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In case there was any lingering doubt, high street retail is in somewhat of a crisis, with ToysRUs and Maplin doing a “full Woolworths” last month by joining an ever-growing list of long-standing high street retailers to suddenly crash out.
Ask these latest high street casualties what led them both to finally buckle and fall into administration and I’ll bet they’ll describe a perfect storm of retail factors:
And these brutal trading conditions are not isolated to a single sector of the retail landscape.
Witness the well-documented difficulties currently experienced in casual dining, with Jamie’s Italian, Byron, Strada, and most recently Prezzo all announcing store closure programmes in an effort to resuscitate flagging performance.
And just this week, Carpetright and New Look have announced that they’re set to close stores, Moss Bros have issued a profits warning, B&Q has reported falling sales, and Mothercare is in “financial talks” with its lenders.
Several commentators have laid blame for the high street crisis on the “Amazon factor” (as it’s being dubbed). With its range of ‘smart’ devices installed in the home or carried around by person, the internet giant is already surpassing its mission to personally cater for every possible need: groceries, FMCG, books, music, television, clothes, etc.
Could the populace at large soon decide to give up any illusion of free will and enable the likes of Amazon to automatically deliver every type of consumer good and service based on one’s digital profile?
Perhaps the only safe haven from Amazon will be the most exclusive of items and experiences, where consumers will willingly pay a premium and purchase more than just the object (although Jeff Bezos is already working to bridge that gap with his 2017 acquisition of Whole Foods Market).
This particularly dystopian vision of retail’s future is thankfully distant and many retail industry experts actually predict better times from 2019 onwards.
For all the gloom reported, we as consumers still love high street retail. Only this month, Yoyo ran a survey with YouGov to find out which method of shopping consumers most prefered.
More than half of respondents (54%) said the high street was their favourite way to shop, while less than a third (31%) prefered the online experience.
As it stands, consumers still want and need to go out and buy goods and services, which means there is always going to be a role for high street retail.
However, to help make these predictions of better times in 2019 come true, it is our collective responsibility to fight against the inexorable advance of the AI-voice assisted ecommerce behemoth, and perhaps even prevent the seemingly inevitable.
In retail, as in life, there are no silver bullets that guarantee absolute success – it’s all about doing as much as one can to tip the odds in your favour.
Traditionally, retailers have focused on nailing certain fundamentals to increase their chances of winning out against the competition. For more than half a century these key variables have been known as the “marketing mix”.
McCarthy’s original 1960 4 Ps marketing mix was augmented in 1981 by Booms and Bitner to the more commonly quoted 7 Ps, which we know and love today: product, price, promotion, place, packaging, positioning and people.
These fundamentals still remain the table stakes for any retailer to compete in their chosen category. Without ticking these seven boxes, no retailer can hope to survive in the medium to long term.
However, these attributes alone are no longer enough to ensure success in such a formidable retail environment.
Times have moved on, and I’m a big fan of even numbers, so is it time to upgrade the 30+ year-old P list to a sparkly fresh 8 Ps for Retail in 2018?
Perhaps unsurprisingly, following a 17+ year career in payments and technology (culminating in stepping into the CCO role at Yoyo in 2017), I have devoted considerable thought to this question and spent many hours debating the possibilities with colleagues, partners and other experts in the fields of payments and high street retail.
So here’s my big tip for the 8th P to augment the mix in 2018:
Perhaps an easy P to drop in, but what exactly does personalisation mean, who’s doing this well today, what are the cautionary tales and how can more retailers harness the power of personalisation to gain an edge over their competitors?
Personalisation is fast becoming a new hygiene factor for high street retail. It’s all about creating the type of immersive, frictionless experience that will keep customers coming back to you time and time again.
Nowadays, consumers are so deeply accustomed to their online purchase experience that they now expect this level of personalisation in all their interactions with retailers whether online or in person.
When we asked which tech-led experience consumers would most like to see in high street retail this month, nearly 70% of shoppers chose personalised deals and discounts tailored to past purchases.
Retailers that grasp this principle will give themselves the opportunity to thrive – those who don’t personalise their offering may find the loyalty of their customer bases severely tested by competitors that are willing to provide compelling reasons for their customers to try new products and continue returning to their stores.
By definition, personalising the customer experience in high street retail means that one size can never fit all, as the range of consumer requirements can vary wildly from one retailer to the next.
