THE DEMISE of BHS and Austin Reed, as well as gyrating retail sales figures, has again highlighted the variety of headwinds facing the retail sector, particularly on the high street. These include: the threat from companies such as Amazon, increasing costs, squeezed margins, keeping brands fresh or even the good, old-fashioned unpredictable British weather.
The story is different online. Figures from the Office for National Statistics, which show online sales in September 2016 as having grown 22 per cent year-on-year. Indeed, online stores now account for over 15 per cent of all retail sales.
How do the two scenarios reconcile? And how should bricks and mortar retailers react to the changing face and pace of customers’ behaviour?
High street retailers have been undeniably slow in responding to the customer purchasing revolution taking place. A mixture of too much focus on short-term revenue targets and reactive shop-keeping, rather than proactive, has meant that the traditionally close retailer-customer relationship has become more distant.
For example, in fashion retail, most customers buy from a large number of retailers and brands each year, with each customer keeping only one or two items per retailer. This means that any single retailer typically has a fraction of the overall shopping and browsing data of any one consumer. Extrapolating customer insight or predicting future trends thus becomes extremely difficult. Put simply, retailers just don’t understand customers as much as they used to.
An essential element in delivering personalised customer service is data but retailers lack information in sufficient quantities in order to give customers what they want.
The good news is that this impasse can be overcome and the delivery of a more personalised service, via collaboration between customers and retailers, is possible and can be a win-win situation for both. Here’s why:
Imagine if a customer voluntarily established their own secure, connected and unified profile. This would centralise all their data: personal likes and dislikes, key physical characteristics, plus transaction and behaviour data from all the channels they interacted with. Imagine too, that this was applicable across retailers as well as channels.
Finally, imagine this more plentiful, more accurate data was then used, with the permission of the customer, by retailers to make improved recommendations to the customer whenever and wherever they were shopping.
This would enable the retailer to go back to being proactive, rather than reactive and truly understanding its customer once more. In return, the customer would have a virtual shopping assistant in their pocket, giving the best possible advice.
This is not mere theory, it is taking place already and it is British companies like Dressipi, a B2B provider of one-to-one personalisation solutions for the fashion industry, who are leading the charge.
Innovative personalisation solution providers are working with major retailers both in the UK and internationally, to challenge existing industry thinking and prove that it is the pooling and sharing of data that will drive the next step change in efficiency and customer service in the retail sector.
Retailers can use data on their customers to do their day jobs better: better products, better merchandising, better distribution – all from better understanding of their customers. And that shows up on their bottom lines.
Some industries tend to be ahead of the customers and successfully sell them products they didn’t even realise they wanted or needed. For the majority of bricks and mortar retail business models, the reverse has tended to be true and they have lagged consumer behaviour.
This cannot continue.
Market forces will show no mercy on those who don’t wise up and speed up in their strategy and operations. Personalisation is without doubt the direction of travel, and it is those retailers who are awake to the possibilities that it presents who are already at an advantage and will continue to be so.
The UK is at the vanguard of this movement, and major international retailers are also looking to our shores for the latest advancements in technology applying customer data to personalise the retail experience.
Inevitably, different companies will seek different solutions, but one solution to the headwinds is a mixture of the old and new: traditional customer service levels - enabled by modern technology and collaborative use of data.
That’s not just good for UK business, but for retailers in the rest of the world too.