There's a new battleground in the ongoing war between Wesfarmers (ASX: WES) and Woolworths (ASX: WOW).
Data and the retail game
As they seek to grow market share, the two giant retailers are looking to reams of data on customers' buying habits.
Much of this data is gathered directly from customers themselves via loyalty programs. For instance, Woolworths' Everyday Rewards program has over six million members, with the program not only incentivising shopping but also allowing the company to collect information on purchases.
Slicing and dicing the data gives insight into how to further drive sales, and decide on the right timing and approach for marketing and promotions. This past May, Woolworths acquired a 50% stake in data-analytics company Quantium, to the tune of $20 million. It was reported at the time of this acquisition that Woolworths planned to double its intenal data-analytics team, with Quantium's analytical toolset and know-how aiding in the endeavor.
In 2012, following the relaunch of its FlyBuys program, Coles sent out some 16 million FlyBuys cards in a bid to attract customers, encourage loyalty and repeat shopping, and of course get access to valuable data. More recently, Wesfarmers last month launched a new Coles credit card intended to help collect additional customer data. Wesfarmers is also looking to make supply chain improvements and better manage inventories through data collection.
According to The Australian, "A survey of business leaders… earlier this year found more than half agreed that a world of big data was emerging in which data streams gave unique insights into things such as consumer behaviour and that it would be a boon to business."
The takeaway for investors
Both Wesfarmers and Woolworths stand to benefit from further collection and use of customer data. As the American multinational GE has suggested, in a sense, all companies – even grocery retailers – are technology companies now. It's a useful framework for investors to keep in mind as they consider individual players – since every aspect of operations is now measurable, it may be easier to get insight into business performance.
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Motley Fool contributor Catherine Baab-Muguira does not own shares in any company mentioned in this article.