There are four key elements to creating a successful personalisation strategy for your consumers:
What technology is appropriate for deployment in your store environments? What do your customers need and how do they want to interact with you? Are self-checkouts appropriate for your brand? Do your most valuable customers regularly ask whether they can pay via their mobile phones, yet you don’t offer that feature at checkout?
Last year, McDonald’s started rolling out self-service kiosks across more than 2500 stores in the UK. Keying into the point-of-sale as the moment to engage, this touch-screen technology enables customers to avoid queues, customise food orders and pay for items.
Then there’s Caffè Nero, which launched their Yoyo-powered payments and loyalty app across 650 stores last April. Replacing the coffee chain’s famous blue paper loyalty card, customers automatically collect their coffee stamps when they pay on the app, redeem their free coffee through mobile and are presented with personalised surprise and delight offers based on past purchasing habits.
Data channels are what the internet giants utilise to such great effect in targeting and retargeting online customers. But this opportunity is no longer the preserve of ecommerce players. Through a mobile-led strategy, brick and mortar retailers can now collect similar basket data at the checkout to analyse customer habits and preferences.
But it’s critically important that these retailers provides reciprocal value back to the customer in return for this exchange of data, secure in the knowledge that the potential hit on margins will be more than made up through driving incremental transactions and/or average transaction value.
Of course the archetypes of data driven businesses are Amazon and Google, but in terms of brick and mortar businesses that utilise their data to full potential, the oft quoted example of Tesco still holds true.
But again, there’s also Caffè Nero. Through one simple EPOS integration, Caffè Nero receives full SKU basket data when app users pay for their items. Caffè Nero uses this basket data to profile their consumer base and then targets them with hyper relevant messages and offers in a way that would have been impossible in the old world of paper stamp cards and email distribution lists.
When a retailer understands who their consumers are, leverages the data collected and gives value back to the customer in return for this data, then a successful customer engagement strategy becomes possible.
When consumers feel that their favourite retailers understand and care about their specific needs, and crucially see this being put into practice in tangible ways when they visit the stores, this can create long standing bonds and significantly increase a Net Promoter Score.
Overly complicated loyalty schemes will turn consumers off through confusing mechanics that don’t promise sufficient value to drive engagement and usage. Waitrose realised this last month when they announced significant changes to their ‘pick your own offers’ loyalty scheme.
John Lewis and Argos are classic examples of businesses that engage with their consumers in very sophisticated ways and can confidently call themselves ‘omnichannel’.
When done correctly, the above three elements of a personalisation strategy overlap to offer retailers the opportunity to provide their engaged consumers with truly immersive retail experiences that can set them apart from the competition and generate emotional connections.
According to Matthew Hopkinson of The Local Data Company: “the more astute retailers are looking to create new in-store experiences to attract customers”.
The key challenge is figuring out how retailers can adjust and be seen as both retail and leisure destinations, thereby increasing the ‘stickiness’ of their brand and proposition to those valuable customers.
Premium brands such as Burberry have found success in this area. The British fashion brand’s flagship store features interactive mirrors that become screens showing relevant footage and fashion videos when approached.
The idea of flagship stores providing immersive experiences is now spreading across a wider cross-section of retailers, with Apple, LEGO, Habitat and the Disney Shop also worth mentioning
All retailers must strike an appropriate equilibrium between technology/tradition and convenience / experience that fits with their own brand values and effectively enhances their customer experience to the point where they can confidently assert a competitive advantage.
The ability to turn personalisation into an effective weapon in the battle for customer consideration is entirely in the gift of retailers, irrespective of the particular sector they are working within.
For those that perhaps wisely wish to focus on their core business, there are a range of agile technology companies out there (including Yoyo), that can help turn this strategy into reality without requiring eye-watering budgets or impacting on your ability to keep selling and serving your consumers.
If those of you in high street retail can use technology to enable more effective collection and derivation of insights from customer data, effectively reward your consumers for allowing you this insight and then build targeted and engaging experiences armed with this, I am confident that you will position your business at the forefront of your particular vertical until the 9th and 10th P’s are eventually added to the marketing mix…
If you would like to find out how Yoyo, Europe’s fastest growing payments and loyalty marketing platform, can help you harness your basket data and personalise your customers’ shopping experience, contact Simon at firstname.lastname@example.org