There are three ways that retailers can thrive in the uncertain Covid-19 environment, according to SAS head of customer analytics, Justin Theng, who believes any modelled trends or predictions are now broken due to the ever-changing retail landscape.
“I believe the key ‘trend’ is creating predictability to better serve customers both offline and online,” Theng told Retailbiz in a recent interview.
“Retailers are not only under threat from the effects of the pandemic, but also the behaviour of Google and Facebook, the inevitable change to third party cookies, and other key changes within the industry, but there are three ways to stay ahead of customer demand.”
- Predicting what customers want next
Theng said retailers need to show items to customers before they even know they want them. This involves creating a product narrative by comparing shopping carts. “For example, a customer looking at PlayStation 5 video games is likely to also be interested in Virtual Reality headsets.”
Retailers need to analyse search data to understand what customers are buying. “Woolworths’ data showed that people were increasingly purchasing comfort foods, organic and health products, as well as locally sourced and produced Australian-made products, and the supermarket capitalised on these shifts in buying behaviour,” Theng said.
“There was also an increase in pecuniary spending – people purchasing premium produce from the supermarket, the grocer or the butcher, in the absence of being able to go out to a restaurant and enjoy a meal.”
2. Offering the best paths to purchase
Make-up sales were particularly hit hard during the pandemic as people shifted to remote working. However, MECCA experienced an uptick in demand for make-up classes, tips and advice, which reflected the increasing desire from consumers for an experience, not just a transaction.
“Simply collecting data is not enough. Retailers need to take the data and interpret it to be able to bring an experience to customers that is based on their analysis.”
Another example cited by Theng was the launch of Woolworths Marketplace to broaden its everyday needs range. “The supermarket considered the value that they sell to customers, which is convenience, and the ability to predict the best path to purchase, driven by strong customer loyalty and customer satisfaction.”
3. Increasing customer lifetime value
Due to such significant changes in customer behaviour over the past 18 months, some data has become completely irrelevant, according to Theng.
“To add longer-term value for customers, retailers must create brand loyalty and unique experiences. Machine Learning (ML) and Artificial Intelligence (AI) is at the core of this and the key to moving ahead of your competition at speed. So, if you’re not already employing ML and AI in your business, you need to start now, or risk being left behind,” he said.
“Online shopping has surged, and the growth is here to stay, particularly as it opens up to a new demographic of Baby Boomers who have now crossed the digital divide. Retailers need to have data and analytics capabilities in place to be able to predict consumer behaviour and act in real-time to better understand what is and isn’t working.
“In 2021, it is no longer about big picture demographics. Retailers must segment singular customer profiles. There is also too much focus on the next sale; instead, retailers need to have a longer-term view of customer value and loyalty.”
In summary, retailers need to invest in three areas – customer intelligence and data, human intelligence – people and skills, and AI to speed up the ability to predict and be able to test beyond intuition.
“In an unpredictable world, we need to create our own predictability,” Theng said.