Ninety-two percent of CMOs are more confident in their company’s ability to attract new online customers than they were before the pandemic began, according to research from Econsultancy and SAP’s Retail Trends Playbook. This figure is perhaps unsurprising, given that online represented 29.2% of retail spending in the UK in 2021 – up 10 percentage points on 2019 levels.
At the same time, this online growth has also created far more competition. Combined with shifting customer expectations, success in retail is not easy.
So, how can retail brands gain an edge?
Robin Barrett Wilson, retail industry executive advisor for SAP, spoke on this topic in conversation with Econsultancy’s Jim Clark, during last year’s Econsultancy Live: The Future of Ecommerce event. Barrett Wilson pin-pointed some key trends that retail brands – particularly those operating omnichannel – need to consider in order to best compete.
Creating compelling in-store experiences
Clark cited Nike as a brand that has carved out a reputation with its fusion of digital and physical, particularly in its ‘Rise’ concept stores, where app users can make use of features such as faster checkout and locker pickup. “Do you think shoppers are really looking for this new kind of integration, linking physical and digital worlds much more clearly as the world opens up?” he asked.
The answer is yes, according to Barrett Wilson, and driven by the fact that “customers are really looking for this idea of an experience.” She equated this to a Michelin star restaurant, where the experience starts “right from the moment you step through the door, all the way through your dessert and your coffee.”
“And truly, that’s a value-add to the consumer. So, if I’m going to spend a little extra money, I want a really great experience. We’ve been locked up for a long time, we’ve been told that this era might feel like the roaring twenties again, but I really think this whole notion of thinking about [strategy] like a Michelin star chef is really something that will maybe spark some brainstorming and some different ideas in how retailers and brands want to communicate with the customer, just like Nike did in its stores.”
Capturing the right (and most up-to-date) data
Walgreens is another retailer that is seeing success from its omnichannel strategy, with customers that shop both online and in store reportedly spending up to six times more than solely in-store shoppers. Barrett Wilson suggests that there are some key elements of omnichannel that marketers should be thinking about.
“Capturing the right data, and that really means more than just ‘where am I shopping and what am I buying?’ she said.
“It’s about understanding your customer. What’s valuable to them? What’s the next thing that they’re looking for? And how do you bridge that successful acquisition into a retention of a customer, like Walgreens has done?”
“And then of course, you’ve got to test, you’ve got to fail quickly and then you’ve got to re-test.” Further to this, Wilson Barrett says that historical data is ineffective, considering the fast-paced nature of the industry. “A year passed is not really going to work, right? We’ve got to look at a month passed, a week passed, maybe even a day if we can do it quickly enough, because that’s really the trend now – this long historical data that we’ve been typically working with is not it’s not going to help us today because we’ve got so many changes that are going on.”
Building a value exchange through experiential loyalty
According to research in SAP’s playbook, 70% of retailers are very or somewhat dependent on cookies for customer insight and marketing activities. There’s a tension here as, with the end of third-party cookies, first and ‘zero-party’ data is coming to the forefront.
Wilson Barrett described zero party data as a customer “raising their hand and saying ‘hi I’d like to be friends, let me tell you what I like and you tell me what you do’.
“In return, the consumer – when they decide they want to have a relationship with the brand – they get better experience, they get better treatment, and they get access to perks that perhaps they wouldn’t have if they hadn’t raised their hands.”
“That voice of the customer is really what you want to act upon. It also gives you an opportunity to really re-engage and re-educate [consumers] about the brand.” Wilson Barrett cites Levi’s as a great example of a legacy brand that listens to modern consumers in order to evolve and adapt. “[It has] embraced re-commerce and vintage, which is something that’s really appealing to younger demographics, and that whole idea of ‘hey I can wear the bell bottoms that my mother wore when she was in the sixties’ that’s become very cool. And the only way you can really do that is if a customer raises their hand and says, ‘yes I’d like to engage.’”
Another example of this is Under Armour, which as Wilson Barrett explained, digs into data to segment and reward its most loyal customers. “They have a thousand ‘athletes’ who they send products to, and they get real time feedback within hours as opposed to weeks. They are able to change products very quickly and they are more effective,” she said.
Loyalty programs are indeed one of the most popular ways to build a value exchange with customers. “REI definitely does a great job with that,” said Wilson Barrett, explaining how the brand also incorporates experiences into the mix. “They’ll take you out and actually show you how to do the hiking or the rock climbing. I think those integrated experiences, for people who really enjoy those types of activities, are really important and it just continues to build loyalty.”
This also applies to fashion, particularly post-pandemic. “Think about the stylists within a Nordstrom or at Harrods – they are going to have access to what you bought in the past and make sure that everything works all together. It doesn’t have to necessarily be for a technical brand or very high-priced brand, it can really work throughout.”
This trend aligns with ‘total commerce’, which Wilson Barrett says is about understanding all of the touch points along the customer journey. “If I’m walking into a store, for example, and looking for a new suit for some sort of event, I want my stylist to bring up the clientelling app. I want her to know who I am, what I’ve been looking at online, what I’ve been looking at on social media, who am I following, what kind of reviews are happening with those products…”
Wilson Barrett also cited Hudson Yards as an example of a truly ‘total commerce’ or omnichannel brand. “They will actually steam everything, package it up, and send it to my hotel. At the end of the day, I show up and there it is it’s already there for me. That’s truly an experience. They send me emails, they asked me how things worked out, ‘how was the event’? And then all of that data then goes back to marketing, and I get great emails and promotions and events that are coming up that I can be part of.”
For brands that haven’t adopted an omnichannel strategy or implemented any technology to support it – Wilson Barrett suggests that the future might be a challenge. “They are going to find other brands are going to really move ahead of them very quickly,” she said.
“Buy online, pick up in store, two-hour delivery… I’m afraid if a brand hasn’t really been able to identify a customer at a point of interaction, and be able to deliver on those preferences, they’re going to struggle in the future.”