Data is the new oil.
And for a one time payment equivalent to 2 million barrels of the black stuff, J Sainsbury's (JS) has taken control of customer loyalty scheme, Nectar.In an economy where algorithms make billion dollar stock market punts and can predict elections better than most seasoned pundits, it's becoming increasingly hard to ignore its power. Just as for the last century, those who controlled oil, controlled the world. So too is true for the next century and those who control the data.
You needn't look further than Amazon who - using their overflowing stockpiles - drive consumer prices down to pull the strings of retail.
Seeing data in this way helps us to see the logic behind the JS acquisition.
The world is split between oil-haves and oil-have-nots. And where direct correlations between oil consumption and per capita income can be drawn, countries have compelling reasons to control the reserves. JS now has full, uncompromising control over Nectar's 'oil fields' and - most importantly - the supporting infrastructure to refine it solely for their benefit.
You cannot do business today without data.
The good news is that data in its pure form of bits and bites is in abundance. But just as if you tried to substitute your weekly petrol top-up with crude, raw data not only useless - it's pretty damaging.
Retail 'knowledge workers' in the form of Buyers, Product Developers, Technical Managers, Category Managers and more are drowning in the stuff. So much is being forced upon them that - just like Mark Whalberg in the 1999 Blockbuster "Three Kings" - they're spitting most of it up - along with their productivity and your company profits.
Spreadsheet after spreadsheet. Cough. Cough.
Clunky legacy system after system. Splutter. Retailers need it refined. And therefore if retailers cannot refine themselves:
- They'll pay the big consulting firms to do it for them; or
- Get them to ship in pre-refined consumable 'insights' instead
Like importing oil, importing data doesn't come cheap.
Each extra 'barrel' of it incurs the consultancy data import tax. Pushing up the cost of operations. Pushing up product prices. Pushing aware your price sensitive shoppers.
This data import tax is driving a divide between retailers - the data-haves and the data have-nots. The JS-Nectar takeover places their feet firmly in the haves camp with the likes of Tesco, Walmart, Boots and of course Amazon.
Those retailers failing to invest in in-house data refinement will continue to fall behind and be known to history as the data have-nots.
Read more in the KamCity article.