In today’s retail market, many mainstream brands are struggling to compete with discounters, both online and in-store. Of course, this is not new news. Recently, The Telegraph’s business editor James Quinn reported a trend on the rise of the discounters, with grocery chains such as Aldi and Lidl facing off and faring far better than supermarket giants Asda and Tesco.
In 2016, profit losses led Tesco and Marks & Spencer to close locations and the decline in retail sales is continuing throughout the UK as more and more shoppers turn to online giants such as Amazon. Black Friday competitors offered more enticing discounts than ever before in 2016. However, retailers appear to have given little thought to the long-term implications of leading with discounts rather than besting competitors by offering a more relevant customer experience.
“Today’s empowered customers are fickle and in control. They are always on, have access to more choices and can switch to other brands on demand with little consequence. Essentially, they have fewer reasons to be loyal than ever before. Many firms try to work around this by using loyalty programmes, but traditional strategies fail to address the rational and emotional complexities of customer loyalty.” – Emily Collins, senior analyst at Forrester
It’s time for retailers to reassess their overall value proposition and come up with compelling strategies that deliver unique value to current and long-term shoppers. Brands are beginning to leverage tactical solutions like chatbots to quickly engage and respond to customer inquiries. However, as brands look to truly personalize the retail experience for consumers, emotional intelligence data, not chatbots will spark the next revolution in the retail industry.
Today’s retailers are drowning in data but thirsting for insight
Without relying on the unpredictable nature of discount shoppers, or resorting to discounts to maintain market relevance, retailers should consider developing new, more insightful approaches that are fueled by advances in data analytics and the new science of data-driven personalization.
As a starting point, retailers need to assess the nature of data they currently capture and retain, which is likely to be traditional customer data such as names, birthdates, addresses and information gleaned from historical transactional data. Although comprehensive, this data only provides a rear-view of customers, with little opportunity to predict future purchase paths.
Forget the past, emotionally engage customers using forward-thinking data
Online retailers are slowly getting on board, but not always getting it right. For instance, Amazon algorithms that offer suggestions to customers based on their book and music preferences are said to contribute an additional 10% in revenue. However, that success is not shared across the board. For instance, when Amazon algorithms are used to provide a relevant, personalized clothing recommendations, the customer response has been disappointing.
The EU’s General Data Protection Regulations (GDPR) are forcing brands to change how data is used for marketing purposes. Rather than basing marketing decisions on past personal information, successful brands will have customers opt-in to share information about their motivations, aspirations, and attributes, enabling brands to craft truly meaningful campaigns that are customer-centric.
It’s becoming clear that the next revolution in retail will be fueled by personalized data-driven services. New technology solutions will empower brand marketing teams to distinguish which insights will enable them to create the most relevant and engaging experiences. If retailers know which questions to ask, they could combine personalized data, emotional intelligence and transactional data to weave together a 360-degree customer view to gain an advantage over their competitors by creating a better customer experience.
Source: Business 2 Community