To Make Shopping Experiences Exceptional, Brick and Click Retailers Must Innovate

Customer Relationship Management
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These days, consumers expect retailers to provide information tailored personally just for them.

In the industry’s current disruptive environment, retail and consumer product companies are competing with new business models and being forced to refresh their consumer experiences and brand engagements to be more relevant.

A new IBM study finds retailers' current strategies to deliver engaging brand experiences are not keeping pace with what customers’ expect and want out of their brick and click shopping experiences.

The new IBM 2016 Customer Experience Index Global Survey finds a mere 40 percent of retailers are providing the integrated on- and off-line shopping experience customers are looking for. The study included 550 retailers in 23 countries visited by mystery shoppers over the 2015 holiday season.

One of the most substantial challenges retailers face is empowering store associates with customer and product information via mobile devices on the brick and mortar store floor. These associates are brick and mortar retailers’ most valuable assets—particularly as 85 percent of customers still prefer to shop at physical stores.

The IBM study found 81 percent of the retailers surveyed do not have store associates with mobile devices or kiosks to help customers compare products based on individual criteria such as price, style, or color.

This is a significant issue given TimeTrade found 90 percent of consumers leave stores without making a purchase if they can’t find the help they need. In contrast, 93 percent are more likely to buy when helped by a knowledgeable associate.

Some leading retailers are providing employees with made-for-business apps on iPhone and iPad that place actionable information into the palm of their hands. This includes accessing basic information like inventory to more advanced predictive analytics, such as customer's unique preferences, which helps store associates understand their style and create more conversions. For example, China's popular high-end furniture and home brand, Markor, teamed up with IBM retail on new IBM MobileFirst for iOS apps to improve its customers' in-store shopping experience.

Markor’s unique iOS app allows store associates to show 3D images of custom furniture in different colors and patterns so customers can visualize the final product in their home. This empowers sales associates to provide personalized recommendations to customers based on purchase history and analytics, such as recommending a new item that will complement their existing décor or suggesting a fabric pattern that might appeal to their tastes.

The IBM study also found that retailers are not supporting customers’ needs for information while they are in stores. While 80 percent of retailers had in-store mobile services for smartphones, 55 percent do not offer additional product information via a digital device while in the store. This is significant given SessionM found 90 percent of retail shoppers use smartphones while in the store to look up product information, compare prices, and check product reviews online.

Separately, while many retailers encourage customers to provide personal information so they can offer custom product recommendations and effectively target marketing campaigns, our study found that retailers often fail to use this opt-in information to benefit the customer, and ultimately the business suffers for it.

Only 57 percent of retailers in our study sent personalized messages through at least one digital channel —such as an app, online store, or email —but even then, the content was usually limited to “welcome back, customer name.” For example, if a customer wears a size eight and prefers heels to boots, that specific product content was typically not reflected in promotions.

Retailers need to apply analytics to relevant data to personalize those messages. Managing data and conducting analytics using cloud computing enables retailers to more quickly and easily scale to hone every message sent through each channel to an individual consumer. Hybrid cloud models are specifically designed to combine new user-generated, digital data with existing legacy systems on premises into one unified ecosystem. The hybrid cloud gathers and securely integrates the most relevant datafrom both inside and outside of the businessto deliver customized offers. 

Cloud technologies can also be used to manage and personalize customer’s options, especially during checkout. For example, the UK’s Shop Direct is leveraging IBM’s hybrid cloud to redesign the retailer’s financial services platform so customers have a wide range of innovative, personalized financial services products to help make the retailers world-famous brands even more affordable. Shop Direct Financial Services is one of the largest non-bank lenders in the UK and lives at the heart of its customer offering, playing a major role in differentiating Shop Direct from other retailers.

Shop Direct will transform their credit offerings and work with IBM to provide customers with a broader set of financial services options, a more personalized experience, and more options to self-serve. The project will separate the Shop Direct financial systems from the retail systems and provide a new financial platform on IBM’s hybrid cloud. The platform will help Shop Direct bring together applications and data from both public and private clouds and across multiple sources so it can deliver a range of flexible credit product offers that meet customer needs, respond quickly to new offers that come into the market, and launch new credit offerings faster and at better cost. The new financial platform will also enable quicker responsiveness to regulatory changes and streamline processes while reducing the business cost, as Shop Direct will only pay for what they use.

The hybrid cloud enables retailers to be more flexible, respond to market demands, and drive business growth. To avoid a bad customer experience, however, brands also need to establish continuous dialogues with consumers. The reality is that retailers are struggling to deliver a contextually relevant, convenient, and personalized shopping experience. Cognitive computing, advanced analytics, and mobile technologies can help bridge these gaps.

Cognitive computing can help retailers create a more individualized and enjoyable brand experience. Based on patterns and insights, the systems generate knowledge about an individual customer over time, bringing intimate knowledge from prior interactions to personalize the shopping experience. This allows retailers to comfortably understand customers’ brand, color, and other preferences—as well as the context of their lives, such as big events (e.g, birthdays)—to deliver communications at exactly the right time, place, and medium to secure sales and increase brand loyalty.

This new cognitive computing era in retail is not an incremental change. It is a fundamental shift in how computers interact with customers, store associates, and the overall retail environment.

For example, through the Watson Developer Cloud, developers are prototyping and building cloud-based cognitive computing applications, many of which are being leveraged by a variety of startups in the retail space, from e-commerce to brick and mortar, to marketing insights and sales training.

The North Face recently incorporated Watson APIs into their latest online shopping experience by introducing a new, sophisticated shopping tool powered by cognitive computing. The tool, called XPS, delivers personalized advice on outerwear that enables customers to use natural language as they shop online. For example, a shopper could type: "I need a jacket for an Oregon ski trip." They are then asked refining questions on factors such as gender, location, activity, and time of year to generate a recommendation that meets their specific usage and climate needs.

Cognitive computing capabilities can also power analytics that help companies provide personalized digital marketing strategies. This gives retail marketers the ability to better customize communication to individuals. For example, Alibris, an e-commerce bookseller, is working with cognitive computing systems so online shoppers can explore the writing style and specific traits of their top authors in order to discover new books and interests.

Today, the bar is high, and consumers expect retailers to provide information tailored personally just for them. Thanks to cloud technologies, cognitive computing, analytics, and advances in mobile solutions, retailers are in a position to deliver just that.