Boost Brand Loyalty with AI Merchandising: An Insight into 2024 Trends

Calling all retailers and CPG brands! Are you prepared for a revolutionary shift in retail? The industry is constantly evolving, and in order to stay ahead of the game, CPGs need to invest in the right tools and use AI algorithms to make data-driven decisions for your brand. With the rise of e-commerce and the growing importance of customer loyalty, it’s crucial to have AI enhanced merchandising strategies in place. And with the help of Artificial Intelligence (AI), retailers can improve the shopping experience in both physical and digital spaces. In today’s fast-paced and competitive market, AI merchandising is no longer a luxury, but a necessity.

The Power of AI in Retail Transformation

Embark on a transformative journey with AI, the linchpin of retail innovation, where it morphs from a buzzword to the core of consumer journeys. This revolution goes beyond data sets and analytics for forecasting and optimization, but instead lays the groundwork for hyper-personalized marketing strategies that ensure impactful new product placements and promotions. AI’s magic unfolds in offering targeted suggestions akin to a trusted friend’s guidance, a feature Shopkick harnesses to reward users for interactions and purchases. This AI-driven personalization anticipates and satisfies consumer desires, propelling the customer experience into a realm of anticipatory engagement and nurturing unshakable brand loyalty.

Spotlight on Success: Nike and Sephora’s AI Triumphs

In the arena of AI innovation and customer data, Nike and Sephora stand as titans, showcasing how technology can transform the consumer journey into something extraordinary. Sephora, a beauty behemoth, leverages AI and customer preferences to deliver a personalized shopping odyssey. With its app acting as a digital makeup artist that doesn’t require you to be in-store, Sephora offers customized product suggestions, making each user’s experience deeply personal and highly engaging. This technological embrace extends beyond convenience, inviting users to dive into a world of beauty exploration, where their shared experiences amplify brand loyalty and create a vibrant, community-driven narrative.

Meanwhile, Nike is breaking records with its AI-driven approach to product design and customer service. By utilizing AI to generate unique designs, Nike taps into the pulse of consumer demand for distinctiveness and self-expression. Their application of AI in predicting the perfect shoe fit eliminates the uncertainties of online shopping, ensuring every purchase feels tailor-made. This precision not only enhances the shopping and user experience but also fortifies customer trust and satisfaction.

Together, Nike and Sephora illuminate the path forward, demonstrating that AI, when applied with insight and ingenuity, crafts experiences that resonate on a personal level, with customer engagement that sets the stage for a future where brand engagement is not just observed but passionately felt.

Overcoming Consumer Skepticism: The Role of Transparency and Trust

Navigating the maze of consumer skepticism is a challenge that demands unwavering commitment to transparency and trust. With 76% of consumers wary of AI’s potential for misinformation and 38% feeling uneasy about new tech in their grocery aisles, the call to action for brands is clear: step up and reassure your audience. This isn’t about merely disclosing how AI tools are applied in the shopping experience; it’s about championing ethical technology use, fiercely guarding consumer privacy, and standing as a beacon of data security. To quell the fears and anxieties swirling around AI, brands must embark on a mission of enlightenment, shedding light on the mechanisms of AI with an honesty that resonates and reassures. The path forward involves not just using AI responsibly, but communicating its benefits and safeguards with a clarity that cuts through the noise, demonstrating a steadfast dedication to consumer well-being. This commitment to ethical AI use is the linchpin in cultivating a landscape where trust flourishes and brand loyalty thrives in the rich soil of transparency.

AI-Enhanced Merchandising Strategies That Connect

Embrace the cutting-edge revolution of AI-enhanced merchandising strategies to forge unbreakable bonds with your consumers. This isn’t about simply meeting expectations; it’s about exceeding them, creating an environment where personalized experiences become the cornerstone of every interaction. Imagine leveraging AI to offer not just any product recommendation, but the perfect suggestion that resonates with each individual’s unique tastes and needs. Picture AI-powered chatbots and virtual assistants transforming customer service from a routine task into a delightful journey of discovery and support. These strategies are about crafting an unparalleled shopping adventure that makes consumers feel recognized, valued, and understood on a profound level. Implementing such AI-driven tactics propels your brand into a realm of unmatched engagement and loyalty, where every marketing effort is not just seen but felt deeply by your audience. This is the era of personalized merchandising, where AI is your ally in delivering not just products, pricing strategies or inventory management, but experiences that captivate and enchant, paving the way for a future where brand connections are not just formed—they’re fortified.

