Could a personalised shopping experience be the next step for South African retailers?
With the rise of industrialisation, shopping became a mass-market, impersonal experience. Today however, we are seeing a significant trend back to an experience-driven economy. Personalisation has become an essential dimension for the delivery of a rich shopping experience, and delivering a customer experience that is tailored toward the needs of shoppers is a significant competitive advantage.
In South Africa, online shopping is growing due to increased availability and affordability of Internet, as well as growing trust in the medium. However, physical stores remain an important customer touch point, creating an omni-channel shopping environment. Retailers are therefore faced with the challenge of creating a seamless, and personalised, experience across both online and physical stores.
South African retail challenges
Local retailers are on par internationally when it comes to aspects such as merchandise planning, supply chain management and so on. However, the slow adoption of online services has led to slow demand, as well as the slow take up of online logistics processes. The South African market is only just beginning to embrace the omni-channel shopping experience, which means that there is much room for improvement.
However, this also means that local retailers can learn from international best practices and applications, in order to deliver personalised customer engagement. One area of opportunity here is the loyalty card scheme, which South African retailers have in abundance, but which produces vast amounts of data that is not being used to full effect.
Becoming customer-centric in a meaningful way is essential in today’s world. However, in many instances retailers remain stuck in the traditional model of competing on price. This is no longer sustainable as products have become increasingly commoditised.
Differentiation needs to move away from price points and into the realm of creating personalisation and engaging the customer in the shopping experience. As the world becomes increasingly globalised and online shopping becomes available from anywhere and to anywhere in the world, local retailers need to address these challenges to remain relevant and competitive
Personalisation in context
Loyalty programs are an excellent way of obtaining detailed information about customers and their shopping habits. With the right analytics in place, these programs are a veritable gold mine for retailers. In addition, we are beginning to find that customers are willing to share personal information, if this leads to the evolution of a personalised shopping experience.
Retailers need to take advantage of this and engage their customers in conversations, which can be done via social media as well as direct interactions and feedback. Utilising this information, retailers can gain a better understanding of shopper expectations, preferences and habits. This information can then be used to offer a tailored experience to the customer.
Personalisation needs to be contextual, and must move past the current mode of channel-specific and generic segmentation, which does not leverage information on specific customers and their buying habits. When customers swipe a loyalty card before their purchase, or includes their loyalty card number in their online profile, a record is created of every item they buy, whether online or in a physical store. By analysing this information, retailers can then create relevant offers across all channels. The uptake of these offers can then provide further insight into both individual and household profiles, which can in turn be used to more accurately predict customer behaviour in future.
Frequently in global markets, shoppers will begin their experience online and complete a transaction in store, something that we can expect to see in the local market as well. Retailers therefore need to facilitate personalisation across channels, which can be done using smartphones and other personal shopper devices.
For example, an app on the phone can guide shoppers through the aisles to easily locate items based on their shopping list, previous purchases, or indicated preferences. It can also suggest complementary products, provide customised offers and more Furthermore, the option to have all or part of the order delivered to the shopper’s home can be incorporated. Store assistants can also be furnished with devices to enable them to assist customers in real time and deliver excellent service.
Maintaining customer trust
While the creation of a personalised experience is important as a competitive differentiator, it is just as important for retailers to know when to stop. Overdoing the personalisation can result in an overwhelming experience, and not in a good way. In addition, while competing on price is no longer the preferred option, retailers need to be sure not to exploit a captive audience with outrageous and extreme pricing.
The most important criterion to keep in mind is that customers should always feel that they are in control. They should be able to decide how much information they wish to share and trust that the information shared will be used to provide a better shopping experience. Furthermore, retailers need to keep their pricing reasonable, and not charge an excessive premium for convenience or a personalised experience. The retailer must instil confidence in customers, which is an essential component of a shopping experience that is both seamless and memorable. This will enable retailers to sustain and expand their loyal customer base.
Personalisation – the key to differentiation
Predictive analytics is the future - and that includes the shopping experience. Being able to accurately predict what customers may purchase, and offer tailored deals that suit their needs, will help to engage customers and provide a new level of competitive differentiation. However, there is a fine line between personalisation and invasiveness, and retailers need to be careful not to overload or otherwise exploit their customers.
Customers need to be rewarded for sharing their information, not taken advantage of, as getting personalisation wrong can severely damage the relationship between a retailer and its customers, and can cause customers to become immune to offers and retailer communications. In South Africa and Africa in particular, mobile is a significant opportunity, and retailers should tap into the potential of this channel to deliver seamless customer engagements and experiences.
By Jaco Barnard, Head of Retail at Wipro Ltd, South Africa