously consider how they balance physical and digital commerce. After all, we have not only seen failing businesses going into administration, but also seemingly healthy retailers, because a significant chunk of shopping is no longer done in physical stores. Elsewhere, the cost of labour is increasing, so retailers are paying higher wages, which makes selling online, and investments in digital strategy even more appealing as they look to cut costs.

Despite concerns about the impact of Brexit on consumer confidence, the evidence suggests that this hasn’t had as big an impact as predicted. Although faith in the future of the UK economy is frail the financial situation of the average UK citizen is fairly positive. As quite an abstract concept, Brexit (at least at this stage) is quite hard to translate back to the impact on consumer finances. On the other side of the fence, most retailers are not reducing investment in technology.

It goes without saying that retailers need to find a way to future proof themselves against the unpredictable political and economic influences buffeting the UK economy. But where should they look?

Make the most of what you have

As an alternative to investing in more costly infrastructural innovations, retailers can adapt to the demands of the digital marketplace by looking inwards to their employees. Some major retailers have identified this opportunity already. For example, Marks & Spencer partnered with Decoded last year to launch a data skills academy, to make them more digitally savvy. For older, more established retailers like this, such initiatives are crucial to help them compete with the likes of Amazon and Ocado.

Although turning employees into ‘data scientists’ should be applauded, it needs to go further and the level of expertise implied by this term is slightly misleading. Rather than training up a select leadership group, it would be more beneficial to dilute training efforts to ensure that all employees, from the shop floor to the warehouse, have at least a basic level of data literacy. There’s proof in the pudding too – our own Data Literacy Index shows that organisations with strong data literacy exhibit up to 5% higher enterprise value.

This tactic makes complete sense in tandem with an increase in high-tech physical stores and the broader shift to online retail. It’s a mutually beneficial exercise for both retailers and their employees, because the evolution of the industry requires employees to have new skills, but also makes working in it more appealing. In fact, the online boom is creating new job roles altogether; you can now have a career in retail through understanding online demand and data analytics. This is particularly important around the festive shopping season, which makes up a third of total annual sales for many retailers. Therefore, they can lose out if they don’t understand forecasting data, for example, as the price of products sold out of season would need to be reduced significantly.

Data literacy tips

For retailers to accelerate this journey towards a more data literate workplace, they should take the following tactics into account:

  • Find a data champion: Organisations can experience resistance from senior executives, particularly those in more traditional retailers that are averse to change. Ensure that a ‘data champion’ has a seat at the table to help them recognise the importance of data.
  • Don’t neglect governance: Tighter regulatory controls conflict with the wealth of new data sets opening up, which retailers want to leverage as much as possible. With so much information available, it is easy to get carried away in the new world of data production and consumption and use inaccurate data. As Data Literacy involves the democratisation of data and self-service analytics, it’s crucial that insights managed by employees that are not data scientists are properly vetted and accurate.
  • Bridge the skills gap: The Data Literacy Index showed that 16-24-year-olds fall below the average level of Data Literacy, highlighting that young adults are not imparted with the skills to succeed in a tech-imbued workplace. Retailers should, however, harness the ‘digital comfort’ of this generation, but not assume they are confident with analysing data.
  • Break down silos: Most data literate talent is likely to sit within the IT or business intelligence teams, which is all very well but doesn’t lend itself to nurturing a data literate organisation. Retailers should create opportunities for data leaders to share knowledge with employees from across the business.

Although the Autumn retail extravaganza usually places a microscope over the industry’s issues, Christmas 2018 is indicative of a much larger trend that requires retailers to adapt to the digital marketplace. After all, it isn’t enough to be digital anymore. Instead, retailers and their employees at all levels, have to be data literate and capable of understanding and interrogating data in order to make their own decisions based on the insights. Despite the buzz around the applications of AI, machine learning, VR and robotics, we must not skip a step and lose sight of the importance of Data Literacy as the foundation of these innovations. Only with a data-driven culture can retailers offer customers a service that can match or even predict their preferences.

Paul Winsor

Paul Winsor


Paul is Qlik's Director of Retail & Services Market Development.