Retail is becoming increasingly digitised as more consumers head online to do their grocery shopping, a trend that has been accelerated by the Coronavirus pandemic. This offers both retailers and brands more opportunities to use retail media to connect with consumers during their digital shopping journeys.
However, this is not without its challenges. In this article we‘ll look at the benefits of collecting customer data, what information you can collect, and how well brands and retailers harness it. We’ll also examine the importance of data unification for effective omnichannel retail media strategies and how to achieve it.
Before we start, if you need more information about retail media and creating a strategy to meet your goals, check out our article looking at where retail media stands today.
The digital transformation of retail and consumer habits
To meet the growing demand for online grocery shopping, supermarket chains with existing ecommerce stores are expanding their offerings, and discount retailers such as Aldi are exploring online services. Even FMCG companies, such as PepsiCo, capitalised on this trend and launched their own e-shops. So what does this mean for your retail media strategies?
As companies transform and modernise, so too does customer behaviour. Our survey of French consumers, run with Harris Interactive in August 2020, discovered that 1 in 2 French people now shop for groceries both online and in store. Shoppers increasingly use multiple devices to buy their groceries and have more touch points with both brands and retailers, meaning more data can be collected on their habits and preferences.
In return, consumers expect a consistent experience online and offline across the different channels they use, whether it’s in the communications they receive, product information, promotions or advertising. As we’ll find out, the key to doing this effectively is having unified customer data across all channels, the holy grail for every advertiser, retailer and brand.
Why collect and analyse customer data?
Brands and retailers must pay close attention to what data they collect and how they use it. In light of GDPR, all data collection, processing and use must be done consensually. Collecting customer data offers a number of advantages and allows you to do the following:
- Refine your knowledge of your customers, so you can profile them and identify prospects and opportunities.
- Gather insights about your customers’ behaviour both digital and offline.
- Run effective retail media campaigns targeting customers individually with the right message on the right channel at the right time, as opposed to bombarding them with irrelevant offers or mass marketing which can tarnish your image and reputation.
- Measure the impact of your marketing activities and investments on your sales.
A wealth of customer data…
The fast pace of the digital transformation of retail poses a number of challenges for both retailers and FMCG brands. Consumers nowadays have fewer qualms switching brand allegiance. According to a Salesforce Research report, over 50% of consumers state that they will switch brands if another offers a superior experience, while 8 out of 10 consumers say that the shopping experience is equally as important as the items they purchase.
Data is your main ally in providing you the information to offer the personalised, omnichannel experiences that your customers expect. Therefore it’s critical as either a retailer or an FMCG brand that you understand what data you can collect and how to use it to create retail media strategies that benefit both you and your customers.
While search engines know what people want, and social media platforms know what they like, retailers collect data on what customers actually buy. This priceless asset is made up of:
- Transactional data, for example from sales receipts, which allows a buyer history and profile to be created.
- Real-time data on customers’ intentions and purchasing context, which allows you to promote relevant products as a customer is actively browsing and shopping.
- Cookies, which enable customers’ online journeys to be tracked and retargeted on other online channels.
For retailers, having this mass of data and insights at your disposal allows you to create customer profiles (families with children, organic product enthusiasts, budget conscious shoppers) and monetise the data. This will encourage advertisers to invest in your retail media solutions (display, search, product recommendations, DOOH screens, etc.).
Storing and measuring data over the long term also allows you to focus on important performance metrics and their changes over time, such as your return on advertising spend (ROAS), market share, customer lifetime value. For more information about tracking campaign performance, check out our article about the KPIs to use to measure the performance of specific marketing goals. Giving brands access to a self-serve platform where they can monitor their campaigns and track indicators such as ROI has become a best practice, something Amazon Advertising uses to its advantage to attract brands.
For brands, leverage the data to your advantage by targeting the right customer with the right message, providing them with a coherent experience across all channels. According to IMedia Center, Auchan’s in-house advertising agency, on average people are exposed to 3,000 brands per day (article in French). This means personalisation and targeting are crucial to making your brand stand out and to create brand preference, which in turn increases the performance of your e-retail media activities.
