Christian Baumann, Head of Value Added Services, SIX Payment Services
Today’s retailers know their customer better than ever before. They understand who they are, what they buy, when they buy, how they like to pay, and what they think of a product or brand. Every customer visit and touch point, be it in the store, online or on a mobile device, produces a stream of data for the retailers to explore.
Big data analytics has become a vital tool in all aspects of the retail sector and offers incredible customer insight and understanding for retailers to explore in order to make their business more transparent and commercially successful.
Smaller retailers may ask themselves whether they want or need these insights. If analytics can provide them with better connections and understanding of their customers, and they cannot afford to analyse the data themselves, how would they capitalise on the wealth of information available?
There are tremendous benefits that retail industries can obtain by using data analytics. By analysing customer data, retailers can better understand their customers, adopt the best strategy to personalise their shopping experience, actively engage with existing customers and importantly, acquire new ones. They are also able to benchmark themselves against the competition and improve their overall business. This is where data analytics comes into its own.
In today’s digitalised marketplace and the increasing need to define a competitive edge in every sector, the opportunities to act upon accurate insights have become clearer. For example, customer loyalty can be improved through reward schemes; new products offers and improved services can be promoted, and new revenue streams explored. By clearly understanding their data, retailers are able put the right product in the right place for the right customer as well as to connect with customers via their preferred channels. Overall, better understanding their data allows retailers to remain competitive.
In the case of larger retailers, they may have already performed their own data analysis to some degree or obtained it through other sources such as till providers. Or, they may expect to receive the information from payment service providers as part of their commercial arrangement.
As retailers chosen technology partner, payment providers are already adept at generating customer insights from data which means they are able to provide added value products and services to merchants, such as:
- Enhancement of the loyalty journey – merchants can recognise when a customer has entered a store for the first time so a card payment can be linked to a retail offer and promote and nurture future loyalty.
- Improved efficiency – ‘heat maps’ based on payment frequency, linked to factors such as the weather, holidays, or social and local cultural events.
- Increased security – identification of payment patterns can improve security and provide fast and convenient check-out facilities, where traditional multi-step security checks may increase payment abandonment rates.
- Market intelligence – potential connections made between payment analytics and other financial systems that can improve general market understanding and benchmarking.
Payment providers have an enormous amount of customer data at their disposal and one of the greatest benefits of working with and using this data is how precise it can be.Payment providers can help retailers understand how loyalty schemes can promote a particular offer to a relevant target group, at a specific time, and through the most appropriate channel be it desktop, mobile device or in-store. This increases effectiveness saves time and resources and avoids the cost of targeting non-relevant groups.
Big data can help generate insights and provide an improved service proposition for customers. This can be taken a step further by capturing new opportunities that extend beyond the boundaries of traditional payment methods that will enable retailers to win new customer segments and open up additional revenue streams through product cross-selling.
At SIX we see the value in collaborating with best-of-breed partners in order to provide high-quality services for retailers throughout Europe. In our home markets of Switzerland, Austria and Luxembourg we are market leaders, renowned for the extensive international experience. We are one of the few payment providers to supply combined POS and e-commerce payment solution and an Omni-channel solution that is now high in demand in order to support a seamless customer experience across all channels. Being present in a variety of verticals across Europe, means we are in a strong position to collaborate with other players in order to enhance our proposition to our customers.
Investing in new types of research helps payment providers to capture the greatest value and insights. SIX has participated in the Swiss innovation ‘Hackathon’ where we harness the analytic power of smart programmers and devise new products for our customers, using location-based services, predictive analysis to present emerging opportunities for benchmarking or loyalty schemes such as gift cards, guarantees or cashback offers.
The business of data and payments is evolving rapidly and we are committed to playing a significant role in this environment, working with banks and merchants, providing new value-added services along with an evolving and extending payments value chain.
The ever-increasing pace of technological development within the retail sector means that the customer relationship has never been closer or as well defined. Retailers that embrace, adapt and capitalise on the opportunities data analytics presents are more likely to succeed in a fiercely competitive and ever-changing landscape.
