TREND REPORT:
DIGITAL TRANSFORMATION IS CHANGING
THE RETAIL SEGMENT FOREVER
Shopping will never
be the same
Out of all industries, the retail segment was first in
line to feel the full disruptive force of digital transformation. When Jeff Bezos launched Amazon.com
in 1995 as a mere book-selling website and Pierre
Omidyar started eBay under the name AuctionWeb
the same year, shopping for products on the World
Wide Web was still considered cutting edge.
Fast-forward to 2015 and online shopping has long
become the status quo for a growing number of
consumers – and Amazon, plus countless other
e-commerce players, deliver the full gambit of
products and services right to their doorsteps.
Within these past 20 years, the retail environment
underwent a major seismic shifts – all either directly
caused or intensified by digital transformation,
leaving many too-big-to-fail retail conglomerates by
the wayside. The graveyard of failed retail mainstays
already includes high street chains such as Borders,
Circuit City, and Blockbuster in the U.S., as well as
camera retailer Jessops and Virgin Megastores in
the UK. And while these tremors first appeared as
shockwaves of the 2008 global economic crisis,
something deeper was at work here…
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Shopping, as we know it, is changing forever.
And digital transformation – deeply connected to
changing consumer behaviors – is the driving force.
EMARKETER PROJECTS NORTH
AMERICAN E-COMMERCE SALES TO
RISE BY 14% FROM $329 TO $376
BILLION BETWEEN 2014 AND 2015. IN
THE UK THEY PREDICT E-COMMERCE
SALES WILL TOP $99 BILLION IN 2015.
Nonetheless, only 7.1% of total retail sales come
from e-commerce – people still like to shop at
physical stores, although with much higher, digitally
enhanced expectations. Today’s hyper-connected
consumers want more than just old school shopping
destinations. In the long run, physical stores that
are mere storehouses of product are headed for
extinction.
The retailers that will survive – and thrive – through
this next stage of digital disruption are the ones
who learn to understand their customers and build
relationship
through
meaningful,
relevant
engagement – online and offline. Because despite
all these landmark changes in the retail segment,
one thing never changed: The customer is king –
perhaps more now than ever before…
Industry trend:
The changing retail customer
Never before in the history of mankind have consumers been given more choices on how, when, and
where to purchase new products. Digital technologies – most of all smartphones and tablets – are
putting a “BUY” button within consumers’ reach - 24 hours per day, seven days per week, 365 days of the year.
This unprecedented freedom of choice – fuelled by digital transformation – is having a profound effect on
consumer attitudes and shopping behaviors. In 2015, the average retail consumer wants to...
... BUY THE RIGHT PRODUCT AT THE RIGHT PLACE AND THE RIGHT TIME.
Consumers want to be able to buy what they want exactly when they want
it – and the pressure is on retailers to make it happen. According to current
research by the e-commerce software experts Nextopia, 44% of shoppers
are more likely to purchase online if they are able to pick up their purchase
in-store – preferably on the same day. And in the same study, 62% said they
are more likely to shop online if given the option to return an item in-store.
In other words: The retailers that will lead the way can do both online and
offline with tightly integrated, omnichannel sales models.
... LEVERAGE ONLINE INFORMATION TO MAKE INFORMED PURCHASE
DECISIONS.
Today’s hyper-connected consumers use smartphones to guide in-store
purchase decisions. Globally, over 85% of consumers have used their
smartphones inside a store (DigitasLBi Connected Commerce study), and
77% have been influenced by smartphones in their purchase decisions.
Overall, 55% respondents in the study said that the Internet and mobile
technology have changed the way they shop. According to a PWC study,
65% of U.S. consumers shop on at least two channels, while 21% use four
to five channels.
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… USE APPS AND MOBILE SITES TO SHOP AROUND THE CLOCK.
Marketers are well aware that the average consumer owns about 50
smartphone apps, while spending the majority of time on only five to seven
apps (most of all, on Facebook). Nevertheless, a well-designed, secure
e-commerce app goes a long way in winning over consumers. When it
comes to conversions, 81% of shoppers using a tablet actually make a
purchase, compared to only 52% using a smartphone (eMarketer).
