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What’s Really Going On With Today’s Struggling Retail Industry
As the first quarter of 2017 nears an end, the retail industry is expected to post a 6.8% decline in sales — its worst three-month performance in nearly four years. This news comes at the heels of a record number of bankruptcies, as nine major retail chains have already filed for Chapter 11 bankruptcy this year. Despite these ongoing struggles, the National Retail Federation still expects industry sales as a whole to increase by 3.7-4.2% this year, with much of that growth attributed to the ecommerce sector. While this has led many people to frame the problem as a “brick-and-mortar versus digital” fight, some experts insist that the reality of the situation is more complicated. While ecommerce retailers continue to outpace their traditional counterparts, there are a number of diverse factors driving the industry evolution — as market fragmentation and sales volatility has been slowly changing the selling landscape over the past decade. As smaller, more nimble companies continue to steal major market share from industry heavy-weights, their success is shedding light on how retailers of all kinds can better connect with their customers.
As Q1 nears a close, only three retail segments are predicted to show year-over-year earnings growth—home improvement, office supplies and auto parts—while department stores continue to turn out some of the lowest performance reports. In fact, a number of major retail chains (including Macy’s, J.C. Penney and Sears) are currently in the process of closing nearly 400 physical stores. As the industry braces for the trickle-down effects of shuttered storefronts, analysts have identified an interesting pattern in this year’s uptick in retail bankruptcies. More than half of these filings have come from retailers that were purchased through a process called “leveraged buyouts”—in which private equity firms buy undervalued retailers through a combination of equity and debt. In stepping in to eliminate costs from the fledgling company, many of these firms are often hesitant to invest in increasingly critical areas of the business, like bolstering digital operations—which can lead the retail store to bigger trouble down the line.
While many traditional retailers have blamed the online boom for their dwindling sales, experts have suggested that may be misguided. According to Kasey M. Lobaugh, Consulting Chief of Retail Innovation for Deloitte, the retail industry as a whole has simply become more fragmented over the past decade - with the top 25 traditional retailers losing over $40 billion in concentrated market share. Much of this share has been picked up by new competition: emerging retailers that have taken advantage of the lowered barriers for entry. These burgeoning brands are not exclusively online-only sellers—but small, forward-thinking physical stores as well. The retailers that continue to thrive are ones that deliver a highly personalized experience to each individual customer, Lobaugh says. From the products shown to the services offered, customization and differentiation are the keys to success—whether you’re selling in-store or online.
How To Offer A More Personalized Shopping Experience
In today’s busy world, consumers are increasingly interested in efficiency—even when it comes to shopping. That means people are not only looking for a faster more convenient shopping experience, but one that is more personalized to them. Studies have shown that more than 70% of people in the US and the UK expect personalized shopping experiences. Despite those expectations, many of those consumers are still not willing to share their personal data in exchange for such benefits. That leaves retailers in a tough position. So what you can do? First, you have to understand what it is your customers are looking for. From there, you can start to build a more effective program that will build greater customer satisfaction, healthier margins and a higher percentage of repeat sales.
Understand Your Customer
According to Retail Dive’s recent Consumer Survey, there are a few different kinds of personalized benefits that are most appealing to consumers—benefits that will actually drive customers to share their personal information with retailers. These include loyalty program points and rewards, discounts and special offers, and personalized recommendations. This surgery found that men are more likely to look for loyalty program rewards and personalized recommendations, while women tend to prioritize exclusive discounts. While nearly three out of five consumers say they are not willing to share their personal data in exchange for benefits—this sentiment differs greatly among generational lines. Today, 62% of consumers under the age of 45 saying they are willing to provide their information with companies in exchange for exclusive rewards, compared to just 24% of consumers over the age of 45.
Adopt A More Robust CRM Software
In order to provide these tailored experiences, you first must have a way to manage and monitor your customer data. One of the best ways to do this is with a robust Customer Relationship Management Software (CRM). Today there are many different software options that allow you to house your inventory, POS system and customer histories in one place. Once you have a comprehensive CRM in place, you are then able to gather and leverage a wide variety of data points to provide each customer more personalized service.
Customize Your Email Marketing
One easy way to personalize your selling approach is with email marketing. Many advanced email marketing services offer built-in personalization features that can be integrated with your CRM software. In addition to actually including the customer’s name and noted preferences within the email, you can use the information based on their past purchasing behavior to provide exclusive deals that are more tailored to the customer.
