By Eileen Kolev, Product Marketing Manager, MicroStrategy.
This has been a year of great change for the UK High Street. Market-watcher PwC says the first quarter of 2018 was the toughest since the beginning of the last recession and several retailers including Toys R Us, Poundworld, Carpetright and New Look face either administration, restructuring, or are closing their doors forever.
Yet, conversely, worldwide retail sales are set to top $24.8 trillion this year, according to eMarketer, and by the end of 2020 they're predicted to reach $28 trillion. Retail isn't dying, but it is changing rapidly, and businesses need to adapt to create a more personalised experience. The good news is that consumers are willing to help retailers revolutionise the shopping experience.
Customers are faced with unprecedented choice
In 2018, consumers can go online and 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% 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 personalisation are in position to compete in this fast-changing retail environment.
Rebooting the customer experience
To truly stand out on the High Street, 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 personalised experience could provide that unique selling point. This could include personalised 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% of consumers say they are now willing to share their data to enable a personalised experience.
Nearly three-quarters (74%) 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 customised offers.
The regulatory balancing act
Retailers keen to introduce or increase personalisation for their customers should ensure their data is up-to-date and managed securely. The new GDPR regulation, which came into effect on 25 May 2018, adds a new layer of complexity.
The rewards are there for organisations 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 personalise their engagement. This could lead to them becoming 19 times more profitable, McKinsey estimates.
The guesswork stops here. It is a necessity in 2018 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 competitive advantage.
How to meet and exceed consumers' rising expectations
Segment's report finds that 44% of consumers say that they will return if their experience is personalised and 39% say they will also tell friends and family about their experience.
The same report even found that 49% of consumers have bought something they didn't intend to buy at the outset of their journey after a personalised recommendation. 40% have even bought something more expensive than they had planned!
The benefits of personalisation 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 strong competitive edge to be gained by brands that can deliver seamless personalised experiences. According to Segment's State of Personalization Report, 41% 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% have ever experienced this. Even fewer consumers (17%) think that retailers are currently personalising the in-store experience for them.
Being able to personalise 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 services economies.
We haven't seen the last of the shops to leave our high streets, but the businesses that adapt and digitally transform are the ones that will be there for a good while longer. Where are you on this journey?