… RELY ON SOCIAL MEDIA FOR RECOMMENDATIONS AND REVIEWS
– AND EVEN MAKING PURCHASES.
Word of mouth is a valuable currency in this brave new world of shopping:
According to research by Barilliance, 31% of e-commerce site revenues in
the 4th quarter of 2014, came from personalized product recommendations, for instance Amazon product reviews. Customers who clicked on
personalized recommendations also had a 5.5-times higher conversion rate
than non-clickers. And for those shoppers reluctant to leave their Twitter or
Facebook apps to buy via dedicated apps, both platforms are adding “BUY”
buttons in cooperation with major brands to catch those in-app purchases.
According to Shopify, the amount of product orders from social media has
grown 202% in 2014, and most traffic comes from paid apps on Facebook.
… RECEIVE PERSONALIZED OFFERS, COUPONS,
AND PRODUCT INFORMATION.
The days of one-size fits all product bulletins and weekly flyers are coming
to an end. Consumers in 2015 want to be engaged on their individual
tastes and shopping histories. Over 64% of Millennial consumers actively
use their smartphones to browse for coupons before making a purchase
(eMarketer). According to the DigitasLBi study, 71% of U.S. consumers
would also welcome receiving personalized rebate vouchers or special
offers sent to their smartphones. In return, these customers are also willing
to – get ready marketers, here’s the magic word you like to hear – opt-in to
sharing their contact information and receiving tailored communications
based on their profiles.
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The changing face of retail:
Viewed from a retail perspective, the profound changes in consumer habits translate into a clear-cut list of
to-do items. For instance, consumer demand to buy the right product at the right place and the right time
is driving traditional brick-and-mortar retailers into the e-commerce segment. And it’s also driving pure-play
online vendors into opening their own physical stores to bring the multi-channel customer experience fullcircle.
Five major disruptive trends
Once again proof: Shopping, as we know it, is changing forever. Faced with digital disruption – and the
graveyard where failed retail operations loom – today’s most innovative retailers are driving the following five
disruptive trends to keep customers coming back:
I
HYBRID SALES MODELS: CLICK AND COLLECT
It may sound unlikely, but the number one retailer giving Amazon a run for its
e-commerce money is quintessentially American powerhouse Wal-Mart. In
the 2015 fiscal year, Wal-Mart’s global e-commerce sales increased by 22%
to $12.20 billion, while time-honored retail giants such as Macy’s, Costco,
and Nordstrom are also reporting double-digit growth in e-commerce.
Their secret lies in aligning their inventory management systems and store
networks seamlessly with online sales platforms to offer services such as
buying online and picking up in-store, or having the store deliver orders to
customers’ homes.
Click-and-collect – buying products online for in-store pick-up – is emerging
as a major trend according to a new Forrester Research report: A stunning
70% of the 3,000 respondents in the U.S. said they use “buy online, pickup
in-store” services mostly to avoid shipping costs. “Click-and-collect” is a
major consumer trend in the UK, and the main reason why the overall share
of e-commerce purchases is double the U.S. number at 14%. Meanwhile,
e-commerce start-ups such as eyewear platform Warby Parker have already
opened brick-and-mortar stores, while European online fashion giant
Zalando may be next.
II
SAME-DAY HOME DELIVERY: CHANGING THE GAME
While Amazon home delivery with drones will most likely land in the near
future, the company’s Prime Now service already delivers purchased goods
within central London in less than one hour. Paired with easy and hassle-free
returns, same-day delivery provides another reason to skip the trip to the
store. When it comes to household essentials, Amazon in July introduced
push-to-order Dash Buttons: One push, and the Internet-connected buttons
automatically place orders for water, paper towels, and other basics.
Competitors, including the eBay-owned Shutl offer delivery times around
13.57 minutes in London, while Google Express, Yummy.com, and a slew of
other providers bring customers what their hearts desire at a wave of their
smartphone.
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III
6
LOCATION-AWARE NOTIFICATIONS: GREAT TO HAVE YOU BACK
Shoppers at Apple stores, Starbucks, and other locations already receive
push notifications on their smartphones right upon walking into the door.
