Over the last half-decade, brick-and-mortar retailers have lost ground to their online commerce counterparts in many well-publicized ways: convenience, selection and even price and experience, all enabled by the mobile phone.
The story not as well-told – nor as often – is the knowledge deficiency that brick-and-mortar retailers have in knowing which customers are in their stores at any given moment. Not knowing who those people are, what they look at, pick up and don’t buy, where they abandon and what has driven them into the store in the first place, means those retailers lack any real ability to personalize the in-store experience.
Beyond the tech that gives retailers a high-level view of traffic patterns and headcount in different parts of the store, brick-and-mortar retailers have had few options available to them to bridge that information gap.
It’s a problem that Michael Klein, Adobe’s director of industry and strategy for retail, travel & CPG told Karen Webster in a recent conversation that technology and data can solve. The information gap, Klein said, is narrowing as in-store technology is advancing.
But the fundamental challenge remains: How to offer a personalized experience that’s helpful and relevant and not creepy and intrusive?
The Spam-Stalking Divide
Beacons – though they never quite went as mainstream as some predicted – changed the conversation about how in-store interaction between consumers and merchants could work in a more data-enriched environment, Klein said.
“Major retailers have been leveraging this kind of technology for a while,” Klein pointed out, adding that Adobe started seeing the first beacon demonstrations rolling out in 2015 and 2016. The change that he’s seeing now is tracking technology that can scale, expand the number of stores that can bring in-store tracking onboard and finally offer the kind of personalization only available to online merchants.
Still, it’s not easy – and tech and tech alone isn’t the answer. Experiences that are “too generic” and just use the new available connection points to throw offers at random customers only make the customer feel spammed – or worse, stalked.
Consumers may not want to know that the store knows they are standing in front of yogurts, and get sent a promotion to buy Chobani at that precise moment.
“What we’ve seen in the data is that consumers are very sensitive to privacy,” Klein remarked. “They want to share information, but they also want something in return for that.”
In other words, there needs to be value for the customer in giving up that data, a relevant personalized experience and offer set. Too generic, it’s spam. Too personal, it’s creepy.
It’s new ground, Klein noted – and terrain that is largely populated by a new type of consumer.
A consumer who, in many ways, is most easily targeted in the rapidly shifting grocery environment.
Going to the New Store
Adobe, through Adobe Labs, took the wraps off its Experience Cloud platform at NRF in mid-January, which was designed over the last three years to crack this very problem for the in-store retailer. The platform works by combining data streams from IoT sensors, beacons (if in use), PoS systems, app information (if the brand has an app) and online data. Taken together, that data gives retailers a much fuller view of what consumers are doing in their stores at any given time.
Their testing ground in retail is the grocery store, because it remains the most physical of all retail environments: Roughly 95 percent of grocery sales take place at or in a physical store.
At the same time, he told Webster, it is rapidly becoming one of the more digitally connected and synced – as it is one of the few retail areas where consumers can still be counted on to actually download the app. Unlike department stores and specialty retail stores, like electronics, the grocery store tends to be an “at least weekly” trip for most Americans – and one that tends to be heavily influenced by coupons, offers and pricing.
“Coupons remain a huge part of grocery,” Klein observed, “and we’ve seen a lot of efforts to move those away from paper.”
But while grocery has been slow into the digital field, it is also a vertical where “huge shifts” are underway as the purchase path is becoming increasingly diverse.
Consumers, he noted, are buying groceries differently – in meal kit form, for example. They are also changing what they go to the store to buy – focusing on fresh and prepared foods, and leaving things like the CPGs to digital orders or subscriptions. Then there are the consumers who make their entire order online, and then offer a quick once-over before a store employee loads it into the back of their car.
“It is not going to happen overnight, but I think as more of these changes become more universal, some of these trends are going to escalate,” Klein predicted. “It is a very exciting place, in grocery in particular, because it is a great example of how industry can really redesign itself and what it offers.”
The Art of the Possible
Adobe, Klein noted, isn’t in the business of telling their retail partners what exactly they have to offer, or how to offer it. What they hope to do, he noted, is give their retail partners the tools to better understand their specific customers, so they can then build the right experiences for them.
“We’ve seen a lot of merchants get out too far over their skis,” Klein said. “They want to do some really sexy whiz-bang stuff before they really know who the customer is, and that almost never goes well.”
But, he noted, it is also possible to get it right. And a fuller look at the retail environment indicates that more and more merchants – and new types of merchants – are beginning to get a clearer picture of what “right” looks like.
Because, he noted, despite all the doom and gloom in today’s headlines, there’s a lot to be happy about if you are a retailer.
“The retail apocalypse is overrated,” Klein emphasized. “The numbers say people are spending money.”
It’s a rather bold statement for an industry that’s seen the loss of hundreds of billions of dollars in market cap over the last five-plus years, and in a retail market that analysts say is simply overstored.
Klein begs to differ. The wave of closures, he maintained, is more about brands not meeting their customers’ expectations than a systemic failure of retail.
The brands that don’t meet those expectations, Klein said, will probably continue to suffer.
On that point, we definitely agree.