Why is CDP appealing to retailers?

As the name suggests that Customer Data Platform (CDP) is a synthesis of three factors: customers, their data and software under which various smaller applications can run. According to a study by the Customer Data Platform Institute the CDP industry reached a valuation of $2 billion in 2022, up 25% year-over-year. Owing to the meteoric growth the industry is expected to reach $20.5 billion by 2027. Interestingly, the same study revealed that in-process deployments are highest in Europe, the Middle East and Africa (EMEA).

That begs the question: Why is CDP, a nascent industry, primed for growth in the Middle East?

The retail sector, where CDP adoption is particularly evident, offers a few answers. The broad consensus is that the retail sector’s customer-centricity prompts the adoption of enabling technologies. So, CDP is seemingly appealing to retailers hoping to synchronise heightened consumer awareness, digital transformation and business outcomes while keeping customer experience or CX at the core.

If a few studies are anything to go by, CDP is the go-to solution to optimise routine retail tasks – such as loyalty offerings and brand messaging – that impact CX. A survey found that 43% of CDP adopters are geared towards developing loyalty programmes that ascribe incentives to more than just purchases.

In this exclusive Q&A Shehbaz Shaikh, Chief Retail Officer at REDTAG, a leading value fashion and homeware brand, laid out his perspectives on CDP and its drivers.

What is the foremost driver of CDP in the Middle East?

The foremost driver is most definitely the proliferation of data. In the Middle East, due to the world-leading internet penetration rate, the impact of Big Data has been immense and immediate. So, customer-centric sectors such as retail had to revisit the tools of the trade. Everyone knows Big Data means opportunities, but CDP has offered the most viable way to harness its full potential. From unified data management to easy cloud security deployments and all the way to orchestrating omnichannel campaigns, CDP opens a pipeline of possibilities.

Please elaborate on the utility of CDP in harnessing retail data.

Retail customers do not shop linearly. So, the data is scattered across different channels such as website, social media and physical stores. Siloed data makes it hard to attain a comprehensive understanding of purchase behaviours and preferences, allowing only cookie-cutter engagement and messaging. CDP integrates information from across channels and retail departments to form a data lake. Working in tandem with other technologies – such as customer relationship management (CRM), enterprise resource planning (ERP) and artificial intelligence/machine learning (AI/ML) – CDP harnesses the data lake to personalise customer engagement, deliver operational insights for internal efficiencies and drive meaningful loyalty offerings, besides optimising other CX-related tasks.

What is REDTAG’s rationale behind CDP adoption?

As REDTAG is a value fashion brand, customer-centricity has been a core tenet of our work from the start. The value we stand for is nothing but “Val-You” where we strive to cater to the unique choices of every customer. In today’s world of myriads of choices, this objective encounters a question: How to customise our value propositions to every customer? Our search for answers inadvertently led to CDP, the one-stop solution for the data[1]enriching journey we are embarking on by collating a multitude of email addresses, shopping histories, birthdays etc. By providing all individual-specific insights in one place CDP will enable us to engage the said customer in the preferred channel at the right time and in a meaningful manner. That is the level of personalisation we are after aimed at solidifying customer relationships.

Is it fair to regard CDP as a prerequisite for hyper personalisation in retail? That aside, what are the other benefits?

Yes, CDP enables hyper-personalisation. The holistic view of customers enables marketing teams to segment them into groups for personalised product suggestions, offers and propositions. We have observed that today’s customers seek such communications from their beloved brands. Additionally, CDP can provide real-time insights which can help increase retail efficiencies, employee productivity and savings. So, there is a strong business case for CDP adoption. Moreover, recent disruptions in the retail world due to various factors like freight charges, VAT etc has led to increased operational expenses. However, REDTAG intends to keep product affordability intact by offsetting the increased expenses with savings unlocked by CDP.

What does the uptake of CDP mean against the current sociocultural backdrop in the Middle East?

Retail, especially dynamic verticals such as fashion, is undergoing a structural shift in the region. The dynamism is fuelled by the broader sociocultural evolution, economic diversification, increased financial agency of women and an overall rise in spending power – something we, as a homegrown brand, are a first-hand witness to. Our shoppers are gravitating towards convenience-led value propositions, loyalty programmes that reward both transactional and non-transactional behaviours and personalised communications at every stage of their purchasing journey. A CDP[1]enabled CX management is our way of meeting their evolving expectations.

RetailME Bureau