Daily Management Review

How retailers use technologies to increase sales


10/31/2018


Retail trade has always been quick to respond to changes in consumer behavior. Digital shifts are directly related to retailers: the ease of buying has turned into demand. Here, breakthrough innovators can be considered those who, with the help of technology, mitigate the inconvenience that a client has in the process of making a purchase. They change the rules of the game and the boundaries of the market. Companies that understand this, invest in the use and development of technology about 10 times more than average retailers. So, Amazon invests 12% of revenue in new technologies, Alibaba - 11% (the industry average figure is only 1-2%). By the end of 2017, Amazon for the first time hit the ten largest retailers in the world in terms of revenue, and this is just the beginning. What can traditional retail players do to improve customer experience and retain their customers?



SounderBruce
SounderBruce
According to Google, more than 50% of consumers will leave your webpage if it loads for more than 3 seconds. Bain says that more than 80% of customers know that companies use their data, and in exchange expect a more personalized approach in pricing, in product, in experience. The population of the Earth now has more mobile phones than toothbrushes. There is a digital change in customer experience.

The 1970s – 90s were the era of Walmart. The company was the first to standardize the use of operational reporting and descriptive analytics to increase operational efficiency and manage stores. The next two decades became the client era. Tesco set the tone: based on data from scanners and loyalty cards using clustering algorithms and analytics, the company began to segment consumers, make targeted promotional offers, etc. In the 2010s, the digital era started, and it was not by chance that Amazon was the growth leader in retail. With the development of cloud technologies, big data, artificial intelligence, predictive analytics and machine learning, the possibilities for retailers to explore customers have increased significantly. Data from social networks allowed Amazon to achieve customer personalization and flexible pricing, provide recommendations and reject middlemen. The next stage in the development of retail, perhaps, will be the era of artificial intelligence.

The development of technology requires new competencies from companies that were not previously characteristic of them. Walmart, for example, invests heavily in development of competencies for working with big data. The retailer scored about 100 big data specialists in the team. It also derives inspiration from the market - for example, in 2013, Walmart bought a startup Inkiru, which developed an actively learning platform for predictive analytics, and in 2016, the giant retailer acquired Jet's online store to increase coverage in the online trading market.

Digital technologies enable more personal communication with the client. For example, the American luxury network of department stores Neiman Marcus, where the top 100 regular customers spend more than $ 10,000 a year on purchases, in 1984 created one of the best loyalty programs in the industry. Today, the network is also among the pioneers. Analyzing the history of previous purchases and views in the online store, it sends specially prepared recommendations by e-mail. This is the same personalized approach to online clients as in an offline store — the product specialist is ready to help at any time. The company also analyzes reviews on products in social networks, making a rating for each of them. The efforts of Neiman Marcus are bearing fruit: the loyalty program participants, with whose data the company works, spend 11 times more than other customers.

There are examples in grocery retail. In the UK, Tesco recently started using data loyalty programs to recommend healthier products. Based on the basket of each customer, the retailer offers to make “small useful replacements” in the same price category or cheaper: for example, replace strawberry yoghurt with 3% fat with the same nonfat one. In addition, Tesco, in partnership with Jamie Oliver, offers “quick” healthy recipes. According to Tesco, 7 out of 10 families in the UK are confident that supermarkets can help them choose healthier products.

Technologies are developing very quickly, and retailers need to constantly monitor them. A few years ago, RFID tags seemed transcendentally expensive. Today, however, they are already used even in the mass segment. First of all, you should pay attention and invest in those technologies that allow you to improve customer experience and relieve the "pain" of the buyer.
For example, the Kroger network uses infrared sensors to monitor and forecast the required number of open cash registers, which allows for a balance between personnel costs and customer comfort. Temperature sensors determine the number of customers in the store, special algorithms predict the size of the basket and the number of people shopping for a specific period of time. This makes it possible to predict the workload of cash desks and call for an additional employee if necessary.

Retailers are increasingly using gadgets for targeted communication. For istance, when entering a CVS pharmacy store, a customer receives a push notification of a discount coupon for certain products, which increases size of the basket. Target practices mobile store cards - it's easier for customers to find what they need. Luxury department store Saks Fifth Avenue notifies employees when a valuable customer comes in, immediately indicating the brands that the customer usually prefers.

Retailers need not only to pay attention to technologies, but also to allocate a budget for them. A new era is coming, so don’t be afraid to experiment. Of the 70 or so projects that Amazon has invested in since 1995, 18 ended in failure. That did not prevent Amazon after Apple to reach $ 1 trillion of capitalization.

source: forbes.com






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