What’s more, consumers generally want their data to be used in order to receive relevant communications, advertising and promotions from brands. The SAP Hybris Consumer Insights survey found that 71% of consumers say they are willing to share their data to benefit from a personalised shopping experience. Likewise, according to Accenture (article in French), two thirds of French consumers clients prefer to shop with companies that personalise customer experiences. Yet on the other hand, 47% of consumers (Accenture) worry about companies having too much data on them and their families. And the SAP Hybris Consumer Insights survey discovered that almost 80% of respondents would drop a brand if their information was used without their consent.
Find out how supermarket retailer E. Leclerc used budgetbox’s solutions to create personalised relationships with their in-store customers in this success story
There is therefore a paradox of consumers wanting more personalisation but still being wary about the use of their data. As long as customers are clearly aware of what data is being collected, how it’s being used and can see tangible benefits such as improved in-store experiences or more relevant discount offers, then there’s no conflict.
… and yet, brands and retailers still don’t harness their data properly
Collecting the data is one thing but getting the most out of it is another challenge entirely. Despite this wealth of customer data, according to a 2019 ReachFive and OpinionWay study (article in French):
- 78% of companies collect data to personalise the customer experience.
- However, only 51% of companies collect behavioural data and not just contact data (surname, first names, e-mail address, etc.).
- And only 2 out of 10 companies consider that they have a very good level of customer knowledge.
Another survey of over 300 retailers and brands, run by Alteryx and RetailWire, found similar results:
- Over 80% said they gather insights on customers and over 75% deemed this data essential to performance
- Yet only 16% called themselves experts in controlling and using this data, with 24% being “newbies”
A survey by Snowflake Computing and Harvard Business Review uncovered that FMCG and retail companies were half as likely to be data-driven compared to the average business across all industries. Marketers who lack unified data lose time organising and managing their databases instead of actually garnering insights and putting the data to use, and struggle to accurately measure the performance of their marketing activities and the impact on their business.
This paints a picture of an industry that understands the need for data collection and the critical role it plays, but struggles to harness its full capabilities. If this continues, retailers and brands will find it difficult to keep up with the digital transformation of retail and provide their customers with the seamless omnichannel shopping experiences they now expect.
How to unify your customer data?
The big challenge here lies in a problem that is well known to all: unifying data from omnichannel shoppers. For example, how can you reach your target audience at the right time with relevant messages or offers, as close as possible to the moment of purchase, if data for each channel your customers use is siloed?
The 2019 ReachFive and OpinionWay study highlights this challenge:
- 53% of companies say their data is not unified
- 60% do not support customer identification
- 67% struggle to manage data redistribution
However, it’s precisely this data that lets brands and retailers create real customer experiences and build consumer loyalty.
So how can brands & retailers meet this challenge? The main steps to unifying your data are:
- Define your marketing objectives (acquisition/conversion goals, ROI, reach, loyalty etc) so you know what data to collect.
- Understand the different contact points that will collect this data (sales receipts, loyalty cards, e-commerce, competitions, etc.).
- Segment your data according to criteria such as customer loyalty, level of activity, purchase history, socio-demographic information etc. Where possible, use AI and machine learning to correctly segment your customer database.
- Study and analyse your customer data over time, gauging changes from one year to the next.
Data management platforms (DMPs) allow you to centralise your data in a single place to avoid it being spread across departments within your company. Such tools also allow actions such as mass updates to be done at once, keeping your data coherent and giving you better visibility over it. It will also help organise the raw data into formats that can be visualised and analysed.
Putting such systems in place and ultimately unifying and harnessing this data is a long-term project that requires the right tools and expert knowledge. Companies lacking the necessary skill sets internally may have to call on external resources and help.
Collecting quality data and using it well will play a big role in the success of brands and stores at a time when the retail industry is undergoing rapid change. As companies look to grow and increase their market share, it’s essential to reduce customer pain points, optimise their purchasing paths and remove any other obstacles to smooth omnichannel shopping experiences, which is only achievable through effective use of data.
Want to find out more about shopping habits? Download our infographic detailing the profile and behaviour of the omnichannel consumer in supermarket retail.