However, as consumers face an influx of generative AI content, there lies a crucial need to reassure them about the safety and security of these advancements throughout their decision making process. Winning customer trust involves convincingly demonstrating that AI tools are not just about automation and deals but are firmly anchored in stringent data protection measures.

The Future is Now: Embracing AI for Retail Success

For brands to thrive, adopting AI-enhanced merchandising strategies is not just advantageous—it’s imperative. Enter Shopkick, pioneering the way by utilizing AI to make each shopping journey not only seamless but deeply personalized throughout their customer journey. This goes beyond mere convenience, as Shopkick leverages consumer data with transparency, ensuring a shopping experience that is both intuitive and enriching. By engaging customers through AI-powered navigation aids and personalized recommendations, Shopkick is setting a benchmark for how brands can foster customer satisfaction, loyalty and trust. It’s a testament to how the strategic application of AI can safeguard consumer data and metrics, while simultaneously amplifying the shopping experience. In an era where operational efficiency and consumer engagement are paramount, tools like Shopkick are not just beneficial; they are essential. As we step into this new dawn of retail, embracing AI with a focus on ethical use and consumer benefits isn’t just the smart choice—it’s the only way forward for brands aiming for sustained success and relevance.

Want to uncover other trends reshaping the retail landscape? Check out the full 2024 Trends report for actionable insights.

Sticky CX: How to Design Experiences that Keep Customers Coming Back

Creating ‘sticky’ customer experience (CX) is about more than just brand loyalty – it’s about staying relevant and interesting to customers wherever they are in a buying cycle. In fact, argues Nick Pearse of agency Vertical Leap, the secret to sticky CX is engaging customers when buying intent is lowest: right after purchase.

Customer experience (CX) design acknowledges the importance of interactions between brands and consumers at every stage of the consumer journey. This starts as soon as someone discovers a new brand and culminates with a purchase, but continues long after purchase. Top brands develop sticky customer experiences that compel people to keep buying from them after the initial purchase. This is critical in the age of consumer power.

Why is a sticky CX important?

Sticky CX design aims to convert new customers and maximize the percentage of them who keep buying from you. It’s more expensive to win new customers than convert previous buyers, especially if you provide a quality customer experience. Returning customers spend 67% more on brands they trust.

Customer stickiness is an important measure of the quality of experience you provide across the entire customer cycle (lead capture, lead nurturing, the buying process, product/service quality, the post-purchase experience).

The buying process and post-purchase experiences are particularly important, as we’ll see when we look at the top reasons behind repeat purchases.

By optimizing the entire customer experience, a sticky CX elevates KPIs that drive revenue and growth, including repeat purchases; customer retention, value, lifespan, loyalty and satisfaction; purchase value; positive reviews; brand engagement, citations and reputation – and all the way down to revenue, ROI and growth.

To create a sticky CX, you have to optimize the whole customer experience – before, during and after the purchase – to maintain engagement and motivate customers to remain active in the buying cycle.

Customer stickiness vs customer loyalty

Customer loyalty focuses on the emotional connection between brands and consumers; stickiness places more emphasis on repeat transactional value.

Customers can remain loyal to your brand as long as they don’t buy similar products or services from rival companies, which doesn’t mean they’re necessarily buying from you as often as they could.

Designing a sticky customer experience doesn’t only strive to maximize customer loyalty but also customer value by increasing the frequency of purchases and/or the value of purchases throughout the relationship.

What makes customers buy again?

According to Bread’s 2020 Consumer Shopping Survey, convenience is the top reason shoppers make repeat purchases from an online retailer.

While it’s important to address consumer priorities, CX design encompasses more than the deciding factors consumers face on product pages. Companies need to craft experiences that maximize customer satisfaction, keep them engaged when they’re not buying, and time motivational messages with precision to inspire new purchase impulses.

Frictionless buying (optimizing the buying process for repeat purchases) is important, but you should also keep an eye on other metrics:

• Time-to-value: Deliver value as quickly as possible after each new purchase.

• Maximize value: Help customers get the most out of their most recent purchase.

Lifecycle data: Analyze purchase habits to learn when different customers types are ready and most likely to buy again – and what they’ll buy.

