Retail Success Hinges on Using Technology and Data — With a Strategy
As the number of store closures this year hit 3,000 (so far), retailers and brands are continuing to make investments in technology while working to realign their businesses in a crowded and highly competitive market.
With technology, having the latest bells and whistles doesn’t guarantee success. Industry solution providers say retail success in today’s environment requires strategic thinking coupled with using the right types of technologies as well as data that can help them make better-informed decisions.
Jeff Warren, vice president of retail strategy and solutions at Oracle Retail, noted that data can play a key role in driving sales as well as profits. “Understanding the ‘network effect’ is essential to understanding influence — just because a retail store is in a large metropolitan city, doesn’t necessarily mean it’s the most influential in boosting sales and conversions,” Warren explained. “By analyzing customers’ transaction data (when products were purchased and how many) and applied machine learning, retailers can better understand the network effect between stores, identify those trend-setting stores and target promotions appropriately — ultimately driving higher profit.”
Nate Smith, group manager of product marketing at Adobe Analytics, noted that as shoppers crave more “compelling experiences” online and in-stores, “brands must start with a strong, secure and scalable digital foundation.”
“While it’s crucial to pay attention to consumers’ habits online, offline spending clearly still plays a massive role in a retailer’s success,” Smith said, adding that leveraging analytics “is still a struggle for many retailers looking to unify the experiences in-store and online to improve recommendations for higher-margin products and increase order size and frequency.”
When asked for an actionable tactic that a company or brand can deploy, Smith said one was to “obtain and integrate multichannel data, such as location and interests based on past behavior, to create a consistent 360-degree view of each customer.”
“With such a view, customers can receive more relevant and compelling offers on a local/regional basis based on online and in-store activity which drives sales,” Smith explained. “With a more complete profile of a customer, retailers can get insight into what they are purchasing both offline and online, make merchandising decisions by persona, and dig into specific patterns to make both in-store and online adjustments (such as placing the lawn mowers toward the front of the store at the start of summer, in Nebraska, or including sweaters next to the deeply discounted jeans to drive up margins). Without proper analysis on this data, retailers are essentially acting blind when it comes to reacting to customer behavior.”
Nitin Mangtani, chief executive officer of PredictSpring, said for retailers to succeed, they need to rethink physical stores and leverage the “endless aisle” of e-commerce. “Stores no longer need expansive storerooms for inventory or thousands of square feet of retail space to display product,” Mangtani said. “Right-size your store footprint with a modern showroom with endless aisle capabilities — this gives shoppers instant access to a full breadth of inventory while making use of the smaller space. Endless aisle capabilities can be deployed via an interactive in-store kiosk or can be embedded in a store associate app.”
Nikos Acuña, who holds the title of “chief visionary” at Sizmek, offered a strategy for success that is anchored by a retailer’s ability to leverage untapped sources of data to create an improved in-store experience. It’s all about context, Acuña said.
“The contextually aware retailer can set and automate dynamic processes, while deploying resources accordingly to heighten consumer emotions at pivotal moments of decision or at other critical points along the shopping journey,” Acuña explained. “For example, a store associate can receive an automatic prompt to lower a price for a customer who tends to shop sales, or a platform can serve up a particularly compelling ad that is more likely to grab an individual customer based on purchase history.”
Acuña said retailers need to better integrate “people, processes and data” if they expect to boost sales. “To do this effectively though, retailers must employ a holistic perspective that takes into account that most customer journeys are nonlinear, with channels, options and means to reach audiences that are exponential,” Acuña said. “By connecting devices throughout the store — such as shelves, shopping carts and displays — processes can become dynamic, automated, and capable of driving competitive advantage.”
Ryan Kelly, vice president of marketing at Nanigans, suggested that retailers and brands need to use machine learning to cut through mounds of mangled data to reach the right consumers online. “Rather than targeting a broad demographic, retailers should leverage machine learning algorithms to determine who is most likely to make a purchase,” Kelly said. “Doing so will reduce efforts and ad spend wasted on shoppers who were already planning to buy products — regardless of whether or not they saw an ad.”
Social media can also play an important role in succeeding. Warren said “social sells” and cited recent wins for Nike using social media. “Last month, Nike announced a partnership with Snapchat, Shopify and Darkstore becoming the first brand to sell through the social channel,” Warren said. “The launch proved so successful that Nike was able to sell out its pre-release of the Air Jordan III ‘Tinker’ in just 23 minutes. The utilization of both online/social media and physical locations enabled Nike to deliver the ultimate customer service experience. While each channel serves a unique purpose, it is the ability to deliver a unified experience for the customer that drives success.”
Susan Rose, director of product marketing at Instagram, said if driving sales is the desired outcome, then “businesses of all sizes should constantly be looking for new and improved customer experiences. [And] platforms like Instagram can do just that.” She said by using the shopping feature on Instagram, “brands [can] serve up easy opportunities for consumers to find and buy products.”
Rose said companies are having success with the platform and cited Lulus, an e-commerce apparel retailer that “has seen over 1,200 orders and 100,000 web site visits attributable to Instagram Shopping.” She also noted that beauty brand Tyme experienced a 44 percent increase in traffic from Instagram since it launched the platform.
Instagram Stories can also help build customer relationships, Rose added. “With Instagram Stories, businesses can take their customers and prospects places they otherwise wouldn’t have been able to go, creating new ways for customers to connect with brands,” Rose said. “Businesses can show behind-the-scenes footage, create a sense of urgency with the products they are highlighting at a given moment (like announcing a 24-hour sale), and ask for real-time feedback. Customers and prospects are taking note, with one-third of the most viewed stories coming from businesses.”
From here, industry analysts and observers expect investments in technology by retailers and brands to continue. Deborah Weinswig, chief executive and founder of Coresight Research, said in a research note this week that one area of rapid growth will be investments in in-store retail consumer analytics.
“In particular, we expect more retailers will want to close the gap between the insights they enjoy into consumer behavior online and the view they have of consumer behavior in their physical stores,” Weinswig said. “Real-estate firms will also likely seek to gain further insights into how consumers are using physical retail environments, and gain a more detailed view of who is visiting their shopping centers.”
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