5 Ways Retailers Gain a Competitive Advantage With First-Party Data

Some of the biggest retail competitors out there rely heavily on first-party data to maintain the lead in their industry. Nike uses first-party data to personalize marketing messages, launch targeted product lines, and improve overall customer engagement. Similarly, Walmart invests heavily in tech and data analytics to personalize the shopping experience, and Sephora’s Beauty Insider program is a testament to how well the retailer uses first-party data to understand and cater to its customers’ needs.

The trick to harnessing first-party data is the right partnership. Data technology providers have evolved significantly over the past several decades, but customer data platforms (CDPs) have risen to become the most-used solution for retailers. Here’s how CDPs are using first-party data to help retailers gain a competitive advantage:

1. Empowering GenAI.

First-party data is more accurate and reliable than third-party data, as it's collected firsthand from individuals themselves. This higher-quality data enables generative artificial intelligence (GenAI) solutions to generate more accurate predictions, recommendations and insights, leading to better decision-making outcomes and more effective personalized experiences. Retailers that get their first-party data in order today can easily ride the rising tide of GenAI, which is set to grow nearly three-fold in the next four years. (Coresight Research estimates that the global GenAI hardware and applications market totals at $79.8 billion in 2024 and will hit $235.5 billion in 2028.)

2. Expanding revenue from retail media networks (RMNs).

An exciting way to monetize first-party data is through RMNs. Like Kohl’s, Macy’s and Nordstrom, many retailers own retail media or feature a marketplace model, and they can use first-party data to build customized media plans that drive conversion and awareness. Costco is also reportedly building its own advertising business using its shoppers’ data. With the help of a CDP or data solution provider, retailers can better monetize first-party data through targeted advertising, data insights services, product placement and merchandising, cross-selling and upselling opportunities, and subscription services.

3. Improving customer acquisition and retention.

Recent data privacy solutions from Apple and Google have made it more costly for retailers to acquire and retain customers. In fact, a survey by CommerceNext found that 86 percent of retail marketers have had to increase their spending following Apple’s iOS 14 update. Leveraging first-party data can help combat rising costs by improving the effectiveness of acquisition efforts through targeted strategies as well as enabling smarter spending on paid advertising channels. Additionally, retailers can improve customer retention and loyalty with data-driven win-back campaigns.

4. Personalizing the customer experience.

According to research by Treasure Data, two-thirds of surveyed U.S. consumers expect more from brands that they share accurate personal data with, and 49 percent have seen the benefits of doing so. Plus, more than half of consumers would be more willing to share personal data with brands if it meant more personal communication with the brand. Retailers can master this across three key applications: website, email and mobile app personalization; customer service and support personalization; and data-driven loyalty programs.

5. Creating a 360-degree view of the customer.

Retailers can significantly enhance the overall customer journey and drive business growth by sharing first-party data across their organization — including sales, marketing and customer service departments — to create connected customer experiences. By breaking down silos between departments and integrating first-party data into various business functions, brands and retailers can empower their employees with a holistic view of each customer, enabling them to deliver personalized service to foster customer loyalty.

Choosing to utilize first-party data now, instead of later, is critical in today’s data-first economy. Department stores are an example of a sector that only more recently started investing in a data-first approach, putting them behind competitors. Retailers can change the trajectory of their business and gain a lasting competitive advantage by acting now on the benefits of first-party data.

Irene Sibaja is director of partner relations at Treasure Data, a top enterprise CDP provider.