Today, online retail is facing several headwinds – rising inflation, a disrupted supply chain due to the ongoing Ukraine war, and the post-pandemic resurgence in brick-and-mortar shopping.
Of these, inflation is causing the highest concern amongst consumers and merchants as prices continue to rise. With global inflation hitting a 15-year high of 8.8% in 2022, the frenzied global adoption of digital commerce during the COVID-19 era is not only losing momentum, but eCommerce growth has also stalled.
Australian consumers are feeling the pinch as is revealed by the change in their spending habits as they return to restriction-free living in the aftermath of the COVID-19 pandemic and adjust their spending in line with the higher cost of living.
Recent data from the Australian Bureau of Statistics (ABS) shows retail sales volumes fell 0.6% in March 2023, which followed a 0.3% fall in December 2022. According to the ABS head of retail statistics, this was the largest fall in retail sales volumes since the September quarter in 2009.
Optimising the retail experience is more important than ever
In this uncertain economic environment of lower spending, businesses must create a clear personalisation strategy. Personalisation needs to be built over a period of time, but when done right, it is certainly one of the finest methods to gain market share.
A recent report from the Infosys Knowledge Institute (IKI) investigated practices that can lead to exceptional digital commerce results and called out personalisation as the main component for digital commerce success. To maintain and grow customers, firms must go beyond high-quality products at reasonable rates and back them up with excellent and tailored digital experiences.
IKI discovered that when applied, tailored customer service, personalised offers, and co-browsing can improve customer experience and correlate with a top performance by 5%, 8%, and 7%, respectively. Nailing these aspects make it more likely that a company will be in the top-performing quartile, IKI reports.
Interestingly, while personalisation has proven to be one of the key attributes in capturing the consumers’ mindshare and thereby increasing a business’ likelihood of reaching the top quartile of performance by 13%, only a few businesses have reported the implementation of these capabilities.
The report also found that the criterion for optimum digital commerce requires a flexible underlying architecture, and leadership that involves sales and technical teams is crucial. Those that do it well, are making significant gains on their competition.
Personalisation in practice
An example of a retailer that recognises the value personalisation brings to the shopper experience, is Spotlight Retail Group.
Tal Lall – Group GM Digital & Omnichannel, recently said: “At Spotlight Retail Group, we are committed to optimising the customer experience as a key competitive differentiator, particularly as our economy continues its recovery from the COVID-19 pandemic and consumers face a cost-of-living crunch.
“One of the ways that we’ve done this is through greater investment in personalisation, for example, introducing new technologies across search and browsing online, making use of real-time customer purchase behaviour for targeted product recommendations. We are also experimenting with personalised messaging.
Collectively we believe this adds greater value to our customers and removes friction in their purchase journey. So far this approach has already produced a 160% ROI on our personalisation investments with more to come.”
Personalisation only possible through technology
One example of personalisation that would resonate with every one of us would be walking into our favourite café with our barista personally greeting us as they get to work on our favourite order. Through the simple act of remembering what type of coffee we drink, we instantly feel a strong connection to the business.
But how can this be applied at scale? Some brands have numerous touchpoints of consumers across all channels, so scaling personalisation is only feasible if driven by technology. Data and systems that generate the underlying data points, analytics systems that draw insights, and the tools that drive actions on those insights are necessary parts of a successful personalisation strategy.
The first step is to get product recommendations right through behavioural assessment and targeting relevant content. For example, an online travel agent can track attributes of a user’s search process, including location, family size, age groups, and trip timeline. If the user has bought a summer trip, the travel agent might recommend winter trips to encourage repeat purchases.
As a business, the journey can start small – offers tailored for your next purchase based on history, linking to loyalty data and then slowly moving to complex areas of capturing an omnichannel footprint and responding with live experiences and offers.
In a challenging economic environment, personalisation offers a pathway for businesses to overcome obstacles and thrive. By leveraging technology and tailoring customer experiences, businesses can position themselves for success in an increasingly competitive landscape navigate the current challenges but also foster long-term growth and customer loyalty.
Personalisation also means respecting consumers’ privacy – intrusion can put them off. The key, therefore, is to master the balancing act.
Andal Alwan is regional head of APAC – consumer, retail and logistics at Infosys.