Co-authored by: Naveen Devnani
Today’s retail environment is experiencing an unprecedented change across the board. Changes are evident in ways and means to engage customers, customer expectations, rapidly changing technologies, and market disruption from the next-gen online players. These are challenging the retailers like never before.
Traditional approaches creating differentiation in retail—such as pricing discounts, loyalty programs, and seasonal promotions—are not as effective as they once were, and customer retention and sales growth are hard to achieve. However, differentiation can still be achieved through personalized customer experiences in retail, wherein retailers create unique customer journey experiences tailored for individual customers to retain, sustain, and improve profitability.
Personalization paving the way in retail
In the words of Seth Godin, “People do not buy goods and services. They buy relations, stories, and magic.” And this reflection still holds true in today’s world, where trends such as heightened customer expectations, advancements in technology, and the rise of omnichannel retail are redefining the retail industry.
A whole gamut of retailers (ranging from e-commerce giants like Netflix, Amazon’s of the world to in-store personalization experts like Nike and Best-buy) is aiming to make the shopping experience seamless, unique, intuitive, fast, and easy across all touchpoints with personalization in retail. This personalized and omnichannel customer experience is vital for future growth, which is further reinforced by the below statistics that show its impact on the bottom line -
- According to Segment,71% of consumers experience frustration with an impersonal shopping experience
- Epsilon reveals that for 80% of consumers, it is important to purchase from a brand providing personalized experiences
- Monetate states that almost all the companies (95%) that saw 3x ROI from personalization efforts also increased profits within a year
Adding relevant, personalized content to a retail website or app helps customers in making the right choices. Retailers can effectively increase engagement throughout the customer journey and increase wallet share with immersive product experiences, engaging product discovery, and optimized navigation.
The BCG-Google study reveals that personalization, when done well by a retailer, can often foster significant benefits. For example, customers are 40% more likely to overspend and 110% more likely to add more cart items in case of hyper-personalized shopping experiences. Additionally, customers experiencing a high level of personalization will award 20% high net promoter scores to the retailers compared to customers experiencing relatively lower personalization levels.
Given the success stories, it is also surprising that not all retailers have matured personalization best practices. Some of them are far behind the curve from a customer expectation standpoint. As per the Retail Touch Points report, over 36% of consumers say retailers need to do more to offer personalized experiences. At the same time, more than 80% of retailers are still defining a personalization strategy and starting pilot initiatives.
Countering challenges in driving personalization
Retailers cite three major challenges when it comes to customer experience design. The first challenge is integrated data management and insights – gathering disparate data sources across the retail value chain, integration, and synthesis of the relevant customer data to put analytics to work faster and see a return on insights sooner.
The second is the availability of the right tools and skillsets – acquiring and maintaining in-house skills such as data engineers, data architects, data scientists are proving to be major concerns for retailers. In addition, tools supporting the operationalization of analytics and AI pipelines usually have overlapping capabilities that make it even more difficult to identify the right product and framework for implementation.
The third is how to leverage artificial intelligence (AI) and ML models – to automate the analytics lifecycle so that retailers can quickly uncover granular insights. Implementation and infrastructure complexities associated with production AI and ML pipelines often overwhelm technical professionals.
Can cloud computing in retail be a savior? Yes, if retailers leverage the cloud smartly
When building an underlying technology stack to design and deliver engaging customer experiences in retail, there are few best practices that retailers need to follow. For example, retailers need to focus on integrating the right data sources to enable the personalization use cases. Also, instead of making huge investments in developing on-premises solutions for Data Lake, customers can leverage Cloud-based solutions.
Hyperscalers like Azure and AWS offer data lake solutions that support standards-based data formats, ETL methods, multiple analytical processing types (e.g., big data, operational, predictive, real-time, and more), platform governance, and data security management while being cost-effective and quickly deployable.
The second most important component is incorporating AI / ML-driven intelligence into the entire data fabric. For optimal customer experience, retailers must invest effectively in the intelligence layer that empowers the personalization engine. Using best-of-breed, AI/ML-based data services (often software-as-a-solution platforms) instead of developing in-house technology enables IT teams to quickly build analytics at scale in the cloud.
Leading hyperscalers offer several AI/ML-based data services that require no machine-learning expertise. Perhaps the best part is automatic model optimization based on reinforcement learning, allowing AI to achieve the goals retailers set to gain significant, granular insights very quickly.
This is only the tip of the iceberg. If done correctly, retailers can provide truly personalized and highly connected customer journey experiences that will differentiate brands, influence customer buying patterns, and increase revenue substantially.
The HCLTech perspective
HCLTech enables retail players to transition from legacy solutions that are efficiency-oriented to ones that are outcome-oriented. The collaborative model helps them in carving a path towards enterprise modernization, enabling them to navigate the digital age with assurance and confidence.
#HCLCloudSmart suite of industry-aligned offerings and platforms like Omni-Channel Customer Experience Assessment (OCEAN) or BlinkE helps retailers boost their e-commerce capabilities, define their online strategies, and meet end-user expectations. All these offerings can be consumed in a XaaS model, which helps our customers to make smart choices for a cloud-based platform powered resilient and sustainable business model.