The first quarter of 2019 has brought about some challenges for retailers. According to outplacement firm Challenger, Gray and Christmas, American employers announced plans to cut 190,410 jobs in the first quarter of 2019, 35.6 percent more than the 140,379 announced at this same time last year. Part of the reason is due to store closures.
Yet, conversely, US retail sales are expected to top 3.8 billion in 2019, according to the National Retail Federation (NRF). Retail isn’t dying, but it is changing rapidly, and businesses need to adapt to create a more personalized experience. The good news is that consumers are willing to help retailers revolutionize the shopping experience.
Customers are faced with unprecedented choice
Consumers can access more than one billion products. With raised expectations, they make their decisions not only on price but also on experience.
Accenture’s 2018 Personalization Pulse Check evaluates the views of 8,000 consumers worldwide and finds that 91 percent say that they are more likely to shop with a brand that can provide a level of service that not only recognises them but also remembers them and provides tailored offers.
The brands that can pull together insights on individuals from their social media, digital devices, voice, and Internet of Things (IoT) sensors to provide that desired—and expected—level of personalization are in a position to compete in this fast-changing retail environment.
Rebooting the customer experience
To truly stand out, retailers need to provide a customer experience that enhances the shopping experience and entices people into a store. With so many products online and plenty of returns options available, consumers need a compelling reason to visit a store.
Putting a serious emphasis on the personalized experience could provide that unique selling point. This could include personalized digital signage, for example, or virtual and augmented reality applications that could gamify the physical shopping experience.
Customers are also willing to contribute to building the retail future themselves. Accenture’s report reveals that 83 percent of consumers say they are now willing to share their data to enable a personalized experience.
Nearly three-quarters (74 percent) of consumers report that they would find a “living profile” of their customer data valuable. They would contribute to it even if brands were to use that data to provide customized offers.
The regulatory balancing act
Retailers keen to introduce or increase personalization for their customers should ensure their data is up-to-date and managed securely.
The rewards are there for organizations that grasp the opportunity. Consulting group McKinsey says that data-driven organisations are 23 times more likely to gain customers and six times more likely to retain customers if they personalize their engagement. This could lead to them becoming 19 times more profitable, McKinsey estimates.
The guesswork stops here. It is a necessity to mine data for insights on who your customers are, what they like, what they want when they want it, and what offers might interest them. And this is where retailers truly create a competitive advantage.
How to meet and exceed consumers’ rising expectations
Segment’s report finds that 44 percent of consumers say that they will return if their experience is personalized and 39 percent say they will also tell friends and family about their experience.
The same report even found that 49 percent of consumers have bought something they didn’t intend to buy at the outset of their journey after a personalized recommendation. 40 percent have even bought something more expensive than they had planned!
The benefits of personalization are clear, as are the pitfalls of not delivering on consumers’ high expectations.
Brands that are suffering in the current climate have not kept up-to-date with shopping habits. Consumers don’t want to visit a cavernous warehouse or crowded store when they could order the same product from the comfort of their sofa and for a lower price. To remain relevant, stores must adapt to a more discerning consumer.
For retailers with both online and physical stores, there’s a competitive edge to be gained by brands that can deliver seamless personalized experiences. According to Segment’s State of Personalization Report, 41 percent of consumers say they now expect staff in a brick-and-mortar store to know what they have purchased from the same brand online, although only 19 percent have ever experienced this. Even fewer consumers (17 percent) think that retailers are currently personalizing the in-store experience for them.
Being able to personalize the customer experience is just one of the challenges retailers face as they embark on their digital transformation journey. For example, at the back-end, supply chain management, and costs are a top concern. Also, making the evolution from a traditional business model to address the growth in sharing, subscription, on-demand, and service economies.
We haven’t seen the last of retail store closures, but the businesses that adapt and digitally transform are the ones that will be around for a good while longer. Where are you on this journey?
ABOUT THE AUTHOR
Ms. Kolev has been a part of the MicroStrategy team since 2010 and is currently responsible for our mobile product marketing efforts. Previously, Eileen spent 10 years working as a Buyer, Senior Merchandise Analyst, and Manager of Allocations and Replenishment for Dick’s Sporting Goods.