AI No Longer Just for the Big Investment Players
How Data, Analytics and Technology Drive Shoppers Back into Retail
05 September 2023 Chris Crammond
In recent times, I have found myself increasingly reluctant to visit retail outlets without a compelling reason.
COVID/The pandemic forced retailers to swiftly adapt and transform in extraordinary ways. They revamped online shopping experiences and introduced highly efficient delivery services. Moreover, they improved returns processes, enabling consumers to purchase high-value fashion items without worrying about returning them if they don't fit or meet their expectations. Retailers and distributors also implemented highly efficient drop-shipping and warehousing solutions, resulting in faster delivery times. Consequently, our tolerance for acceptable wait times when ordering online has decreased significantly, making the frustrating experience of circling Westfield car park in search of a parking spot seem like a relic of the past. On top of all this, the proliferation of last-mile delivery services has relieved retailers of the need to establish their own specific delivery services, as they can now rely on these business’ to meet the increasingly high expectations of their customers. To quote the wise words of Daryll Kerrigan, "Why would you go out!?".
Interestingly, all these innovations and efficiencies have come at a significant cost to traditional retailers. Footfall traffic in certain areas has plummeted by more than 50%. In-store revenues have experienced a decline of around 10-15%, and any growth achieved has fallen below the rate of inflation. Additionally, the return on commercial property has remained stagnant, if not regressed, for over a year.
So, who is still thriving in such a challenging environment? Today’s winners are the progressive retailers who have managed to leverage data to reimagine retail experiences and entice shoppers back in-store.
For instance, Changi Airport, capitalising on its position as a tourism destination in its own right, launched an innovative points system platform several years ago, geared at both driving visitation and increased spending on-site. Customers are encouraged to sign up and receive points and discounts in return. This program has achieved tremendous success, with their e-commerce platform witnessing a staggering 70% year-on-year growth.
In the realm of parking, which often serves as customers' first interaction with retail establishments (and is typically a negative experience), the likes of Stockland have seen significant improvements in customer sentiment by enhancing valet parking services during peak periods. Other retailers have explored the implementation of Parking Guidance systems, such as park assist, which enables customers to pre-reserve parking spots before arriving, ensuring a smoother and more positive first impression.
To remove some of the uncertainties associated with retail shopping, Australian startup Brauz has developed a platform that effectively connects potential customers with physical retail stores. Their platform facilitates various functions, including reserving products for in-store pickup, locating specific products within stores, and scheduling appointments for purchases that require consultation. Their aim is to enhance the efficiency and success of the retail experience. By partnering with Zoom, the platform even allows for virtual shopping appointments with physical stores.
Last but not least, Skyfii utilises the MAC addresses of users' mobile devices to map and analyse their movements within retail environments. This data helps gain insights into customers' physical behavior and enables better optimisation of retail spaces. It presents an intriguing approach to understanding customer behavior and enhancing retail environments based on the knowledge gained – Minority Report anyone?
At the core of all these examples lies a concerted effort to minimise friction in physical retail experiences by leveraging a combination of intriguing data points and technology. Collectively, these efforts are likely to establish a better balance between revenue generated online and in physical stores. At the very least, it’s creating a whole new area of behavioural science that is both intriguing and exciting.