If we look at the retail industry over the last year we can pick out four trends that have shaped, and will continue to shape, the landscape. What all four have in common is that they put the customer first; the customer is now clearly king. As a result, retailers need to use all the information they have available to meet the increasingly sophisticated needs of customers in a new retail world shaped by:
The continuing move towards omnichannel shopping. Successful retailers have a clear strategy seamlessly linking all touchpoints and channels with the customer at the heart. The big build this year is hyperlocalisation. Retailers can no longer prioritise operational efficiency – each physical location must carry a range of products that reflects the requirements of the geographical community it serves.
A trend that is truly global and growing fast. Customers are increasingly looking to lead healthier lifestyles and grocery retailers and manufacturers have a huge part to play.
Brands like Coca Cola and Starbucks are leading the way in creating personal experiences for their consumers. It’s early days and we’ve yet to see what really adds value for customers and creates meaningful competitive advantage. What Coke and Starbucks have shown is the incredible potential to create personal identity within their world - speaking on a 1-2-1 level and demonstrating they understand you the customer. They aim to drive affinity and create brand ambassadors through personalisation. In programmatic, brands know what price to pay to acquire customers, but what is the value of making you loyal again and again and do retailers understand this? I suspect they do and are working to make this habitual.
The rise of discounters
This has taken the shopping trip almost full circle. Once upon a time customers would visit the greengrocers for fresh produce, the butchers for meat and so on. Today, they are increasingly visiting different retailers to get the best deal on specific products, and the discounters will continue to drive that shift.
For retailers, behavioural insight is playing an increasing part in the harnessing and scaling of effective responses to all of these trends. Consumers are coming to expect that brands better understand their needs, habits and demands through behavioural insight. The good news is that we now have the ability to link the ‘what’ and the ‘why’ much quicker and with increasing confidence. For example, manufacturers are now able to rapidly contact groups of customers who purchase a particular product to understand why they made their choice. This allows us to move away from conjecture and guess-work like ‘well, sales were low because it was raining that day’ or ‘England lost at football’ and spend more time working out how to respond to shifts in the marketplace. We can also use data and insights to prepare markets in advance; thanks to the globalisation of retail we can understand and anticipate trends that will spread across the world. Those brands that listen and learn from their audiences and their requirements will always prevail.
In the future, I believe we will see the convergence of the shopping trip and media. Today, online shopping requires a customer to enter a digital store. Tomorrow, they will have more choices in how they shop online and how media assists the shopping trip. For example, they may be able click on an active advert for a recipe displayed on their favourite website and see all the ingredients instantly drop into their basket at a retailer of their choice. At this point, the media execution and point of sale become blurred. In the future, as a consumer, I expect my online experience to be 100% personalised and relevant for me. Recipes completely tailored to me, suggested menus based on my previous shopping behaviours and trends.
Advertising and marketing content will focus on activating the customer, using omnichannel data and insight to communicate about useful and relevant products at the right time, right place and through the right device. For example a customer may have been highly targeted for a display-ad based on a recent search for instant coffee machines. If they then go into a physical store and buy a machine we would need to change the message across all channels. Instead of continuing to be retargeted with ads for the espresso machine, the next advert they see will be for the coffee pods, and these may automatically refresh based on how often the customer prefers to stock-up. Instead of a traditional linear advertising approach in which one burst of annual activity focuses on the machine itself, a second on the pods and a third on accessories to maintain the machine, the brand will have the tools and resources to target individual customers with relevant content at the moment they are likely to be interested in it. Customers will receive highly personalised messages in their channels of choice. For me personally, that might mean display ads on business news sites; whereas they would attract my mum using television adverts during X-Factor.
The implications for the marketing industry are huge. In the past, we had mass marketing plans for all. Today, we have broad marketing plans on a segment level. In the future, marketing at scale will mean having individual marketing plans for every customer, based on data and written by computers using science and algorithms. Agencies will need to evolve, putting customer activation at the heart of their business models and prepare the move into the new world of marketing in which paid, owned and earned media is the currency.
At dunnhumby, we’ve spent 25 years developing the field of customer science – how to use insight to improve the experiences that people receive from retailers and brands. The potential when applied to media is similar, and immense: to build a world in which insight is used to ensure that the messages that people receive from brands are relevant and personal all of the time. A world where the messages you see as a customer are for things you want to buy or things that add value to your everyday life, not for things you’ve just bought. A world where advertising is valuable and engaging to you as a person, rather than interrupting or irrelevant to your preferences.
Over the years, we’ve developed tried and tested techniques to understand and target customers accurately and effectively with offers that they want to receive. The digital age brings with it new challenges. We realised we needed the technological and real-time analytical skills to realise our vision of making the world’s media relevant and personal. Our business has always championed the concept of partnership as a way of doing business and we wanted to bring an organisation into our family with these skills – an organisation that could collaborate with us as partners to create something magical. With the acquisition of global advertising technology company Sociomantic – we have found just that and entered into a true marriage, all based upon a shared customer-first philosophy.
For the first time we have the ability to dynamically create more relevant and personal content in real-time for those who want to receive it – based upon their interests and preferences, serving more valuable messages across online, social and mobile media.
Six months on from the signing of the deal, we’ve already learned a huge amount from each other. Early tests and pilots show a great deal of promise. As we move closer to realising our vision, I am even more optimistic about the opportunity we have to improve the role media plays in people’s lives. It’s clear that the future of data-driven advertising will be a place where advertising has the opportunity to be far more useful and engaging to customers than ever before, regardless of channel. We can see a media world that is no longer silo-based and instead evolves around an ever-expectant consumer who will only digest 100% relevant and bespoke media. How long will customers have to wait until all the communications they receive are valuable, one-to-one and omnichannel – with anything else considered wasteful and inefficient by brands and retailers?