Rethinking the future of retail – an all channel perspective
A decade after broadband arrived in Britain, internet shoppers are at long last getting the convenience they were always promised. The rise of 'Click and Collect' has changed the landscape of the retail market, providing consumers with the ease of ordering their shopping online and picking it up from a local store, without having to wait days on end for it to be delivered. Encouragingly, the UK is well positioned as a front runner in the revolution in retail sales.
The once in a century rise of technology has changed the way consumers shop - using their mobile devices for comparison shopping and reading reviews, before going into a store to get a better idea of the look and feel of an item, with many retailers finding that their stores are more frequently being used as 'show rooms' by consumers, rather than a place to spend their money - could this have been a factor in the destiny of Comet, Jessops, HMV and Blockbuster? Did they fear that their online sales would cannibalise their in store success?
While interaction strategies have previously focused on reaching customers across multiple channels, we are now entering the age of 'All channel' (or omni-channel to use the current buzz word) marketing as the distinction between online and offline shopping becomes increasingly blurred. As if we needed any confirmation of this, a recent survey which found that 44% of consumers always research purchases online before actually buying in-store, while a further 52% sometimes check online before buying in store.
So how do retailers claw back competitive advantage? Ideally, by avoiding direct price comparisons and instead by adding distinctive features which customers value and are unable to get elsewhere in the market; by introducing exclusivity - creating bundles which make it more difficult to directly compare with a competitor (providing the same bundle isn't available elsewhere!); by mining historical data to find meaningful relationships between products from past sales; by raising switching costs; by establishing loyalty programmes which offer perks and privileges for loyal consumers and by enhancing customer experiences.
Getting to grips with data will play a massive part in surviving this tough economic climate. Many sunken retailers such as Jessops had a wealth of customer information at their fingertips but the degree to which it was used and linked across all channels is unclear. There is a lot of hype around 'big data' at the moment, however there's little point in holding as much information as possible and then being unable to maintain and use it data effectively.
Today's pattern of customer buying behaviour requires new data models - traditional ones are not enough. Businesses need to work the best model for their business, eg what combination of data types that should be gathered and used to support their marketing objectives.
Blending traditional data types (such as demographics and transactions) with emerging types (such as social, website and intent data) is vital to ensure that the data model is fit for purpose. It should take into account 'stream variables' such as web visits, email clicks and geo location as well as traditional 'static' attributes. It is now practical to capture and link this type of data back to known customers - many of today's retailers should not have to look to far to get access to website searches, express or implied check-ins (social, wifi and 3G) and store visits (card swipes, RFID and voucher redemption). But capturing and storing that data in the best way is only the first step. Competitive advantage will only be built if retailers have the ability to combine with wider customer datasets (to build out an overall picture of each person) and use analytics to make propositions to customers which are, for example location and time sensitive.
'All channel' retailing and the use of mobile devices allows consumers to detailed information about a product through one channel, whether that be stores, websites, mobile apps or social media and then have the ability to purchase it through another.
Retailers must become more data driven to ensure that they cater for those customers who prefer shopping across multiple channels and in order to deliver accurate advertising strategies. The problem is no longer a lack of data but rather how to join this up across the offline and online environment - the strategy must work across as many touch-points as possible to give the customer everything they need. Every channel should act as a window onto the whole offering.
Technology has made omni-channel retailing inevitable, geography no longer dictates where a consumer chooses to shop and as a consequence retailers must adapt in order to survive.
Head of Consulting
Callcredit Information Group