It’s hard not to be convinced that the local retailing sector is at risk of being left behind in the technology and data battle that is unfolding all around us – but it’s not too late to fight back.
by Antony Begley
You don’t have to look far for examples of technology being employed to transform the customer experience both in-store and digitally and, for the smartest retailers at least, that tech is normally only the front end of a database. Every customer touchpoint – in-store, social media, websites, loyalty cards – generates important data that can be collected and harnessed in order to deliver a better, more personalised experience for every customer.
And that, whether we like it it or not, is the ultimate goal: a one-to-one relationship with every single customer, based on all the information we have been able to gather about their past behaviour, transactional history and preferences.
If it all sounds a little futuristic and Matrix, that’s because it is. But the reality today is that the future is approaching us far quicker than many of us may assume.
Consider the case of the cause célebre, Amazon. From being a start-up business in 1994, Amazon has gone on to become a global behemoth that recently posted a $2.6bn profit for the quarter – yes, three months – that still managed to be “a disappointment” to both the company and the markets.
What’s important here is that Amazon has been built on one thing and one thing only: data. All online retailers rely almost exclusively on data. Data drives everything they do. The vast majority of decisions – be they sales or be they operational – are made off the back of hard data. No gut feel, no intuition. It’s a “computer says” model and it very clearly works.
And while Amazon and co have always relied on data, an increasing number of bricks-and-mortar retailers are spending enormous sums of money playing catch-up.
What does all of this have to do with local retailers? To answer that, ask yourself another simple question: what are local retailing’s biggest USPs? Chances are most retailers would say location and customer relationships. We are convenient and have fantastic personal relationships with our customers.
Now look ahead to two or three years in the future. Will location matter? When online and real-world retailers will be delivering product to customers’ doorsteps by drone in under 10 minutes, why bother walking to a local store?
Which only leaves our unique relationship with our customers. But if we’re being honest, how important is that relationship to our shoppers? Do they value it more than price or range or quality? Some do, some don’t. But it’s getting more and more difficult to argue that we still know our shoppers better than everyone else. It’s the easiest job in the world to argue that Amazon knows its customers far better than we do, certainly at a level that converts into pound notes.
We may know all about Mrs Hutcheson’s angina through our regular chats with her and she may be a loyal customer, but Amazon knows far more about her than we do and almost certainly sees more of her spend than we do. They know everything she has ever spent with them – because she paid by credit card and thereby identified herself to them. They know every time she responded to an email and what she bought. They know everything she has ever searched for, even if she didn’t end up buying it. They know her sensitivity to price. They know a whole world of information about her that we as local retailers could only guess it.
Ok, the point has been laboured a little but the consequences are clear: our biggest USP is being undermined by our refusal to accept that the personal relationships we enjoy with our customers are not enough to guarantee future success. Will Mrs Hutcheson still buy her milk and Tunnock’s Teacakes from us when Amazon or someone else will deliver it to her door, and probably charge less into the bargain? It’s unlikely.
This threat is set to be escalated as the supermarkets and discounters get their data act together too, joining up the pieces of the jigsaw to allow them to understand their customers far, far better and give them much more of what they actually want.
But what is the solution? The solution is in embracing the new world order and getting to grips with technology and data ourselves – and the sooner the better. It’s not too late to wrest the initiative back from our online and major multiple cousins. We’re still hanging on to our uniquely valuable relationship with our customers – but for how much longer?
One way forward is to beat our competitors at their own game. The good news is that much of the technology that would be required to do just that is already out there, and it’s getting cheaper every day. And being small and nimble, convenience retailers can move quickly and act fast, learn and move on.
And that’s exactly why we will be hosting our third annual #ThinkSmart event next month in Glasgow. #ThinkSmart3 is our contribution to encouraging retailers to embrace a technology, data and innovation-driven future – because it’s likely to be the only future there is.
Love him or loathe him, retail billionaire Philip Green got one thing right when he said: “If you’re not investing in technology you’re going to get left behind.”