5 ways data is redefining the consumer industry

2. Data is becoming the currency of choice in digital economy

In this new digital economy, data has become the currency of choice. According to consultancy McKinsey, cross-border data flows accounted for S$3.1 trillion (US$2.3 trillion) of global Gross Domestic Product (GDP), which is roughly 3.5 per cent.

But this also means that companies must be equipped with the right tools and infrastructure in order to cope with the deluge of data, said experts at the CGF 2018.

As more businesses and users come online, the proliferation of everything electronic, from machine learning to data analytics, has set digital traffic on an exponential growth. 

The Republic is regularly ranked top for network infrastructure in the world on indexes such as World Economic Forum’s Networked Readiness Index and Economist Intelligence Unit’s The Inclusive Internet Index. The Singapore government has committed to ensure it remains so by making strategic investments for the future.

This is partly the reason why many companies have chosen to establish their digital operations in Singapore, with multinational companies such as US conglomerate General Electric opening its first Asia digital operations centre in Singapore. The centre provides the group with around-the-clock infrastructure, systems engineering, and IT support.

3. The secret sauce to brand loyalty: Paying attention

With the advent of online mega marketplaces such as Amazon, many traditional retail businesses are playing catch-up in meeting the evolving needs and expectations of consumers. To this end, data can give smaller retailers a leg-up. 

“You would think that [as] an independent chain where we have been in that marketplace for a hundred years, we would know our shoppers well, and yet emerging tech startups…have better scores on understanding and knowing the shopper,” said John Ross, CEO of the Independent Grocers Alliance, during one of the panel discussions.

Data can help companies understand their consumers in a more intimate way and support their efforts in personalising shopping experiences and building brand loyalty. 

And when it comes to brand choices, data shows that the US has seen a three-point share shift in the consumer marketplace, where consumers are increasingly choosing to purchase from smaller brands instead of the big boys, said Mitch Barns, CEO of Nielsen.

With more people readily connected to online networks, consumers are increasingly exposed to a variety of brands in the marketplace, leading to a fragmentation of choices. 

“Smaller brands are actually more on trend, and they have less of a barrier if they are relevant, if they align with the millennials’ values, if they are a brand that stands for meaning and purpose – then they have a big leg-up,” observed Barns.

4. From locations to loans: Creating new businesses with data

Take a look at one of the ways Grab managed to create a new business line using the data it collects from passengers. 

By analysing travel patterns, the company was able to determine, among other things, how credit-worthy their customers are.

For instance, if the customer travels frequently to the gym or to the office, it is likely that his or her credit score is decent. Grab will thus be more inclined to offer the customer a loan at a lower interest rate. In contrast, numerous trips to the casino raises a red flag that will decrease the likelihood of Grab extending a loan to the individual.

“[We can access their data] with [the customers’] approval, because they want to borrow from us. We can see what they’re paying, buying, or what food they’re eating. Then, I can create essentially a profile, not just for lending, but also of the entire person,” said Tan. 

“We have over a US$700 million (S$960.3 million) lending portfolio. We have a below 1 per cent default rate. I’m telling you with a tremendous high level of confidence because I know that if a person is going to a casino, I’m probably not going to lend to that person,” he explained.

Companies in the consumer goods industry are also creating new business models that are informed by data. 

With the buying preferences of consumers shifting online, Procter & Gamble (P&G) was forced to rethink how consumers buy their products. 

The company decided to trial a direct-to-consumer subscription-based sales model through its “Tide Wash Club”, after data of changing consumer buying preferences and falling retail sales showed that selling online was one way to regain market share and compete with other digitally savvy rivals. The company also introduced a “Gillette Shave Club” subscription service to rival the “Dollar Shave Club”, a competitor providing grooming products to customers via a subscription model.

5. Boosting industry talent in a data-centric economy

Without proper analysis, data is just a spreadsheet of numbers. The ability to translate data into meaningful insights is a specialised skillset, and the right talent is hard to come by. 

The huge demand for skilled talent in data science and analytics, is one reason why Singapore, with its emphasis on building the next generation of data specialists, has emerged as one of the leading Asian hubs for the consumer goods industry.

“Singapore’s workforce development programmes focus on building digital skillsets. These programmes have helped groom a ready talent pool to support companies’ growth aspirations, where there is an urgent need to digitalise value chains — from research and development, manufacturing, to supply chain — in order to elevate the customer experience,” said Chan Ih-Ming, Director of Consumer Businesses at the Singapore Economic Development Board (EDB).

Indeed, to leverage Singapore’s vast pool of talent, strong infrastructure and research capabilities in the field of applied data analytics, many international companies in the Consumer Packaged Goods industry, such as Unilever, Nestle, and Johnson & Johnson, have established data analytics and digital teams in Singapore. 

For instance, as part of its regional focus for South-East Asia and Australasia in Singapore, Unilever has embarked on several new data projects, including one that involves the utilisation of data analytics to predict consumer behaviour. It has also been transforming its bricks-and-sheds supply chain in the region into a retail logistic chain that is driven by big data. 

US consumer goods giant P&G has also set up a US$100 million (S$137.2 million) digital innovation centre in Singapore, in partnership with EDB. A first of P&G’s to be situated outside of the US, the centre undertakes end-to-end digital innovation projects across supply chain management, e-analytics, and e-business.

This is a clear sign of the confidence in Singapore’s vision to be Asia’s epicentre of the digital economy.