The recipe for success in food retail is changing at breakneck speed. Economic drivers, such as commodity deflation, make revenue growth difficult. At the same time, demographic trends – including the rise of both millennials and centennials – undermine tried-and-tested business models. And now they are faced with the game changing move by Amazon with its planned acquisition of Whole Foods.

Above all, digital disruption is transforming the marketplace. Retailers with outdated IT platforms are struggling to serve digitally engaged customers, the amount of data is exploding across the sector, customer expectations are higher than ever, and new entrants are using technology to take on established brands.

None of these challenges are straightforward. Yet forward-looking food retailers understand that the ingredients for profitable growth are to be found in a relentless focus on the customer. In today’s world, this may mean using data and analytics to anticipate market trends, rethink the business model and explore new opportunities on a “hyper-local” basis.

Anticipating and responding to trends

Leading food retailers are using analytics tools to identify and capitalize on trends not yet on their peers’ radar screens. This could involve identifying new “eater types” to better understand which customers prioritize healthy ingredients or good value. Or it might mean developing a granular view of when and how often customers shop, as well as what they buy.

Much of the data that retailers need will come from stores’ interactions with customers, including their purchasing histories. But capturing data from outside the brand or location is important, too. Brands may work with food manufacturers and distributors to develop a more complete picture of customers, while harnessing social media for the same purpose.

Once they identify trends in the data, food…