How 2020 changed retail, what to expect in 2021 and why personalisation is more important than ever.
Author: Amber Cella, Venture Co-Founder
2020 accelerated existing trends in changing consumer behaviour – a move to online shopping, increased expectations of relevance, value, speed and convenience. Stay at home mandates caused behavioural changes to speed forward years almost overnight.
Bricks and mortar retailers were hardest hit. Those that adapted and improved their e-commerce experience survived and thrived. High-street legacy businesses that were already struggling and those that failed to adopt an e-commerce approach suffered huge losses. Debenhams and Arcadia Group both failed to adapt quickly enough and found their existing problems exacerbated by the pandemic. Takeovers by digital natives Boohoo and ASOS, respectively, tell a clear story about the future for retail – neither want to keep the physical stores.
This year, there is some cause for optimism but consumers are unlikely to return to their old habits in full when some semblance of normality returns. Even with vaccine rollouts bringing hope and the potential for a post-pandemic boom, the fabled ‘second roaring 20s’ as was seen after the 1918 flu pandemic, majority of consumers will still be spending an increased amount of time and money shopping online rather than visiting physical stores.
The exception to this will be those high street retailers that provide a true shopping destination with complementary experiences. Pop-ups for food or beauty and entertainment will be core drivers to convince consumers to visit stores in person. For the large retailers that means a focus on quality, not quantity, when it comes to store locations. Selfridges, for example, are faring better than John Lewis as a result of their ability to be nimble and provide a 360 customer experience in their small group of sites. With less than a tenth of the stores to focus on, additions like in-store cinemas, Japanese flower markets and art installations are made a reality.
Retailers with bricks-and-mortar locations are expected to focus this year on adapting and reinventing their business models. John Lewis announced multiple store closures and were even given the green light to convert 45% of their flagship Oxford Street store into office space. Following suit, other retailers with large store networks will have to rethink how they use these. Permanently reopening the doors to the same store that closed for the first time in Spring 2020 just won’t cut it. Store segmentation can help retailers identify which stores should remain open and the ideal product mix they should hold.
For online retailers, the key to success will be providing a personal, relevant and positive shopping experience that drives conversions and customer loyalty. Of course, continuing to provide value, reliability and speed will also be crucial. Some of the biggest ‘winners’ in retail from 2020 are those that had purpose-built systems to do this. Ocado, as a digital native grocer, saw its share price more than double. No surprise given that its challenge was to increase existing capacity rather than reinvent the wheel.
Other digital natives with a strong foundation of technology and data-led customer experience, thrived in 2020 and are likely to continue to do so this year. Amazon’s meteoric rise continued as they expanded operations to keep up with increasing demand. But the message to retailers wanting to future-proof themselves this year is not that you need Bezos’ budget to do so. Though it would certainly help.
Instead, all businesses can take a leaf out of the digital natives’ books. The key takeaway has to be that providing a positive and personal experience for online shoppers is the way forward. The more streamlined and simple it becomes for a customer to find the products they want from an online shop, the more likely they’ll be to buy them. That’s why the most successful players within e-commerce provide relevant recommendations and targeted offers to drive loyalty and customer lifetime value.
For retailers who saw a huge increase in customer numbers as a result of the lockdowns, finding ways to communicate with those customers and maintain relevance as the retail climate changes this year will be key to retention. For those who suffered losses, driving customer loyalty and increasing conversion rates and lifetime values is just as crucial, if not more so.
Personalisation requires accurate predictive analytics. Using AI+ML to generate ‘propensity to buy’ scores for every customer against every product stocked, for example, allows for tailored marketing and offers, making customer communications relevant and timely. Traditionally, implementing AI+ML to achieve this has been a long and expensive process, out of reach to all but the largest retailers. Datatonic’s purpose-built platform product changes that. Connect your data and within 24 hours you can generate actionable insights and customer scoring for use with your existing activation layer.
For retailers looking to boost their e-commerce customer experience, using a tool that enables multi-touch personalisation is a great start. More generally, there are a few steps that can be taken to start the journey:
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