It is fitting that one of the most important themes explored on day one of The Australian Financial Review's Retail Summit was the critical role of data analytics in every aspect of modern retailing.
Data analytics is just as valuable to Scentre Group's Peter Allen in his management of the right mix of tenants in Westfield shopping centres as it is to JB Hi-Fi's Richard Murray as he attempts to predict the impact of online shopping on his network of stores.
Surveys show that a majority of customers walking around retail stores in Australia are using smartphones at some stage as part of their shopping experience.
Allen says shopping malls now have access to huge amounts of data about retailers and their customers.
"We're using greater data analytics to work out what works, to understand the relationship between shoppers and retailers, and what makes them go from one store to another," he said.
"We buy credit and debt card data and use that to understand where they shop and in what order. We also use it to find out what retailers are missing from our malls, by seeing where money is being spent either online, offshore, in other centres and then look to bring those retailers into our shopping centres."
Murray says the shift towards online shopping and the use of smartphones inside stores presents a challenge for companies such as JB Hi-Fi.
"We have great data on our customers who shop online ... we protect customer privacy instore because we don't capture it," he said during a roundtable discussion with Mark Coulter, the interim chief executive and co-founder of online furniture and homewares retailer Temple & Webster, and Julie Stevanja, the co-founder of online activewear retailer Stylerunner.com.
"Online sales will grow disproportionately, but the real question is what will it do for our stores?" Murray said.
It is ironic that the wisdom of using data analytics to engage with customers was highlighted in the same week that the liquidators of Dick Smith attempted to find out why that company collapsed. Evidence presented to the court suggests that a modicum of data analytics at Dick Smith would have exposed the gap between what consumers wanted and what the company was building up in its unsold inventory.
Another over-arching theme of the Retail Summit in Melbourne was the rapid pace of change in regulatory frameworks and in payment systems.
Rod Sims, chairman of the Australian Competition and Consumer Commission, said in a keynote speech that he will be watching closely any attempts by large retailers to absorb emerging online rivals.
"Going forward, our main competition role in retail will be to ensure new entrants are not prevented from competing on their merits," he said. "While this is our key challenge across all sectors, the rise of online retail makes this particularly important in this sector.
"We will, therefore, be alert to the consequences of large firms acquiring promising start-ups, we will closely monitor access to data issues, and we will continue to support the proposed Harper changes to section 46."
Opposition to section 46 is one of the few issues which unites big business and the Labor Party. Sims dismissed the idea that this reform will stop large retail players opening new stores in new locations.
"Not only is opening new stores in new areas pro-competitive but, in any rare case that such activity could substantially lessen competition (SLC), we already have the "effect of SLC" test in sections 50 and 45," he said.
The rapid pace of change in the payments system was the subject of another keynote address from Reserve Bank of Australia assistant governor Malcolm Edey.
Edey's speech provided a reminder of the significant investment in payment technology by the major banks as well as the benefit to consumers of having a proactive regulator with an eye to supporting new technology.
Edey, who will retire soon, says the most significant contribution made by the RBA to the payments system was its role as catalyst for the new payments platform (NPP), which heralds a brave new world of instant money transfer.
"The NPP will allow individuals and businesses to make account-to-account funds transfers, with the recipient having access to those funds in most cases in a matter of seconds," he said.
This will create opportunities for retailers able to offer products and services which are presented to consumers following almost instant data analytics.
