The retail industry’s continuing evolution took the spotlight at this year’s “Big Show,” the annual conference hosted by the National Retail Federation. Several key trends were on display as retailers look to imagine the future of their business while establishing a digital foundation for the future. The universal trend shaping retail today is the capture and application of customer data.
Seven years ago, the prevailing wisdom was that online commerce would kill physical retail. Venture funding flooded retail. Brands such as Bonobos, Warby Parker, Trunk Club, and Wayfair were touted as the future. Today, though, Statista reports online accounts for just 10% of retail sales. Digital-native brands are developing or growing physical retail stores. In fact, research from the National Retail Federation shows a net increase of 2000 physical retail stores in 2018. The paradox of retail is that while digital-natives are going brick-and-mortar, retail stalwarts are retreating, closing stores and declaring bankruptcy.
The data-enabled difference
In the early days of e-commerce, digital retailers used lower overhead costs as a competitive advantage to offer discounts and low prices. Consumers snapped up monetary incentives to disrupt their existing habits and take a risk on this new channel.
In 2019, though, there is a single differentiator that every retailer must cultivate: the customer experience. And the most significant difference between the customer experience of today and that of five years ago is data. Across all industries, companies are adapting the digital advantages that have served them well in the online space and applying them across the entire customer journey. This data-enabled customer experience presents a unique opportunity for the retail industry.
To see why download this recent study by Oxford Economics and NTT DATA. This study found that only 20% of consumers felt that retailers were using customer data to improve customer experience. Compare that to 34% in financial services ad 26% in healthcare, both industries that have traditionally looked to retail as a source of customer experience best practices.
To deliver a data-enabled customer experience, retailers must begin to think of themselves as data-enabled enterprises. This means, at a minimum, updating talent strategies, technology, and business processes. The good news is that the task is manageable. Here are five ways to get started.
Deliver a single view of the customer
Customers interact with your brand more than ever, across multiple channels, often simultaneously. Data from across your organization, integrated with the larger data economy, can deliver a holistic understanding of your customers. Retailers need to connect disparate systems and data sources to build a single view of the customer, then leverage that view across their enterprise and share it with partners.
Online, offline, in-store, in social media—the challenge is interconnecting all the data. Once you have done so, your single customer view can become a tool to target recommendations, identify the next-best-action, and equip associates with the information they need to make a meaningful connection with customers.
Enable employees with new skills
Acquiring, cleansing, standardizing, analyzing and maintaining data requires specialized skillsets. The lack of these skills within the retail workforce is hindering the implementation of data strategy. Every employee from associate to CEO needs data competency and an understanding of how to use data in their daily activities.
This does not mean turning everyone into a data scientist. Rather, it means weaving the use of data into existing business processes to guide activities and deliver new insights. Developing these skillsets takes time, and the sooner you get started, the sooner you can properly leverage your data.
Personalize the customer experience
Prepare to move beyond basic targeted offers and promotions. Customers want the organizations with which they engage to use data to improve products, services, and experiences. Retailers can (and are) collecting a wide range of data, and they need to put that data to use.
In particular, you can use the data you collect to customize and personalize products. You can also equip employees to use data to make informed suggestions. Your goal is to simplify and enhance the customer experience and relationship.
Physical retail focuses on data
Physical retail is not dead. It’s just different, powered by in-store technology and data. Digital natives have an advantage in this space as they apply their backend-enabling technology to their newly launched brick and mortar locations. Traditional retailers must, therefore, look to connect their physical and digital spaces to deliver the experiences that customers demand.
Merging the data that you capture, maintain, and operationalize in these channels will enable this transformation. As an example, smart shelf and beacon technology have the ability to bring our digital selves into the physical space to make product recommendations, help complete a shopping list, and even deliver customer reviews of products.
Deepen customer trust
Consumer trust will be one of the greatest competitive advantages that a company can possess in the opt-in economy. As data drives deeper insights about your customers and how you can better serve them, seek to establish a deeper level of trust. Trust is not just about data security, but rather a factor of how closely a brand can integrate itself into a consumer’s life and demonstrate the value of that relationship.
What does customer trust look like? Many of us have put one retailer’s microphone-equipped speakers throughout our homes. We didn’t do this because we believe that Amazon has the best security. Those devices are there because of the value they provide, and because the consumer’s trust in Amazon is at least deep enough to bring the devices into the consumer’s home. The more you know about your customers, the more important trust becomes. The future of retail will be driven by data, and customers will not share that data with the organizations that they do not trust.
What’s next for retailers
In the early days of e-commerce, digital-first retailers had the distinct advantage of being able to reach a wide audience while keeping their overhead low. Recreating this advantage was near impossible for traditional retailers with existing infrastructure. In the experience-focused age of retail, digital natives are creating an integrated, data-powered experience across all consumer channels.
Customer experience is enabled by, but at the same time transcends technology. All retailers have the ability to compete in this world where physical locations, distribution networks, and high-touch consumer interaction are no longer seen as a disadvantage. Those retailers who are mission-focused on delivering a superior customer experience will continue to expand in all directions throughout 2019.
Post Date: 3/11/2019