Retailers are operating in an environment of unprecedented competition and complexity. The threat posed by online players such as Amazon, Alibaba and pop-up marketplaces have become existential, online-savvy consumers have ever-increasing expectations, and traditional approaches to marketing have been rendered less effective by digital channels.
Against this backdrop, retailers need new ways to engage with consumers, with a competitive offer that is based on more than simply price or convenience. Across the industry, we see industry leaders focusing on nine behaviours to master their engagement with the consumer:
Make data analytics work harder. As retailers enable consumers to build relationships with brands through digital experiences, they capture powerful data. Drawing on key insights from this data, industry leaders can develop offers that appeal at a very personal level. The next step is to use this data to innovate new products and services that they know will resonate with the market and find a valuable place in consumers’ lives.
Embrace a new approach to marketing. The traditional marketing mix, based on mass-market advertising, is less effective than before. Instead, forward-looking retailers are delivering marketing that is more personal and are doing so through new channels – mobile, for example, should become the second largest advertising channel after TV by 2018. Many retailers are also getting better at understanding and working with leading ‘influencers’ on social media, to ensure their message is relayed truthfully and reaches today’s connected consumers.
Keep it local. Retailers have long understood the power of localised offers and authentic experiences. However, digital offers an unprecedented opportunity to build communities of like-minded consumers – and engage with them on a day-to-day basis. By working through digital brand platforms, often alongside other service providers, leading retailers can connect consumers with one another, and the products they want, when they want them.
Fulfil on fulfilment. Many retailers struggle getting customers into the store, so can’t afford to lose out to online rivals because a product isn’t available. To avoid this, industry leaders are introducing more flexible supply chain and fulfilment models that blur the boundary between online and in-store and make it easier for consumers to receive their products. For some, this means introducing lockers in their stores where consumers can collect products at a later date. Others are aiming for more ambitious models, so that, if the product the consumer wants isn’t available now, perhaps it can be delivered before they get home.
Improve the experience. Consumers’ online experience is changing, but there are many ways to deliver compelling experiences in retailers’ traditional physical locations. Some are experimenting with technologies that give consumers access to product information such as origin and nutritional value, links to related products, and even advice about waste disposal, all through a screen activated when the customer waves their hand over the product.
Turn customers into ambassadors. Personal recommendation is as powerful as mass marketing, and customer loyalty is more valuable than ever before. Retailers that generate value for their customers through digital platforms – from product advice to personalised service – will see those customers evangelise the brand to their network. Others will find that being more transparent about price and quality, providing full product details online, inspires their consumers to ‘spread the word’.
Differentiate on security. Retailers that customers do not trust with data will find themselves unable to capitalise on digital. This is why leading retailers are building trust through transparency about the information they gather, and control that is firmly in the hands of consumers. They are making it easier for customers to decide what data they share while proving their information will secure greater value.
Reward customers in new ways. Rewards are a tried and trusted way to build relationships with consumers, and retailers have new opportunities here. Some are making it as easy as possible for consumers to take advantage of rewards schemes, using digital alongside traditional mechanisms such as coupons. Others are thinking about providing special offers for repeat purchases of consumers’ most common grocery or healthcare purchases, giving their discounting a personal touch.
Cut costs to drive value. While digital technologies can transform the relationship between retailers and customers, the investment required can squeeze margins. Leading retailers are bearing down on cost and using the savings to invest in creating greater value through the customer experience, a more efficient supply chain and better digital platforms.
By following the above approaches, forward-looking retailers can satisfy consumers’ appetite for highly personalised, hyper-convenient services while differentiating their brand. Many have mastered one or two of these behaviours – yet few have adopted the majority. Those that do stand to win the competitive advantage they need to gain market share.
For more information: Accenture Consulting