Foxconn chairman says expects “limited impact” from chip shortage on clients
TAIPEI (Reuters) – The chairman of Apple Inc supplier Foxconn said on Saturday he expects his company and its clients will face only “limited impact” from a chip shortage that has rattled the global automotive and semiconductor industries.
“Since most of the customers we serve are large customers, they all have proper precautionary planning,” said Liu Young-way, chairman of the manufacturing conglomerate formally known as Hon Hai Precision Industry Co Ltd
“Therefore, the impact on these large customers is there, but limited,” he told reporters.
Liu said he expected the company to do well in the first half of 2021, “especially as the pandemic is easing and demand is still being sustained.”
The global spread of COVID-19 has increased demand for laptops, gaming consoles, and other electronics. This caused chip manufacturers to reallocate capacity away from the automotive sector, which was expecting a steep downturn.
Now, car manufacturers such as Volkswagen AG, General Motors Co and Ford Motor Co have cut output as chip capacity has shrunk.
Counterpoint Research says the shortage has extended to the smartphone sector, with application processors, display driver chips, and power management chips all facing a crunch.
However, the research firm predicts Apple will face a minimal impact, due to its large size and its suppliers’ tendency to prioritise it. Apple is Foxconn’s largest customer.
Foxconn is looking at other areas for growth, including in electric vehicles (EVs), and Liu said their EV development platform MIH now had 736 partner companies participating.
He expected it would have two or three models to show by the fourth quarter, though did not expect EVs to make an obvious contribution to company earnings until 2023.
Liu also said the company was still looking for semiconductor fab purchase opportunities in Southeast Asia after not winning a bid to take over a stake in Malaysia-based 8-inch foundry house Silterra.
(Reporting by Ben Blanchard and Jeanny Kao; Writing by Josh Horwitz; Editing by William Mallard and Ana Nicolaci da Costa)
EU seeks alliance with U.S. on climate change, tech rules
By Sabine Siebold and Kate Abnett
BERLIN (Reuters) – Europe and the United States should join forces in the fight against climate change and agree on a new framework for the digital market, limiting the power of big tech companies, European Union chief executive Ursula von der Leyen said.
“I am sure: A shared transatlantic commitment to a net-zero emissions pathway by 2050 would make climate neutrality a new global benchmark,” the president of the European Commission said in a speech at the virtual Munich Security Conference on Friday.
“Together, we could create a digital economy rulebook that is valid worldwide: a set of rules based on our values, human rights and pluralism, inclusion and the protection of privacy.”
The EU has pledged to cut its net greenhouse gas emissions to zero by 2050, while President Joe Biden has committed the United States to become a “net zero economy” by 2050.
Scientists say the world must reach net zero emissions by 2050 to limit global temperature increases to 1.5 degrees above pre-industrial times and avert the most catastrophic impacts of climate change.
The hope is that a transatlantic alliance could help persuade large emitters who have yet to commit to this timeline – including China, which is aiming for carbon neutrality by 2060, and India.
“The United States is our natural partner for global leadership on climate change,” von der Leyen said.
She called the Jan. 6 storming of the U.S. Capitol a turning point for the discussion on the impact social media has on democracies.
“Of course, imposing democratic limits on the uncontrolled power of big tech companies alone will not stop political violence,” von der Leyen said. “But it is an important step.”
She was referring to a draft set of rules unveiled in December which aims to rein in tech companies that control troves of data and online platforms relied on by thousands of companies and millions of Europeans for work and social interactions.
They show the European Commission’s frustration with its antitrust cases against the tech giants, notably Alphabet Inc’s Google, which critics say have not addressed the problem.
But they also risk inflaming tensions with Washington, already irked by Brussels’ attempts to tax U.S. tech firms more.
Von der Leyen said Facebook’s decision on a news blackout on Thursday in response to a forthcoming Australian law requiring it and Google to share revenue from news underscored the importance of a global approach to dealing with tech giants.
(Additional reporting by Foo Yun Chee; editing by Robin Emmott and Nick Macfie; editing by Jonathan Oatis)
Packaged food giants push direct online sales to gauge consumer tastes
By Siddharth Cavale and Nivedita Balu
(Reuters) – Packaged food giants including Kraft Heinz, General Mills and Kellogg are pushing sales of their products to consumers directly via their own online channels, in a quest to gather more data about shoppers’ purchasing habits.
