Just about a year ago, there were a flurry of articles and think pieces lamenting the demise of the retail sector. The Retail Apocalypse was nigh; beloved brands were toppling and prognosticators imagined a retail environment dominated by Amazon and Walmart. And meanwhile the customer was largely left out in the cold.
But even with a little interrogation this vision of the retail sector fell apart like the strawman it was. In fact, if you looked at data from the sector it was true that some brands were struggling, but many others were thriving. Moreover, while many brands were closing their brick and mortar stores, Internet darlings, like Warby Parker, were defying logic and opening brick and mortar stores. And while Amazon and Walmart are certainly sector leaders, other retailers were capturing the imagination – and wallet-share – of consumers.
So, what has been going on in the retail sector?
We asked Andy Reid, Global Head of Retail at Pitney Bowes, to explain what is happening in the retail sector and why there are so many seemingly contradictory trends in the sector. As it happened, Andy had just returned from The Retail Hive, a new style of networking for the brightest minds in retail, where he had hosted a series of roundtables with leading retailers including Hugo Boss, Casper, L’Oreal, Macy’s, Bloomingdales, PepsiCo, and L’Occitane.
“Retailers that are succeeding are able to drive customer loyalty and improve customer lifetime value,” said Andy. “They’re not throwing technology at customer challenges and hoping an email brings them to the store or the web site. Rather, the retailers that are succeeding in driving customer loyalty and lifetime value are creating a seamless shopping experience for their customers.”
What this means is that the brands that are thriving are striving to understand their customers across all channels – both physical and digital. “There’s no ‘online/offline’ distinction for leading retailers these days,” shared Andy, “It’s all just shopping.”
Retailers that are really engaging the customer have a single connected view of the customer across all channels and can provide them with a personalized experience if their online or in store. From Andy’s observations “retailers are at different levels of sophistication when it comes to analyzing customer insight and putting it to work. Some retailers have entire data and analytics functions baked into their process, whereas others are just starting that journey but at least they’re on the right track.”
Baking data and analytics functions into their processes enables the secret to customer engagement – personalization. “Innovators are creating highly personalized experiences for their customers,” said Andy. While in the luxury goods market this manifests as clienteling — that is building a one to one relationship between staff and specific customers — personalization can be introduced across the different retail markets to build brand loyalty and retain share of wallet.
An analytics-centric approach is also at the heart of the re-emergence of the physical store. “Retailers value their physical store presence and with data-driven insight they can create a differentiated and personal experiences in store by adding local elements that resonate with their customers,” Andy shared. “Moreover,” he continued, “as retailers adopt this customer-centric approach it enables them to build their bottom line by focusing less on which category is selling and more on what the customer is buying.”
Ready to become customer-centric? You can get more tips from industry insiders here.