Try App-Based Deals
As more customers are using their smartphones to guide their in-store shopping, retailers have a unique new opportunity to engage with them as they walk around the store. Point Inside, a provider of in-store product location solutions for retailers, recently unveiled a new tool to do just that. The company’s new Deals Personalization technology allows retailers to leverage their customers’ historical shopping data and in-store location to send more relevant recommendations and promotions directly to their smartphone in real-time via their mobile app. These deals are automatically configured based on the shoppers’ in-app search history, shopping list contents and physical location in the store.
Rethink Your RSA Tools and Training
Another way to further personalize the in-store shopping experience is by bringing this kind of technology straight to the RSA. When equipped with an optimized tablet that is connected to the store’s CRM, RSAs can immediately access detailed information on the customer’s purchasing preferences and the store’s current inventory. This not only allows them to guide the consumer towards products they may like, but it also makes it easy for them to offer more detailed product information.
Build And Maintain Trust
While this new technology has made it easier for retailers to provide their customers with a more personalized shopping experience, today’s consumers are well aware of potential privacy risks this can pose. As such, it’s more important than ever to be vigilant about protecting your customers’ information from data breaches. Not only should all of your technology be properly encrypted and protected, you must effectively communicate that dedication to your customers. In order to reap the benefits of these personalization tools, you must be continuously working to earn and maintain your customers’ trust.
Google AdWords Improves In-Store Visit Tracking
“Paid Search” advertising campaigns have long been proven to be a valuable and effective way to drive more traffic to your website. For many brick-and-mortar retailers though, it has been difficult to see how this type of campaign can impact your in-store sales. Google recently announced new improvements to its AdWords program that will make it easier for retailers to track the influence of paid search ads on physical store visits: providing more accurate data on how many people saw your ad then later came in to shop at your store. For retailers who may have been hesitant to adopt this type of digital advertising in the past, these updates may be a good reason to test it out.
Google first introduced “store visits” as part of their AdWords measurements two years ago. This data is calculated based on aggregated and anonymized data from users who have opted-in to activate location history. According to Kishore Kanakamedala, Director of Product Management for Online-to-Offline Solutions, the company is committed to only providing store visit data that meets the highest standard of accuracy. As such, the company recently unveiled a number of updates to AdWords’ “store visit” tracking capability. In addition to prioritizing locations signals that are more predictive of actual visits, Google has increased the precision of the geography around business locations via Google Earth for better tracking. The company has also added additional verification by surveying users about their store visits.
While the exact technology may be complicated, the benefits of such improvements are clear. Google is providing brick-and-mortar retailers with a more accurate picture of their AdWord’s campaign return on investment.
The Jackpot of Better Sleep
We all know that a good night’s sleep leaves us feeling better. But just how much better? A new study out of England’s University of Warwick has attempted to quantify just how good a solid night of sleep makes us feel. Dr. Nicole Tang of the Warwick University Department of Psychology analyzed the sleep patterns of more than 30,500 people in the UK over the span of four years to better understand the effect of restful sleep. The results? She found that improving positive sleep habits can actually make you feel like you’ve won the lottery.
Tang’s findings, published in the Sleep Research Society’s Sleep publication, indicate that participants who focused on improving positive sleep habits and using less sleep medication resulted in a change comparable to an eight-week program of mindfulness-based cognitive therapy designed to improve psychological wellbeing. Tang translated this as the equivalent of someone who’s won a jackpot of £200,000 (approximately $250,000). She stresses that the quality of sleep is far more important than the quantity. Unsurprisingly, the converse is also true: poor sleep habits, a lack of sleep and increased sleep aid use were attributed to decreased emotional and physical health.
Tang frames her results as an effective and inexpensive way to raise public health and wellbeing as a whole. She comments that “the benefits of better sleep are accessible to everyone and not reserved for those with extremely bad sleep requiring intensive treatments.” She goes on to say that “Further research in this area can inform the design of public health initiatives.”
It’s clearer than ever that retailers need to communicate to consumers that quality sleep is important and that finding the right sleep situation is imperative. Because the verdict is in: deeper, more restorative sleep is like winning the lottery and who doesn’t want to feel like a million bucks?
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