New technologies are enabling analytical capabilities and helping retailers engage with customers like never before. Brian Ross of Precima takes a closer look.
Every day we are reminded that we are the midst of a technology revolution like the world has never seen. The pace of change and disruption is dizzying, and it feels increasingly impossible to keep up with the latest innovations.
For many years in retail, the ultimate analytical goal has been to fully understand our customers’ wants and needs so that we can deliver the products, services and experience that will win sales and long-term loyalty.
Recent advances in technology and analytics are finally allowing us to deliver on this vision — as long as we stay focused on the needs of the customer and make sure to leverage technology and analytics to maximize the customer experience.
New possibilities — the evolution of technology
It used to be that if we wanted to understand how customers shopped the store, we had to physically watch them. Initially, we might have done this with in-store monitoring, and then moved to video, and then on to the most sophisticated system: GPS devices on shopping carts. This allowed retailers to understand how customers shopped the store and gauge the effectiveness of layout, flow/adjacency, display, shelf-sets and even price and promotion decisions. However, this approach was very costly and disruptive, not to mention anonymous — it tracked aggregate traffic flow and carts, not individual shoppers.
The power of mobile — personalization
Without a shadow of a doubt, one of the most critical technologies that has and will continue to redefine retail is the proliferation of the connected consumer. As smartphone penetration among shoppers approaches 100 percent, we have the most powerful platform for understanding shopping behavior before, during and after the store visit, allowing us to create the optimal personalized customer experience.
By offering a world-class app with opt-in permissions, we can engage customers along the entire path to purchase through the promise of helping them save time and money and have a better experience.
Think about this: In Canada today, we have tens of millions of mass-produced fliers delivered to our doorsteps every week, each listing hundreds of items. But the average consumer buys only 100 to 200 individual items each year. How many of those items will happen to be listed in the local flier?
But by using a mobile app and robust predictive analytics, we can replace those mass promotions with personalized promotions that feature exactly the right categories and brands for each customer, along with personalized pricing. Moreover, we can time these promotions based each customer’s shopping habits.
Once they’re in the store, we can use the same app to understand how individual customers shop and to truly personalize the in-store customer experience — all using technology that’s far more cost-effective than our old methods.
Amazon Go is a leading example. It offers personalized prices to customers and creates the ultimate in shopping convenience by completely removing the lineup and payment steps from the process. There are other “stores of the future” in the market today that demonstrate the power of personalization by sending, for example, a notification if you forget to add an item to your cart that was on your shopping list. In Europe, several retailers provide nutrition or sourcing information on their products through apps or augmented reality.
Given the possibilities, it is an optimal time for retailers to harness the pioneering opportunity to repersonalize the shopping experience.
Of course, nothing is easy. The greatest emerging challenge in taking advantage of these opportunities is the increasing sophistication of the analytics required. Fortunately, another great innovation is providing the answer.
Artificial intelligence — the next generation
AI is back and with a vengeance! You can’t turn around today without hearing or reading about artificial intelligence, machine learning or deep learning. These concepts are now at the peak of the Gartner Hype Cycle, a tool for measuring the adoption of technologies, when they weren’t even on the list in 2016.
Of course, AI is not new; the term was coined in the 1950s. Since IBM’s Deep Blue beat Kasparov at chess in 1997, there have been many continued innovations and improvements in AI.
But the driver of the recent surge in AI is that it is quickly becoming a necessity. The sheer volume of data we need to manage, the need for both structured and unstructured data (remember Big Data?), and the speed at which we need to compete clearly point to the necessity of artificial intelligence.
We can personalize every aspect of the grocery shopping experience to every customer in every visit, and yesterday’s segmented or rules-based approaches simply won’t work. We can now use optimized scientific models to personalize decisions for each customer, and AI allows us to learn from every customer interaction — one customer at a time — and continuously refine, enhance, update and improve the customer experience.
Bill Gates famously said, “We always overestimate the change that will occur in the next two years and underestimate the change that will occur in the next 10.” We’re in a brave new retail world. It promises dramatic changes over the coming decade.
Brian Ross is President of Precima. He can be reached at firstname.lastname@example.org.