Behind the scenes, beacon technology identifies registered users’ signatures,
which opens the door to targeted, personalized customer engagement. U.S.
retail conglomerate Target is currently testing beacon technologies at 50
stores across the country. Shoppers with the Target iPhone App installed, will
be asked to opt-in to receive personalized recommendations and deals on
their phone. But even at this early stage, Target knows the biggest pitfall of
this approach: Notifications are limited to two per store visit to avoid churn.
Smart move.
IV
PERSONALIZED COUPONS AND OFFERS: A SPECIAL DEAL –
JUST FOR YOU
According to UK-based website Voucherbox, the number of customers seeking
discounts while making purchases online grew from 23% in 2014 to 33% in
2015. Use of online voucher codes is also up 43% on last year. The only thing
customers like more than rebate coupons, are personalized rebate coupons
– reflective of purchase histories and preferences. According to a Monetate
infographic, 75% of consumers would like retailers to use their personal
information and shopping history to improve their experience. Customized
emails also prove efficient in driving conversions; emails generate twice as
much traffic to e-commerce sites as social media messages (Venturebeat).
Selligent customer SECRETSALES manages its relationships with more than
3 million registered members via Selligent’s data-driven marketing software.
By sending members highly personalized content features, SECRETSALES is
driving higher online sales and strengthening loyalty.
V
BEYOND SHOPPING: CREATING MEMORABLE EXPERIENCES
When it comes to making a choice between visiting a store and shopping
online, customers are looking for the kind of memorable in-store experiences
only stationary retail can provide. Armed with data from customer profiles
and loyalty programs, innovative retailers are creating special retail moments
with birthday surprises or tailored rebates (see IV.), while the future holds
anything from interactive mirror displays fed with personalized data, to
personal robot stylists and bag carriers. According to research by Accenture,
51% of shoppers between ages 20 and 40 like the idea of “one-click checkout
retailers who know how customers want to pay and have items shipped”.
Upscale shopping mall stores in the UK and U.S. are already delivering bags
straight to shoppers’ trunks. And ultimately, a company culture built on ethics
and philanthropic engagement – including the TOMS brand “One for One”
donation for each purchased item – connects companies and customers to
a greater good for a lasting connection.
Showcase:
These innovative retailers have
customers lining up
The key to giving customers what they want, when they want, is simple: Customer data. Collect, analyze,
leverage, personalize, and repeat – that’s the mantra for successfully building long-term customer
loyalty. The following forward-thinking retailers are connecting to today’s consumers with data-driven marketing
powered by Selligent’s omnichannel customer engagement platform for personal engagement across the entire
customer journey.
1. BRILLE 24: BUILDING LOYALTY WITH PERSONALIZED MESSAGING
Founded in 2007, Brille24 quickly established itself as the leading
German online optician. With competitive prices, a wide range
of products and high quality service it rapidly began to provide
stiff competition for established brick and mortar giants who
had yet to develop a functioning digital strategy. Today it delivers
its products to more than 1 million customers in 117 countries.
Brille24 began using the Selligent platform to power its
marketing in late 2011 – progressively introducing new
campaigns and features to keep pace with the evolving habits
of its connected consumers. In order to engage consumers
with highly personalized content, the online optician launched
its “Optician’s Journey” campaign in 2015. Brille24’s campaign
creative encouraged users to provide their birthdate to receive
automated customer loyalty rewards. One set of personalized
communications—the “Glassify Your Horoscope” email—used
a customer’s astrological profile as the basis for eyewear
recommendations.
The recommendation engine also analyzed known and
unknown data to determine product suggestions based on
user behavior, browsing and shopping history (views, clicks,
shopping cart items and wishlists). Behind the scenes, the
Selligent platform allowed for personalization and dynamic
content elements for each and every mailing, resulting in some
37,440,000,000 possible permutations of content.
KEY RESULTS
81.304 55.42% 8.16% 14.72% Emails sent
View Rate
Click-through
Click-to-open
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2. V&D: DRIVING CONVERSION THROUGH PRECISION PERSONALIZATION
As the largest department store chain in the
Netherlands, V&D attracts over 100 million visitors to
its 63 brick-and-mortar shops each year generating
€630 million in annual sales. Early on, the company
had also made the leap into e-commerce with an
online store carrying over 300,000 products from
3,000 brands.
