Retailers can compete with the online juggernaut!
5 ways retailers can compete
While the online retail juggernaut moves forward, bricks-and-mortar retail needs to re-invent itself and capitalise on its strengths. Despite the massive growth of online retail, it still represents perhaps 10% of total retail sales with a forecasted growth over the next few years to 15%. Traditional retail is not going to disappear anytime soon, but it certainly needs to adapt.
The online retail world has a number of advantages not least of all the fact that it is easily and seamlessly data driven. It is often touted that not having physical stores in another major advantage, although the monster distribution centres increasingly appearing across the landsacpe would no doubt take the shine off this 'advantage'.
Despite their size and strength, Amazon the largest behemoth of all is now opening brick-and-mortar stores across the US, targeting an even larger chunk of retail sales. They will use their sophisticated data tools to enhance the traditional shopping experience. So in-store shopping is not 'dead' by a long shot - but technology will dramatically change what it looks like.
As Amazon and possibly others to follow move into the traditional retail space, bricks-and-mortar retail must focus and build on their strengths while embracing new technologies and getting smart with their data.
Location and convenience
Customers tend to shop with physical retailers that are easy to get to, giving stores that are local a competitive advantage. But many shoppers today use their mobile or digital devices at the start of their shopping journey, to gather information, check reviews, and do price comparisons. Then they will go to a store, and this is where the customer experience is critical. So bricks-and-mortar retail must embrace an online and digital presence to mimic some of the online retail strategies. A perfect way to bridge this divide is to migrate a loyalty program to the digital world and use this as the showcase for offers, incentives and product promotions. A loyalty program provides the mechanism to gather essential data, as well as the vehicle for delivering a common experience online and instore.
Insights from customer data
Understanding customers better is key to delivering relevant and timely incentives and communications. Capturing and using shopping basket transaction data is critical to building deeper insights into what drives customers. Until recently, offline retailers haven’t had the tools to compete in this area. However, new technologies coupled with high speed data networks have given brick-and-mortar stores access to real-time business intelligence. The in turn provides ability to segment customers by shopping preferences and purchase behaviour, and deploy highly targeted campaigns to different segments.
Focus on customer retention
For most retail categories, 25% to 30% of customers make up about 75% of the sales revenue. Unless a retailer can identify and nurture this critical group, they will never be able to compete against the online giants who have this information at their fingertips. A rewards-based loyalty programme is a fundamental building block and cornerstone of marketing activity. Just by knowing exactly who these top customers are is one of the most valuable ways to get immediate payback from data. By identifying high-value loyal customers, a retailer can provide perks other businesses cannot, not just rewards, but other benefits such as exclusive events and tiered rewards when they purchase with you.
Invest heavily in repeat visits
While your top customers are critical, they are not the only valuable customers. Any customer is an easier source for repeat purchases and future revenues. It costs seven times more to acquire a new customer than retain an existing one. Do what online retail does, and reach out to customers immediately after they have purchased, thank them and incentivise the next visit. A well crafted customer loyalty program provides the best mechanism to achieve. Simplicity is the key. Everyone who joins a programme should be rewarded, but reward best customers better. Remove the barriers to achieving a reward and focus on customer engagement.
Avoid "one size fits all" marketing
Don't waste valuable customer data by treating all customers the same in marketing communications. Amazon uses behavioral data and past purchase information to deliver highly targeted and personalised email messages. Many traditional retailers are still treating electronic marketing in the same was as an ad in a newspaper or a house-drop catalogue, blasting out discount campaigns to all and sundry that don’t take customer shopping experiences into account. To cut through today's onslaught of information, marketing communications must be timely and relevant to the recipient.
Tranxactor can help build an integrated network across all your touchpoints with a centralised processing platform that offers the single source of truth about customers.