Velveeta-cheese maker Kraft Heinz saw its e-commerce sales double in 2020, now representing more than 5% of its global sales, Chief Executive Miguel Patricio said at the virtual Consumer Analyst Group of New York (CAGNY) conference this week.
The company sells Heinz baked beans and tomato soup by subscription or in bundles directly to consumers on a “Heinz To Home” website in the United Kingdom, Australia and Europe.
Sales on the site are “giving us valuable insights into consumer behavior, enabling us to quickly test and learn from innovations,” Kraft’s head of international business, Rafael de Oliveira, said at the conference.
Kraft would continue to use the site as a channel to generate strong sales in developed markets, he said.
The company also counts sales of its products through marketplaces such as on Amazon.com and Walmart.com as part of its e-commerce sales.
U.S. shoppers spent on average $1,271 buying groceries online last year, 45% more than they did in 2019 as the pandemic spurred shopping online, according to market research firm Earnest Research. In contrast, the average dollars spent in stores rose only about 7% to $3,849.
PepsiCo sells products including Doritos, Quaker oats and Gatorade directly to consumers through two websites, pantryshop.com and snacks.com, both launched in 2020.
Chief Financial Officer Hugh Johnston said that more than 45% of the company’s capital investments over the next few years would be dedicated toward manufacturing capacity, automation, and a “ramping up of investments in our e-commerce channel.”
As major online retailers including Amazon.com and Walmart.com continue to gather valuable data on shoppers, many packaged food manufacturers are keen to gather their own data on shoppers, too.
“COVID (has) simply accelerated our digital growth and has provided us with yet another source of data and insight,” Monica McGurk, chief growth officer at breakfast cereal maker Kellogg Co., told the conference.
Kellogg, producer of Corn Flakes as well as Pringles chips, said on Wednesday it had launched a direct-to-consumer website focused on digestive wellness. The group plans to sell its new Mwell Microbiome Powder for gut health via the site to gather data on customer interest before it launches the product more widely.
E-commerce sales have doubled in the past year and now represent about 8.5% of the group’s $13.77 billion in annual sales, Kellogg said.
Pillsbury dough-maker General Mills also sees the benefits of tracking consumer habits more closely.
“We’re aggressively investing in data and analytics. We are gathering unparalleled insights from the first-party data we collect through our brand websites,” General Mills’ Chief Executive Jeffrey Harmening said at the conference.
On its Bettycrocker.com website, General Mills provides hundreds of recipes using Betty Crocker cake mixes and frosting. The site leads people to the closest store or an online retailer where they can purchase the products, thereby generating data for General Mills on what a particular customer from a certain zip code is buying. The company does not sell the food products directly on its website.
Consumers, however, may have to shell out more if they shop directly from brand websites.
Prices on the two PepsiCo sites, for example, were generally higher than those on Walmart.com or Amazon.com, Reuters checks show. On Walmart.com, for example, a 10 oz pack of Doritos Nacho Cheese was on sale for $2.50 compared to $4.29 on Pepsico’s website.
Kraft Heinz offers tins of soup, beans, pasta and baby food bundled into packs ranging from six to 25 items and costing between 10 and 20 pounds ($14.01-$28.03) on its UK website. It told Reuters the relatively higher prices of items and bundling of packs than on some other online marketplaces was to be able to eke out a margin after including delivery costs.
“Longer term, we see real value in this channel to be an insight and data channel for us,” Jean-Philippe Nier, head of e-commerce for Kraft Heinz’s business in the UK and Ireland, told Reuters. People are more prepared to order directly from manufacturers than they were before. The time is now.”
Graphic: Direct online sales to cross $20 billion in 2021 – https://graphics.reuters.com/PACKAGEDFOODS-ECOMMERCE/rlgpdexngvo/chart.png
($1 = 0.7137 pounds)
(Reporting by Siddharth Cavale and Nivedita Balu in Bengaluru; Editing by Vanessa O’Connell and Susan Fenton)
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