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WHY IS PERSONALISATION SO HARD FOR TRADITIONAL RETAILERS? Brands such as Netflix, Spotify and Tinder are transforming our lives with real-time personalised experiences. Meanwhile, most store retailers still rely on 20th century technologies to drive sales. So, how can the potential of in-store personalisation be capitalised on? OBy Eagle Eye General Manager APAC Jonathan Reeve. ne-to-one communications stores are held back by their legacy have always been the holy systems. In particular, POS systems grail for retail marketers. lack the flexibility to handle real- Within the traditional in-store time personalised offers. To deliver environment, they could only be personalisation at scale, a large delivered by motivated team members who could remember the names and preferences of customers who regularly shopped in their stores. However, the late 20th century shift to self-service and low-cost mass retailing operating models removed that opportunity for face-to-face interactions in most retail formats. The rise of digital technology has led to the re-emergence of a wave of personalisation, delivered at scale through our smartphones, with digital- first brands including Netflix, Spotify, Facebook and Tinder transforming lives via delivery of personalised experiences. The vast majority of consumers have now come to expect similar levels of one-to-one personalisation in most areas of their lives. Yet, most retailers with physical stores are still relying on technologies from the last century to drive sales. It would not be unfair to describe most of these stores as ‘digital black holes’ as so few retailers are using the power of digital to personalise their store shopping experience. One example is the widespread use of store-wide discounting, communicated through analogue media such as shelf tickets, in-store displays, newspaper ads and paper catalogues. While many retailers use digital media – for example, email – this is usually just to broadcast store-wide promotions. As I skim through the last 10 retailer emails I received, nine led with products on store-wide discount. The systems bottleneck So, why have so few omnichannel retailers been successful with personalisation? Retailers with physical omnichannel retailer will need to issue hundreds of millions of offers each week. When a customer is at the checkout, the POS needs to access all these millions of offers once all the products have been scanned, but before the customer sees the total to pay. The sheer data storage and processing power needed to perform this calculation alone is far beyond any traditional POS hardware. An analogy is that it’s like attempting to access today’s bandwidth-heavy media platforms such as Netflix and YouTube using a 1990s dial-up modem. The equipment doesn’t have the capacity to handle the 2020 requirements and was never built to accommodate how consumers search, shop and pay today. If most retailers wanted to run a one-to-one marketing program, their technology simply won’t allow them to deliver it at the checkout. Core requirements to deliver personalisation Two critical ingredients for personalisation include: • The ability to analyse data relating to the products individual customers are buying. • Creating a real-time digital connection with customers and the ability to send them personalised offers. For everyday-low-price (EDLP) retailers with no loyalty program and limited ability to connect digitally with their customers, there is no incentive for customers to identify themselves. Some retailers have overcome this systems bottleneck by managing their digital marketing programs in the cloud. When a customer presents an offer to redeem at checkout, the POS calls the platform in real time. The platform checks the member’s entitlement and responds immediately to confirm that the POS should apply the appropriate reward or discount. These global digital leaders can in effect issue every customer with a personalised digital catalogue in which both products and incentives reflect the individual customer’s preferences. I’ve experienced technology-driven retail transformation before, having worked for Tesco.com in the early years of online retail in 2001. It was clear then that some industry leaders were being left behind because they didn’t see quickly enough that the new technology had the power to improve customers’ lives. The application of digital technology to physical stores will be just as transforming for store retail as e-commerce was 20 years ago. Will we see history repeat itself with some players failing to recognise the full potential of digital technology to improve the shopping experience? Or will retailers avoid mistakes of the past and capitalise on the potential of in-store personalisation to create value for customers and earn their loyalty? Only time will tell. MARKETING About Jonathan Reeve and Eagle Eye Jonathan Reeve is General Manager APAC for Eagle Eye, a leading SaaS technology company transforming marketing by creating digital connections that enable personalised performance marketing in real time through coupons, loyalty, apps, subscriptions and gift services. Its customers in Australia and New Zealand include Woolworths Group and The Warehouse Group. MAY, 2021 RETAIL WORLD 55