A Modern Food Industry Must Have a Data Strategy
For any business operating in our rapidly evolving, digitally transforming, increasingly AI-powered world, there is only one certainty: Data is king. For the food industry — and food retailers in particular — there’s no shortage of data to mine. There’s data on consumer purchasing habits and the effectiveness of marketing efforts in shaping those habits. There’s supply chain data on how efficiently products are produced and transported to store shelves, and data on which products perform best on those shelves. Those examples barely cover the totality of what’s available. But if all that data is just the tip of the iceberg, then the businesses that are unable to manage, analyze and effectively operationalize those insights run the risk of becoming the Titanic.
The good news is that unlocking this data is the key to various opportunities across the industry, but at present, the food industry is unquestionably missing out on ways to capitalize on this ocean of data. But the urgency doesn’t just apply to serving customers and optimizing profitability. The fact is that not having a data strategy is no longer an option, and an effective one has wide-ranging benefits, from reduced costs to increased efficiency, more effective partner collaboration, improved business operations and better chances of industry-wide success.
So why has data science posed such a challenge to the food industry? FMI collaborated with Accenture on the “Daunting Data Dilemma” report to investigate this question further. First and foremost is simply the sheer volume of information available today, which on a global scale is now being measured in zettabytes, or 1 billion terabytes. This growth shows no sign of slowing down. Investment management firm Blackstone has forecast $1 trillion in investments into the U.S. data center industry in the next five years just to store and handle all of this information.
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Second is a broad lack of both data standards across the industry and systems that can give organizations a comprehensive view of the data that they do have. There’s no quick fix. Not only will the effort and cost required to upgrade legacy systems or design new ones be significant, but success will also require a philosophical shift in the way that different organizations collaborate and share data among themselves.
The Right Stuff
Tackling both issues requires the right talent, something that poses further challenges and opportunities for the food industry. Simply collecting the right data isn’t enough. Companies must also have the expertise to manage and turn data into insights, which will require rethinking how talent is recruited while simultaneously developing a culture where data is democratized and used in decision-making across the organization.
Attracting the right talent can be a daunting, if essential, first step. The food industry is already competing against other sectors that will likely either offer better compensation to top talent or that are perceived as being more innovative or, for a lack of a better term, “sexier,” than the food industry. Overcoming these hurdles must be an industry-wide priority.
Failure to modernize data infrastructures and systems, improve standards and transparency, and shift the culture of recruitment and data sharing will put food industry firms at a distinct competitive disadvantage, particularly when it comes to generative AI solutions that will shape the next wave of business and the ability to improve the consumer experience.
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By aligning on data processes and standards, businesses across the industry can achieve better visibility into the supply chain that will help everyone with key metrics like in-stocks. Additionally, there are massive opportunities related to customer service and consumer engagement – particularly when it comes to loyalty data and metrics that can be used to optimize store performance – that will enhance the shopping experience and build more trust in our brands.
Broadly, the industry needs to take a hard look at what data provides a competitive advantage and what foundational, core information would be best shared to lift all boats. It’s also critical that all stakeholders work to standardize data so that efforts can be spent on differentiation and meeting consumer needs rather than collection. While the industry must work collectively, individual businesses must continue to create the right digital infrastructure to leverage data and take advantage of improved AI capabilities.
The food industry already invests heavily in employee training — an average of more than $600 per employee for food retailers and $750 per employee for suppliers — and both expect to increase these investments in the future. This workforce training and upskilling, combined with strategies to recruit tech talent, will help the food industry continue to take advantage of data to enhance the customer experience.
However, the benefits of improving business insights, encouraging further trading partner collaboration and elevating the consumer experience will be transformative, and it is essential that the industry works together to modernize and embrace the digital data revolution to best compete in the future.
