Exclusive: ‘Retail’s in the detail’ – Hamza Khan, Suburbia in “The Paytech Magazine”

Suburbia is bucking the personal data trend and focussing on the product. Founder and CEO Hamza Khan explains the ‘alternative’ approach that’s driving retail revenue.

If you try to avoid data analysts at a party, next time make an effort to seek them out. You might be surprised by what you learn – you might just meet Hamza Khan.

Khan is the founder and chief executive of Dutch startup Suburbia, which is not a ‘data company that has technology’, but rather considers itself to be ‘a tech company that does data’. It works with firms in the payments ecosystem, gathering point of sale (POS) transaction data and sharing it with institutional investors and the companies contributing to its data pools.

For retailers, it promises that it can create revenue from business data within 60 days. Quite a boast.

‘Don’t ever think data is boring’ could be its brand logo. Using proprietary artificial intelligence (AI) and machine learning, it turns digits into real-life, meaningful insights that could help merchants, banks and even individuals, while crucially protecting personal and commercial privacy. Most recently, it’s yielded insights into consumer buying patterns due to the coronavirus pandemic, which proved to be similar across the world – i.e. panic buying of key products.

Suburbia’s stock-in-trade is alternative data. Whereas, before, investors and analysts would be restricted to traditional sources, such as official economic data, company results and consumer surveys, to assess market trends, the mining of alternative information brings huge opportunity, says Khan.

 “This could be point of sale transactions, it could be satellite tracking data or data from smartphones – alternative data is an attempt to capture and use all of the data that’s being generated. Why look at high-level data when you can look more deeply, in more detail?,” he says. 

“That’s really the difference between traditional and alternative data. Alternative data is faster, it’s better, and one day it will take over and just be called data.”

The use of alternative data has been made possible by Cloud data storage. Information that a decade ago was siloed in black boxes, is now linked and accessible.

Suburbia works with its clients to identify and clean up their own data so that it is usable. That could be barcodes or internal product tracking. Data is then de-personalised so that the source is not identifiable, which allows rival companies to share information and benefit from the insights gained from larger data pools.

Clients may also need to be reminded that their own data is more insightful than the reams of chat in the social media universe. For example, take perceived trends around environmentally unfriendly plastic straws. Twitter may suggest a switch in attitudes, but has consumption actually changed?

“You can capture the number of tweets about plastic straws, but has that related to a real-world impact?” says Khan. “You are able to see, not only what people intend to do, but what are they actually doing.

“We believe that retailers, which can struggle in the social media data environment, will assume a social media company has more interesting data than they do, because a retailer is old-fashioned. We think the opposite is true – I personally don’t tweet about every purchase I make, and neither do I purchase everything I tweet about. So, the social media information is indicative but it isn’t actionable, whereas the retailer can tell you whether plastic straw sales are rising or falling.”

Of course, social media metrics can form part of Suburbia’s alternative data pool but, in a nutshell, Khan believes ‘you shouldn’t act just based on what you know, you should act based on all the information that’s available out there’.

He says retailers were innovators in the past – brands such as Selfridges or WHSmith made more products accessible to people – therefore democratising commerce. Retailers are now challenged by e-commerce so they must innovate again. And he’s betting on the small guys – the independents who could move to the forefront of the digital revolution, given their ability to quickly implement a point-of-sale terminal that is more up to date than those used by a large incumbent player.

“We believe the key to them regaining their competitive edge is connecting their data and making it more accessible,” he says. “A study by Forrester Research concluded that 70-plus per cent of the data that’s generated by organisations like retailers, is sitting in a black box and not being connected. We aim to help these retailers turn that data into value.

“More connected stores get us more data. When a retailer switches from its offline POS system that it’s had for
30 years to one of the new Cloud-linked suppliers, it generates data for us.”

The unexpected recent raising of contactless transaction limits (to £45 in the UK and the equivalent across Europe) was a bonus, says Khan, because it will yield data from higher value purchases that may have previously been made with cash.

“In Europe, there’s a tendency towards cash, which means if you’re tracking connected devices that take mobile payments you lose a large amount of transactions,” he says. “So, if people are switching from cash to contactless, that creates more data. Hopefully, it also creates opportunities for more interesting transactions.

“Contactless cards are like an entry-level drug – you start off with tapping your card and realise it’s OK, then you’ll feel confident to do it with your phone.”

Capturing aggregated data from the full value chain is one of Suburbia’s tactics. Khan uses the example of a beverage: in the past the only data available was the manufacturer’s half-year or quarterly earnings, assuming they were a publicly listed company, and maybe a research firm’s survey about consumer preferences.

“Now, we can gain insight into the manufacturing of the beverage,” he says. “Is it being produced more? Where is it being shipped? Where is it wholesaled? Where is it being sold? If you’re able to track the sales of a product through a period of time, you gain a big insight. Now your marketing department is interested, your treasury and procurement departments are interested.”

Using alternative data also makes sense because previous measures of a product’s performance have lost relevance, Khan explains. Once, retailers depended on indicators such as footfall, or knowing where in a store a product was placed – top shelf or middle shelf? But with the increasingly digital and connected retail environment, the modern shopper may have seen the product on their phone, or found out it is in a retailer’s store, and will visit the shop and buy it, regardless of where it is displayed.

“Whatever metrics you could’ve used to find out information about this customer, you no longer have,” says Khan.

“Taking the example of a book sold at a railway station branch of WHSmith, data could tell you when it was sold, what the weather was like, if news broke which increased interest in a particular topic.

“By connecting to these data sources, retailers are able to target their products more efficiently, which leads to happier customers and more sales. That’s a win-win.”

Suburbia stresses that its focus is not on individuals, but products. That means companies can confidently share data for the greater good, and privacy rules, such as the General Data Protection Regulation (GDPR) are not at risk of being breached. For Khan, a product is a product. 

He says: “It doesn’t matter whether it’s being sold to one individual or millions, whether it’s being sold in America, Antarctica or Africa. If you link to a very small dataset and extract huge value, that’s a better approach than trying to figure out everything about an individual and unlocking a little bit of value from that.

“We don’t need to microtarget. Data should be used around the product, making sure it’s priced properly, stocked properly and so on. All of the data we use is aggregated, there’s zero personal information in there. The companies that share data with us never share personal data and that’s what makes us so secure.

“We explicitly state in our contracts that our suppliers should not send us any information about their users, or anything that could lead back to an individual.”

Khan says anonymity also applies to data partners in the value chain, which share a ‘subset of a subset’ and key performance indicators (KPIs) that are not personal to the provider itself.

“We’re interested in companies with information about companies,” he says. “This means you’re able to give indicators about market trends, about which products are in vogue or which sectors are selling, not how you as a retailer are performing.”

Returning to the coronavirus crisis, Khan says Suburbia’s data shows consumer buying trends being replicated across the world. And while his data flagged up the full scale of the retail panic, it could equally predict what happens next. 

“When will the economy start to recover? You don’t need to know what individual consumers are doing, you need to know what the broader retail landscape is doing,” he says.

“We see regions where the virus broke out first, versus regions where it hadn’t really taken off, and we saw the same type of behaviour – people being proactive and careful. It gives you hope that we will tackle it because everywhere people are acting smarter and safer.”




This article was published in The Paytech Magazine: Issue #05, Page 56-57

Featured in this Article:

Hamza Khan Suburbia

Author: Laimis Bilys