Declarations of the retail apocalypse for brick-and-mortar stores are more than overblown; they’re downright wrong, according to experts at a recent conference – and they’ve got data to back them up.
About 90% of retail purchases occurred in-store, according to a U.S. Census Bureau study last year. And a savvy use of data can help retailers deliver a personalized customer experience – no matter where people decide to shop.
“We should treat you as an individual, not generally, and we should know and be able to respond with what would appeal to you right off the bat,” recently retired Macy’s chairman and CEO Terry Lundgren said during a video interview with SAP at the Global Retailing Conference 2018 in April. “That’s all done through machine learning and repetition from customers … [with] shopping habits like you.”
Engaging individuals more effectively with machine learning
Machine learning is also helping retailers create more effective platforms that can distinguish between individual shoppers, according to Lundgren. Store websites, for example, could quickly display the most appropriate products for each person within one or two pages.
“There’s tremendous value in using technology and data to improve efficiency,” Lundgren said. “And machine learning is helping us become more intelligent.”
But the rise of omnichannel retailing could spell big trouble for those who focus only on e-commerce.
“There’s tremendous value in using technology and data to improve efficiency … and machine learning is helping us become more intelligent,” Lundgren said.
The e-commerce ceiling
“There’s an absolute ceiling for e-commerce,” MasterCard senior VP for market insights Sarah Quinlan said at GRC 2018. “If you have a separate marketing department for your online versus your in-store, that’s a real mistake.”
E-commerce will continue to grow, but it’s unlikely to overtake in-store shopping because we’re social creatures who crave a person-to-person customer experience (CX), according to Quinlan, whose team at MasterCard routinely analyzes massive volumes of consumer data. This is especially true after the Great Recession, which showed consumers that jobs, companies, and capital can be fleeting – but experiences with loyal family and friends are priceless.
“That is what drives their spending,” Quinlan said. “We are not going to stop traveling; we are not going to stop dining out together; we are not going to stop that whole social side.”
The best use of your data
“Think about how to collect that as much as possible, but not just for the sake of collecting data – think about how you’re going to utilize it,” Alilbaba Group VP for North America Lee McCabe said at GRC 2018. “Think like a tech company … [that] means you have a test-and-learn mentality.”
Most retailers wouldn’t survive a tech brawl with the likes of Amazon or Facebook, but they can still learn from them – and even partner with them, according to McCabe. Test everything – including what’s been successful for your organization over the past six months because it might not work over the next six months. If you’re experimenting with a new website, AB test everything on it.
“It’s very rare when you see big innovation, especially when comes to e-commerce,” McCabe said. “It’s the thousands of small ones you should be thinking about – how you can improve conversion by 0.001% by just changing one little thing.
“Doing that on a daily basis is how tech companies think.”
Don’t miss out on the consumer
“Artificial intelligence (AI) opens up a big opportunity to predict the purchasing behavior of in-store customers,” The Financial Express stated. “AI, through its sub-technologies such as machine learning and deep learning, can enable offline retailers to derive actionable insights from consumer data … to offer predictive and precise decisions for better customer experience.”
Data can also help retailers keep their focus on what’s really happening, as opposed to the mythical retail apocalypse, according to Macy’s Lundgren.
“So 90% of the transactions still take place in a brick-and-mortar – that’s going to go to 89, it’s going to go to 88,” Lundgren said during his GRC 2018 keynote. “It’s going to change, but if we don’t focus on how consumers are really shopping – if we get bogged down in believing that everybody shops online all of the time – we’re going to miss out on the consumer.”
For more on digital disruption in the retail industry, see The New Retail Reality: Moving Beyond Sales.