A leading data expert says that in 2019 the retail landscape will change dramatically with loyalty points becoming futile, voice assistants transforming our shopping experience and machine learning and data-driven insights taking centre-stage.
Kylie Gleeson-Long, managing director of dunnhumby at ANZ says that the new year will be marked by a new-found focus on data-driven sales.
“In 2019 more retailers will come to see that the only way to ensure continued sales and profitability growth is through providing customers with what they want―a more personalised, more curated, more relevant experience, product or service,” she explains.
“Sounds so obvious right? If so, how come so many retailers have lost their way?
“While most retailers would say that this is what they want to do―or indeed are already trying to do ―it may surprise you to know that fewer than one per cent of all retailers globally (according to a joint dunnhumby/Forrester Customer Centricity Index) are actually successful.”
“That one per cent of retailers who are successful in transforming their entire businesses to be truly customer-driven have found the answers and the guidance that they needed to do it right in front of them―in their customer data! That’s the primary reason why it is going to be so big for so many retailers in 2019 as more retailers realise this fact.”
Gleeson-Long says that while retailers such as Coles and Wesfarmers are already investing in their data ecosystems and hiring data scientists to help them to interpret data on their customers’ buying preferences and shopping habits, the “next piece of the puzzle is monetising that transactional data to create new revenue streams for areas such as market research and advertising”.
Five retail predictions for 2019
1 The new rule of Ps: personalisation and price perception
According to Gleeson-Long the first trend that will gain traction in 2019 is customer demand for bespoke shopping experiences.
“In 2019 customers will demand more premium products and bespoke shopping experiences. For instance, they will gravitate towards aesthetically pleasing and experiential store locations for Instagram photo opportunities. Discerning millennials prioritise experiences over saving a few bucks at the checkout, and large chain grocery stores like Coles, Woolworths and Aldi are beginning to listen to their data,” she says.
And for those retailers who don’t know where to start in giving their customers a personalised retail experience, there are four key tips to utilise to get you going.
“Firstly, it all starts with the customer data. Conduct a customer data health check. There are many questions that should be examined critically in this process. What is the quality of your data set? Is it accurate? Has it been maintained properly? Are there the right governance and privacy protections around it? Are you capturing the right type of information to be able to inform your commercial choices and strategies?” Gleeson-Long says.
“Secondly, boldly challenge the myths within your business. The availability of data has transformed the ability of the retailer to factually know what their customers want. Thirdly, know who your most important customers are: mine the data to identify your most valuable customers, what are they looking for, what is most important to them, what are the drivers of their store choice, what does personalisation mean to them? And fourthly, apply world-class data science and algorithms.
2 Loyalty points will become passé
2019 will also see loyalty programs being phased out in favour of more innovative reward incentives, according to Gleeson-Long.
“Consumers have lost their appetite for loyalty programs that deliver irrelevant offers and rewards via the same-old schemes and experiences. Loyalty programs are struggling to keep pace with the growing needs and expectations of today’s modern shopper. The evolution of loyalty has meant the need to shift from a focus from ‘earning and redeeming’ to consistent and proactive customer engagement across all touch points,” she says.
“Moving into 2019, retailers will need to rethink their approach to loyalty. Whether they are searching for product information, making an online purchase or browsing in the store, customers want to be recognised and have their needs reflected in the offerings and services provided. Loyalty should be recognised with and without a physical card or offer.”
According to Gleeson-Long, taking a ‘customer-first’ approach to loyalty programs is key to reinventing your loyalty program.
“This means retailers should be updating and continuously evolving the program and the messaging to grow and adapt alongside the lifespan of the consumer. By unlocking customer data from various silos in your business and using these insights to inform the loyalty program―by adapting pricing, promotion, and personalised communications within the loyalty program―this has time and time again proven higher ROI. Of the 320 billion items (SKUs) dunnhumby analyses daily, we’ve seen brands on average gain more than two per cent in loyalty retention when customer data is effectively used.”
3 Voice assistants will transform the retail experience
The convergence of chat bots and virtual voice assistants has the potential to transform the retail experience, turning voice assistant technology into a customer service functionality, Gleeson-Long says.
“Think of the amount of data about customer preferences you could also retrieve from these devices,” she says.
“Voice technology is going to boom over the next few years―we’ve already seen an immense rise in voice assistants in the home. And with many reports showing that this trend will be of importance over the next three to five years, retailers should be looking at implementing a strategy now to prepare. After the holidays, many more Australian households will have voice assistants such as Google Home and Alexa as these devices are at the top of many Christmas wish-lists. Brands with a strong local search strategy already have a leg-up on voice technology, as it translates to search. Optimised local search products and updated local business listings is an effective first step towards having a voice technology strategy for retailers.”
4 AI and machine learning will take centre-stage
Leveraging AI and machine learning in 2019 is going to become absolutely essential to extract insights about consumers from the multiple touchpoints of the retail journey, according to Gleeson-Long.
“The success of machine learning and AI will hang in the balance of well-designed, intuitive interfaces that make retail data easy to understand and re-apply. The interfaces will intelligently learn from experiences, serving up suggested actions around product placement, pricing elasticity, and customer personalisation that will give retailers an empowering context to improve their offering. It’s this powerful ecosystem, which will see AI and machine learning take centre-stage in 2019 for retailers.”
5 Retailers will turn data into dollars
Finally, it will be those retailers who can gain insights from the ‘treasure trove of transactional data’ that will thrive in the new retail environment.
“There are vast opportunities to sell this data to create new revenue streams via advertising, market research and business intelligence,” Gleeson-Long says.
“Global online giants like Amazon have moved very quickly to create revenue streams out of their data, but in 2019 we’ll likely see a lot more of this from not just retailers, but other industries as well that rely on customer data insights. Yet retailers are in an especially strong position, because transactional data about what people buy is valuable for many other businesses.
“There are opportunities spanning the full breadth of the retailer’s business―from the shop floor (online and offline), to supply chain, to marketing and advertising, and back through to the support offices. What we see both in Australia and globally is when retailers unlock the tremendous power of their data assets, they are able to save money, make money, and find money.”
By Georgia Clark
This article first appeared on retailbiz