The harsh reality is that local retailers are still very early in their journey to harnessing big data. Traditional business models and reliance on physical outlets still dominate our retail industry. But, as retailers consider the right big data strategies to fuel future sales growth, it might be instructive to examine the approaches of their online-only peers, those “pure” digital retailers – both South African and international.
In general, e-commerce players have been much quicker when it comes to truly harnessing the power of big data. All over the world, traditional retailers are starting to learn from them and are beginning to follow suit. For example, US-based clothing retailer North Face has become one of the pioneers in this space, with a broad strategy of using everything from transactional data to in-store behavior and interactions. with customer service and social media.
By understanding their customers more deeply, they create higher levels of loyalty and engage more in their customers’ lives (such as loyalty rewards for attending outdoor events they sponsor). They can intelligently personalize their marketing based on a person’s interests, weather conditions, location, and a host of other variables.
So what big data tricks can the brick-and-mortar retailer learn from their digital counterparts?
Leaders in online retail are realizing that it is not enough to simply create static profiles of their customers. We are fickle individuals and our interests, tastes and ambitions often change. By taking a “real-time” approach to their data, retailers can keep their personalization strategies up-to-date and ensure they communicate with their customers in the way everyone prefers.
If an outdoor supply retailer is able to discern – perhaps from social media – that a particular customer is on a camping holiday on the south coast of KwaZulu-Natal, they can promote certain products suitable for their holiday. , easy to pick up at a nearby store. exit. Although it sounds simple enough in principle, doing it at scale can be a very complex challenge, but it’s a challenge that e-commerce leaders have shown to be possible.
Focus on trust and security
Since the beginning of the e-commerce era, online retailers have gone to great lengths to ensure the security of their services and to overcome the trust barriers that make many people skeptical about shopping online. Physical retailers could take inspiration from this book: focus on physical security, payment security, information security and other aspects of the relationship of trust with the customer.
Digital retailers are smartly using big data to understand the barriers to online shopping and bolster security and reliability angles where needed. For traditional retailers, instead of viewing privacy and information security as a hygiene factor, they could use the strength of their information security as one of their key marketing attributes, creating a compelling brand opportunity. .
The power of customer reviews
Many analysts believe that the main reason for Amazon’s incredible success is its data algorithms that rank products based on customer reviews. Contrast that with the online face of your average South African retailer, and we can see a huge missed opportunity to leverage ‘social validation’.
In fact, research suggests that 88% of consumers trust online reviews as much as personal recommendations and that customers typically read reviews before making a purchase.
If we look at how the mechanics of our favorite digital marketplaces – the mighty app stores – we see an ecosystem-based approach. Google, Apple and Microsoft use big data to suggest other recommended apps to users. By presenting other services based on its behavior, it not only helps the user, but creates opportunities for other app developers. Ultimately, this creates a network effect where the number of users and app developers skyrockets.
Nothing prevents traditional local traders from adopting a similar approach. In our South Coast RV example, perhaps the outdoor supply retailer could partner with area activity centers or 4×4 vehicle suppliers. Even if it does not directly benefit the retailer, it will become more integrated and indispensable in the lives of its customers, once again reinforcing strong feelings of goodwill and loyalty.
In other markets around the world, big data principles are integrated into every step of the retail process: predicting trends, choosing inventory, forecasting demand, optimizing pricing, targeting customers and adapting your approach. sales on the right channels.
It’s time for local retailers to realize that they could not only take a data-driven approach to their strategies, but could even potentially have an edge over their digital pure-play peers. With in-store data, they can tap into a rich treasure trove of information and build even stronger customer profiles to deliver the most personalized and value-added experiences.