Why Data Governance is Critical for the Retail Industry

By Jason Rushin

Published on February 15, 2022

Two esclators with people going up and down in the middle of a retail mall

For more than two decades, the big battle in the retail industry has been between online and offline channels. It was the bricks-and-mortar, merchandising experience versus the data-driven, near-limitless inventory and dynamic flexibility of e-commerce competitors. But today’s consumer wants both. The pandemic only accelerated the trend of omnichannel consumers demanding more personalized attention from both broad and niche retailers. To meet this trend, retailers know that data is the key.

The wide-open, greenfield opportunity presented by retail data in the early e-commerce days has also changed. Retailers today see the huge potential of data, but it is tempered by security, compliance, regulatory, privacy, and many other concerns. The question of, “How do we use this data?” is becoming increasingly replaced with, “Can we use this data?” And broad regulations like CCPA and GDPR mean further attention must be paid to privacy concerns and data ownership.

So how can retailers, online and offline, continue to leverage their valuable data to optimize inventories, streamline logistics, target consumers, ensure adequate staffing, and enhance the customer experience? How can merchandisers use data to get more of the right products in front of the most valuable consumers at the right times? And how can retail IT teams ensure data remains accurate and trustworthy, data sources remain integrated and accessible, and the business retains easy access to timely, high-quality data? The answer to all of these questions and more is data governance.

Why Is Data Management Important for the Retail Industry?

OK, if you read the words “data governance” and started to doze off, bear with me. Data governance, when approached proactively, is just data management from a different perspective.

Consider data governance as a way to ensure your best data informs your most critical decisions in the most appropriate manner. But data comes from so many different sources and can contain personally identifiable information (PII), financial information, and other sensitive details of customers or even employees. That’s because retailers collect data from myriad sources, including:

  • Point of sale,

  • Online transactions,

  • Payments processing,

  • Customer surveys,

  • Email and marketing tools,

  • Web analytics,

  • Pricing,

  • Inventory,

  • Logistics,

  • Referrals,

  • Returns,

  • Payroll and scheduling,

  • …and many other systems.

That breadth of retail data is then aggregated and consumed by the various stakeholders across the retail spectrum, from marketing to merchandising, staffing to social media. A thoughtful approach to data governance makes sure these stakeholders can access the data and that the data is the best it can be.

If those data sources are adequately governed, understood, and integrated, teams can more quickly deliver deeper insights on a wider range of customers, products, regions, and more. Those insights can then be used to:

  • Retain and engage customers more effectively,

  • Find opportunities to adapt to changing markets and consumer trends,

  • Optimize pricing, inventory, and workforce allocations, and

  • Identify new and previously untapped opportunities.

Proper data governance is then critical to improving overall retail performance, overcoming common challenges, and staying ahead of more powerful retail competitors and more nimble direct-to-consumer brands. Governance eliminates friction for those requiring fast access to data, which makes more data available to more decision-makers.

Effective data governance also standardizes data and data terminology, exposes the details behind data elements and sources, shares institutional knowledge for better data usage, and identifies the subject matter experts to consult when questions arise.

Improper or no data governance, on the other hand, can lead to bad decisions. Teams then face delays as they discover outdated information being used to make critical assumptions, models, and forecasts. Or, they find that incomplete data has led to mistaken and expensive conclusions about customers, pricing, revenues, or consumer trends.

What Is Data Governance in Retail?

Data governance provides guardrails and consistency for retailers by defining how data is gathered and used. It explains what data is, the various sources, the accuracy and quality of data, who can use it, how it should be used, and more. Think of it as a set of rules used to ensure data is used appropriately and effectively across your organization.

Data governance starts with inventorying and classifying the data that’s available. That’s a big job, but intelligent and automated data governance solutions are available to accelerate this process. Once data sources are curated, data governance efforts then focus on creating policies to manage data usage and identify data stewards for hands-on governance of specific datasets. Those stewards then act as subject matter experts when others have questions about the data or its usage. Finally, any good data governance initiative tracks data quality metrics to highlight gaps in governance coverage, identify and catalog new data sources, and alert stewards and stakeholders to shifting data usage patterns.

Data drives so much of your retail business today, the need for high-quality data used appropriately to quickly arrive at accurate decisions is, obviously, critical. But, with retailers capturing so much sensitive data on consumers, and their payments and behaviors, it’s clear that data governance is a critical function from a regulatory and compliance perspective, too.

What Are the Benefits of Data Governance in Retail?

Data governance creates a framework for retailers to improve data utilization while maintaining compliance. But that’s not all. Data governance also helps retailers:

  • Capture and share data ownership, responsibility, and accountability so data assets can be used effectively and appropriately, and workers know who to contact when questions arise.

  • Improve business insights through analytics to help retailers generate new revenue streams, provide a competitive advantage, identify new strategic partnerships, and discover areas of underperformance.

  • Enable better decision-making by guiding workers to the best data for the required task under the appropriate controls to maintain privacy and compliance, especially as those rules change across countries and regions.

  • Save time and drive efficiency by helping workers quickly find the right data, increase the speed to insights, and generate more accurate answers the first time around.

  • Improve data quality by providing constant tracking of data quality and usage metrics to understand how workers are using, or not using, data across the organization.

How Alation Data Governance Improves Retail

Retailers have long relied on data to engage consumers and capture more revenue. Today, with so much data coming from so many different retail channels and sources, the need for data governance is more critical than ever. Relying on untrustworthy data, skirting compliance and regulatory requirements, and leaving workers to fend for themselves is a sure way to quickly fall behind. Every retailer needs data that is trusted, compliant, secure, and fit for analysis. Alation’s active data governance provides just that.

Especially in the fast-moving retail industry, data is a very fluid concept. So just as data is constantly changing and expanding, so too must governance. Alation Enterprise Data Catalog and Data Governance Platform give retailers search and discovery tools, migration capabilities, and self-service analytics to improve data governance, better connect with consumers, and keep up with escalating demands for on- and offline retail experiences.

  • Why Is Data Management Important for the Retail Industry?
  • What Is Data Governance in Retail?
  • What Are the Benefits of Data Governance in Retail?
  • How Alation Data Governance Improves Retail


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