Lupin 2023

Grasping digitally influenced shoppers

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Quarterly financial results continue to demonstrate that retailers are struggling to crack the code to serve omnichannel shoppers profitably.

Despite the fact that most sales happen in brick-and-mortar locations, the overall industry trend is down and store closures are on the rise. 2017 promises to be a rough year for retail.

Meanwhile, online revenues are growing rapidly. Experts in the financial community speculate that the reason retailers are failing to grow sales and share of wallet is that online channels are cannibalizing in-store sales.

Gib Bassett_Oracle

Gib Bassett, Oracle

Critics point out that retailers tend to operate an online business that is separate from and superior to their physical stores — which is not completely fair. Some retailers are admirably moving to integrate inventory, facilitate click-and-collect buying and pickup, and allow in-store returns for online purchases. Still others are digitalizing the store itself to provide a personalized shopping experience much like the online experience.

Despite these efforts, the online component of most retail businesses remains fundamentally a more convenient shopping channel for customers than the store — especially when retailers are removing friction in the fulfillment process by offering free and expedited delivery.

Thus, the conundrum retailers face is how to continue to invest in both online and offline channels with the expectation that sales from both will be at least somewhat incremental. If not for the intense competition from Amazon across retail segments, this would not be so troubling.

What I haven’t mentioned are those customers who traverse the shopping journey by starting in the online world and end up transacting in the store. These “digitally influenced shoppers” represent a subset of consumers who already recognize the utility and value of using digital channels to improve an in-store shopping mission.

According to a Deloitte Digital study reported in The Wall Street ­Journal, consumers’ digital activities were expected to influence 64%, or $2.2 trillion, of retail store sales by the end of 2015, a 15% increase over 2014, when 49%, or $1.7 trillion, of in-store sales were driven by consumers’ use of digital technologies.

The report also states that digitally influenced sales are five times larger than e-commerce sales alone, and consumers who use digital while they shop convert at a 20% higher rate than those who do not. Clearly, these shoppers are being served more profitably than others, and they demonstrate the utility of a blended online and offline retail business ­model.

Do you think most retailers truly know these customers, why they shop this way, and the possibly dozens of “moments of truth” that occur along their purchase paths? I suspect few really do. If they could, however, then it’s possible to use that insight to create many more look-alike customers and gain far greater leverage from investments in online and store channels than they do today.

Key to this is recognizing that “online” implies far more than e-commerce — it describes any of the online advertisements, mobile applications, social media accounts, reviews, emails, mobile messages and website interactions that retailers utilize to create demand in the pre-shopping phase. By extension, it also reflects the collaborative efforts between retailers and their suppliers — trade promotion and shopper marketing efforts. All of these actions are owned by separate functions, including marketing, sales, store operations and ­e-commerce.

Understanding how to influence the many potential moments of truth affecting omnichannel shopping journeys is an analytical question that some retailers have the potential to address now with the data, technologies and skills at their disposal. Many have some, but not all, of the right pieces.

The diversity of data types that reflect the shopper journey is a Big Data problem by definition, and many companies struggle to achieve the insights they seek. Top reasons for struggle are the sheer complexity of the technologies available to capture and analyze diverse data, as well as the time, skills and business stakeholder participation required to develop actionable insights.

The now almost cliché “data lake” many retailers have created is almost always earmarked for this kind of data, but what’s typically missing is the business use case — including what questions and hypotheses will be asked of the data, by whom in the business, and how actions will be tested, activated, evaluated and improved. For example:

• How do customer shopping missions, journeys and baskets differ between online and brick-and-mortar channels? Where do they overlap?

• What are the purchase triggers that precede these events?

• What is the optimum mix, sequence and timing of digital engagement, communications and store associate actions to compel customers to engage in incremental brick-and-mortar shopping missions?

Questions like these lure retailers large and small to cloud technologies to provision whatever capabilities are necessary to execute a business-focused use case freed of constraints related to the data, analytics and actions that can be taken. Speed to insight is now the critical metric for evaluating your analytical competency.

Analytics is a process unto itself, which top companies today well understand. Research just released by Forbes Insights and EY recognizes this among companies in all industries that get the most value from ­analytics.

Retailers “getting it right” are focused on streamlining the discrete steps involved in taking data from its raw sources to the unique insights that help understand and create additional digitally influenced shoppers. Retailers earlier in their journeys have the opportunity right now to get started by leveraging the same cloud capabilities as leaders.

Gib Bassett is retail and consumer goods industry principal with Oracle Corp. He can be contacted at [email protected].


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