Danyal is a seasoned Marketing and Insights Executive with extensive global leadership experience in brands, research and strategy, having worked in CPG, Retail and Tech verticals, both on the client and agency side. Currently overseeing consumer and customer insights for IKEA Canada. Danyal also holds an M.S in Marketing from Columbia University, New York.
Lucy James: what is the biggest challenge facing retailers in today’s fragmented market?
Danyal Syed Ali: It’s a very pertinent question, as it’s top of mind for everyone these days. So, I think it’s essentially economic headwinds, and the reason I say that is regardless of the market you’re in, or the economic indicator you’re looking at (inflation, GDP, real interest rates etc), all of them are either flat or on a declining trajectory. Retailers, and essentially all business owners, are hence faced with the rather familiar challenge of how do they, again, optimise their supply chains, their value propositions, their products, their brands, and more, to be able to cut costs and then eventually forward some of those savings to the consumers. Let’s not forget that the normal challenges still remain., just worsened by our overarching affordability challenges.
LJ: Is there something different about this economic period or is it just the ‘current’ economic crisis?
DSA: There is a difference, and I think one of the metrics that we’ve looked at, which makes it super interesting is the Consumer Confidence Index. Different countries have different methodologies of calculating it. The one that I’m referencing for Canada is calculated by the Conference Board of Canada. If you look at the Consumer Confidence Index trend over the years, going as far back as the 2008 financial crisis, 2020 pandemic, and then now, the Consumer Confidence Index right now is as low as it was during the pandemic and the 2008 financial crisis. The weird or the interesting part is, economically speaking, our metrics and indicators are not as bad as they were during any of those periods. However, consumer confidence has hit that low.
So this is an interesting time because, although things, objectively speaking, aren’t as bad, but when it comes to people’s perceptions and how they’re feeling, it IS bad.
LJ: In these circumstances is there a way that retailers can leverage necessity?
DSA: Yes, we’ve done a lot of work in terms of understanding the drivers of price perception and our products range from basic to moderately premium, and we cover as many price points as possible. We have a team dedicated to pricing and their role is to understand if our range covers the entire spectrum of prices and if our entry product is at the bottom of that price ladder. We track that metric consistently. The lowest price in our range is really important. That low price dictates the price perception for consumers; consumers perceive your brand in a particular way based on the way the lowest product is priced. So, we absolutely leverage that across all our range categories, because that is one of the ways we drive affordability. Whichever category you look at, we’re ultra-competitive.
LJ: You focus on consumer analytics. Tell me about some sources that have surprised you, a data source that you have found consistently reliable, or something that you’ve seen change over time?
DSA: The one that I feel – during my time at IKEA, and generally in the industry – has changed dramatically over time, is essentially how retailers collect feedback around customer experience. It has improved dramatically within IKEA. We’ve now transitioned from using our partners, to an in-house team of data scientists and data engineers to capture the entire customer journey and collect feedback through multiple touch points. Now that we’ve made customer feedback omni channel, we’ve gotten really good at attribution.
My consistent favourite continues to be brand tracking data. I’ve leveraged it in research roles in different companies and different categories, and I continue to believe in the value that brand tracking data delivers to us. As it relies on survey data, it’s not complicated, but the type of insights and the value of information it delivers, remains paramount. And again, it’s actionable across the entire organisation.
And then what has surprised me has been more of a category shift: having worked in the CPG space for a while, when I entered retail, market share was very surprising for me, because it’s arguably one of the most important metrics that you track. But in retail it’s not tracked as well as in CPG. And the main reason for that is that over time, CPGs get a lot of passive data such as point of sale or receipts data, to calculate market share. We don’t have that luxury in retail, as we don’t get point of sale receipt data from our competitors, so we have to rely on a lot of different sources to extrapolate and triangulate data to get to the overall market size, and then use our internal sales numbers to calculate the percentage that IKEA controls of the total market.
LJ: Why is knowing your market share useful?
DSA : It’s important to understand the overall market potential.So, when you are thinking about your expansion plans and your growth strategies, you need to understand how much of the market remains untapped that you can potentially explore. Some of the other reasons are then where you are losing market share, for example, from a geographical granularity standpoint, which areas do we want to zoom in on where perhaps we’re losing customers? And if you’re gaining customers in some areas, what’s working and what’s not. Finally, who are we losing market share to? Which competitor has been gaining market share? All these questions provide invaluable information that subsequently informs your growth strategy.
LJ: I understand you’ve worked in CPG. You now work in retail. You’ve worked in tech as well. You’ve worked on client and agency side. You’ve worked for brands research and strategy. So you’ve seen the industry from a lot of angles and I’m interested to know, from your point of view, which sector do you think is the most pioneering, and what can the different sectors learn from each other?
DSA: If I was forced to single select, like in a survey, I would select CPG. When it comes to branding, a lot of the pioneering brand work, for instance, comes out of Procter & Gamble. All the work that they’ve done over the years to understand brands and how consumers perceive brands has had a huge impact. It forms the foundation of how even tech and retail brands continue to build their own brand value.
Similarly, I feel in research, it’s been more a case of circumstance as opposed to theory.For instance, the market share example, CPG is, by virtue of being less fragmented, able to get more granular and hence able to get more robust data through passive tracking.
The sector that stands to learn the most, I would say, is retail. Partly just because of the scale of operations. Making sure all parts are equally robust and not operating in silos continues to be a challenge. Sometimes adapting and adopting practices between sectors can be a fairly tedious, long-term process.
LJ: What’s your prediction for how e-commerce will change in the next five years?
DSA: I struggle with prediction questions ☺The pandemic was a pivotal time and I think we’re at a similar moment with AI. I firmly sit in the camp where I don’t think we need to talk about AI as a separate discipline. We just need to ensure that whatever we are working on, whether it’s research insights or brand strategy, we are leveraging AI to the best of our abilities to optimise our processes.
Additionally, there will be the change of e-commerce and our online experience becoming more seamless coupled with the impact of Gen-Z entering the workforce and having higher purchasing power, we will continue down the trajectory of being more mobile-driven. AI will be leveraged to remove some of those friction points, as and when they occur along our journey.
Danyal will be speaking at the Italian Commerce Summit, 25 October, giving a presentation on “Powering Growth through Insights: IKEA Canada’s Response in Helping Consumers Navigate 2024”