Rapid advancements in technology have changed how shoppers live their lives, and this certainly includes how they shop. People are always connected, always on and always seeking — and finding — information. Immediate access to information is an expectation, not an added benefit.
This need for immediate access to information has changed the face of retail, and it has changed how retailers must communicate with shoppers. In health care, in particular, the vast amount of information available has spurred increased levels of self-care, self-diagnosis and thus self-treatment.
Consumer packaged goods health care products address many ailments and contribute significantly to shoppers’ successes with their health and wellness efforts, a trend that has gained tremendous momentum in recent years.
But the marketplace is blurry — there is a battle brewing between online and brick-and-mortar retailers, and shoppers have shown they are not committed to either exclusively.
To win, all types of retailers need to understand the complexity of the shopper journey and deliver personalized, unique experiences to capture sales and loyalty.
Changed face of retail
The movement to personalized marketing is a direct reflection of the changing U.S. shopper. After all, the shopper is in control and at the center of the marketplace — informed and empowered by wide-scale access to technology and all that goes with it. A few remarkable shifts will hasten the indelible change to the face of retail as it is known today:
• Increasing ethnic diversity — A whopping 43% of Millennials are nonwhite, and diversity is increasing with every generation. By 2055 there will be no ethnic majority.
• Increasing urbanization — Retailers are responding with smaller-footprint stores, placing even more of a premium on shelf space and making it more critical to get the right assortment in place. Meanwhile, online growth has been rapid in urban areas, fostering even greater competition for share of spending.
• Technology — There are 242 million adults in the U.S. and 223 million smartphones; 9 in 10 Americans are online. The siren call for on-demand access to information is only getting louder.
Complicating matters, consumers are exposed to 5,000 ads per day and, out of necessity, they have gotten really good at ignoring broadcast messages. Fragmentation of media has made it very difficult to reach the right shoppers with the right messages at the right time. The clutter demands that messages are relevant, timely and in context.
While shoppers themselves have changed and affected the face of retail, the physical faces of retail stores have changed, too. There has been a trend toward smaller-format stores and an influx of digital assistants across the aisles to help shoppers and to influence their decisions.
Shoppers are using digital tools before and during trips, and a significant 76% of all shopping trips begin online, according to IRI tracking. However, shoppers still are buying in-store and online. According to the Food Marketing Institute, mobile computing is driving change in shopper behavior:
• Webrooming — 80% of shoppers have researched products online and bought them in-store.
• Showrooming — 70% of shoppers have researched products in-store and bought them online.
The face of retail has changed, and it’s blurrier than ever. Manufacturers and retailers need to collaborate with a digital presence that leverages retail platforms.
Feeling the squeeze
Traditional retailers have had to work harder than ever to find pockets of growth in the increasingly digital world.
In health and beauty, $10 billion in sales are expected to move online by 2020, and $30 billion by 2022, according to IRI forecasts. With outsized growth for nonfood categories, the fundamentals for traditional retail are challenging but ripe with opportunity.
Personalized marketing can be effective in fighting the squeeze from online retailers, as well as hard discount outlets. There are ways for retailers to stay competitive in this new normal, and some have already invested heavily in last-mile programs, such as click-and-collect.
As a percentage of total online sales for multichannel retailers, click-and-collect grew 155% between 2011 and 2015, according to online retail association IMRG (Interactive Retail in Media Group). Leading retailers such as Ahold Delhaize, Walmart and Kroger Co. have embraced click-and-collect to capture shoppers online while also bringing them into stores.
Trends and data indicate this is a necessary evolution of the marketplace; however, personalization efforts could be far more effective by taking a step beyond digital technology and bringing the actual online experience into the store. The blurred lines here have an advantage — the mixing of information and fulfillment options in an omnichannel retail world can make the path to purchase unique, fluid and personalized to shoppers’ specific needs and desires.
Enhance the experience
Personalization is necessary, but it isn’t easy. It demands out-of-the-box thinking, as well as investment in program development and execution. But it can be accomplished in a number of ways, especially to help shoppers with their health and wellness efforts and their drive to fight to stay younger longer and ward off chronic illnesses, including diabetes and heart disease.
With strategic research and development and financial investment, personalization can enhance experiences and, according to the Harvard Business Review, it can:
• Reduce acquisition costs by as much as 50%.
• Lift revenues by 5% to 15%.
• Increase the efficiency of marketing spend by 10% to 30%.
In-store experiences and support — similar to what shoppers can gain online via research that supports their journey — can create connections to store experience. Some leading retailers and manufacturers have engaged with interactive shelf technology with display screens on the front edge of shelves and target discounts and pricing for particular shoppers.
Taking it further and creating an experience that fulfills many senses and needs, Albertsons, for example, offers “Eating Healthy with Diabetes” tours at 400 stores. Albertsons is focused on becoming a “solution center” for its shoppers.
Other retailers have amped up in-store resources with in-house nutritionists and expanded dietary guidance programs.
The market will continue to evolve, but digital isn’t going away. It’s only going to get more prevalent as capabilities hard to imagine today become the norms of tomorrow.
Personalization is happening now, and though it takes time to develop the necessary skills, it’s imperative that retailers and manufacturers act now to take on this challenge and don’t get left behind. There is advantage to be gained from accrued learning, and big technology infrastructure pieces are already in place to help catalyze the process.
Shoppers today have shown they will opt in to marketing in exchange for value and relevant offers. Undoubtedly there is opportunity in this omnichannel world for organizations willing to clear through the clutter and personalize it.