But as digital transformation increased in the retail
segment, the company wanted to find meaningful
ways to engage their customers in new digital
channels. As V&D’s twice per year, multi-week
sales event known as Price Circus (Prijzencircus)
approached, the marketing team used the Selligent
platform to maximize the campaign’s potential as a
major traffic and revenue driver.
V&D used email as the primary channel to drive traffic
to the site and outperform its previous year’s Price
Circus results. Using Selligent to test and learn in the
two-month period leading up to Price Circus, V&D
created a customer contact strategy that leveraged
its existing email sales channel to increase touch
points, boost engagement, and drive conversion.
Enriching customer profiles with data from multiple
touchpoints allowed V&D to send customized emails
through Selligent’s Dynamic Templates functionality.
And thanks to targeted, relevant content, opt-out
rates also dropped significantly, while sales increased
by a whopping 78%.
KEY RESULTS
Number 1 online channel
(both by visits, and by %
revenue)
+78% sales
+40% open rate for
personalized emails
-25% change in opt-outs
for segmented targets during
Price Circus
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3. CHRONODRIVE: ONLINE ORDERS, READY FOR IN-STORE PICK-UP
Selligent customer Chronodrive is a French grocery
firm that offers a hybrid model of online ordering with
customer drive-through pick up at one of 50 stores
across France. Before working with the Selligent
audience engagement platform, the company’s
business model had already gained traction, but
lacked a personalized communications strategy,
especially in customer emails.
The results from implementing the Selligent platform
proved nothing short of transformative for the retailer.
Selligent’s “360° profiles” for customers made all the
difference: Each customer received a unique ID
and all data is tied back to that customer. Selligent’s
industry-leading security protocols ensure that no
customer data is vulnerable, even as it is accessible
for marketing analysis and segmentation through
Selligent’s interface.
Within a single month, Chronodrive went from
manually sending generic e-mails to using automated
scenarios based on customer momentum, refined
with Selligent’s A/B testing tool. The company quickly
saw the open rate of their newsletter rise by between
3–5% and ROI increase dramatically.
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Outlook:
The future of
shopping
begins today
The future of retail starts today. And it belongs to
innovative, proactive companies willing to put the
customer at the center of meaningful, personalized
shopping experiences. With a firm grasp on providing
a consistent experience across online and offline
channels, these retailers are leveraging customer data
to surprise, delight, and build long-term loyalty among
their customer base.
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Looking ahead, the good news is that customer data
will not only increase in size and relevance thanks to
digital transformation in retail. Customers are also
increasingly willing to share data with retailers.
According to Accenture, 65% of respondents were
willing to share their gender, 53% their age, 52%
their contact information, and 24% share contact
information on social media.
Engaging hyper-connected customers with truly
integrated marketing based on sending relevant
messages to clearly segmented audiences and age
groups requires an integrated solution. And with a
growing number of successful retail implementations
under its belt, Selligent’s omnichannel customer
engagement platform emerges as a powerful choice
for forward-thinking retailers.
About Selligent
Selligent is a global marketing automation provider
that powers audience engagement programs for
more than 450 leading brands in retail, financial
services, automotive, publishing and travel. Our
solution empowers brands to create meaningful
omnichannel communications across email, site
optimization, social, mobile and customer care at
a competitive price point that makes Selligent the
best value in the market.
●● Monitor and react to customer behavior in real time
●● Tie all activity across all devices and touch points
back to the individual
●● Deliver personalized data-driven dynamic content
to every customer in every communication
●● Easily segment and manage the communications
cadence for different audiences
●● Adapt seamlessly as your customer continues to
interact
The platform uses rich data analytics to provide
360-degree audience insights and offers customer
journey mapping capabilities to deliver optimal
audience engagement to customers and prospects
alike. Serving brands in 19 countries across both Europe
and the Americas, Selligent works with companies
ranging from the mid-market to large enterprise, often
partnering with its extensive network of agencies and
MSPs.
This report is part of a trend report series examining
the effects and opportunities arising from digital
transformation.If you would like to find out more,
head on over to the resources section on the Selligent
website, where further reports on additional industries
are available to download.
www.selligent.com/resources
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