You can also motivate engagement, giving customers a reason to keep visiting your website with temporary deals and rapid product rollouts. It helps to identify VIPs and give repeat customers special status and rewards for repeat purchases. Instant responses are useful here, giving priority support to your best customers.

You can use these efforts to build a community, using customers to drive engagement. It helps to build an emotional connection between customers and the brand. Showcasing loyal customers in social campaigns and putting the spotlight on them is good too.

Then, of course, there are the usual tactics for customer retention, such as cross-selling and upselling. Retention may be a key part of building a sticky CX but you can’t rely on transactional interactions alone – you also have to optimize the gaps between purchases and nurture emotional motivations.

The secret to sticky CX is keeping customers engaged after their most recent purchase, while intent is at its lowest, especially across channels that you can use to build motivation over time.

This article was written by Nick Pearse from The Drum and was legally licensed through the Industry Dive Content Marketplace. Please direct all licensing questions to legal@industrydive.com.

Marrying Consumer Expectations With Values

How to align brand values to today’s consumer expectations was at the center of topics covered at the recent 2022 CEO Summit hosted in New York City by the Jay H. Baker Retailing Center at the Wharton School of the University of Pennsylvania and the Retail Leaders Circle. The conference’s theme, “Values + Purpose: Leading the Neo-Renaissance,” offered a fascinating look into how some of the nation’s top brand and retail leaders such as Pfizer’s Sally Sussman and Revlon’s Debra Perelman among others are innovating today in order to remain relevant tomorrow.

Here are my top takeaways:

Gen Z’s influence continues to impact everyone; Sustainability is sticky

Throughout the CEO Conference, every speaker touched upon issues that are being driven by Gen Z, from community building to saving the planet. First Insight’s recent survey in partnership with Wharton reveals that Gen Z is using its collective voice to influence all generations, and that is especially true when it comes to sustainability. Retailers, brands, and manufacturers need to pay close attention because by 2031, Gen Z’s income will surpass that of millennials. Gen Z values sustainability over brand name, will pay more for sustainable products, and is convincing their Gen X parents to do the same.

As retailer and brand CEOs grapple with making sure that their brand continues to resonate with younger consumers, they need to actively listen to these consumers to understand how to improve their efforts on sustainability.

Leveraging the data collected from these conversations is one way that companies can evolve to achieve more purpose driven initiatives, remain inclusive, and meet both employee and consumer expectations.

Safety and Health More Important Than Ever

The pandemic brought to light so many ways we’d been doing business that simply won’t work in the future in the same way – from toxic work environments to overcrowded offices. However, the biggest a-ha moment for many was that employers need to demonstrate their commitment to health and safety to their employees and customers. These new values transcend simply providing a safe or healthy working, shopping, or dining environment. For instance, the best employers now offer resources and assistance for improving the mental and physical health of their employees. Retailers will need to continue to ensure that their customers feel safe shopping in physical retail. They can do this by expanding upon curbside pickup, same day delivery, and easy access to the most popular items. In addition, upgrading physical store locations with better technology can mitigate the exposure to too many people.

Recommerce Is the Next Big Thing

Even Boomers are embracing recommerce or purchases of previously-owned items according to the First Insight Wharton Sustainability report. Boomers are now 56% more likely to engage in recommerce models than they were just two years ago. More than half of those surveyed prefer to shop resale formats for a variety of sustainability reasons. It’s clear that the consumer has become much more complex in a relatively short period of time, and retailers will need to go the extra mile to keep up. For example, First Insight data reveal that among the various sustainable shopping methods, 65% of consumers across all generations prefer brand or retailer-operated recommerce. Yet as third-party resale brands such as ThredUp, The RealReal and Depop continue to develop brand affinity among younger consumers, brands and retailers are giving away the business that they could be generating from new retail formats. Retailers and brands must begin testing and learning with new formats today so that they can retain and attract consumers tomorrow. The best way to start is to listen to your consumers to understand the way they like to shop.

Supply Chain Innovations

One of 2021’s biggest topics and challenges for retailers and consumers alike, supply chain challenges continue to exist. Labor shortages, manufacturing challenges, inflation, and, now, the war in the Ukraine are a few of the factors contributing to challenges for global businesses. The bright side is that the covid pandemic forced manufacturers and brands to take a good hard look at their supply chain and make fundamental changes to improve it. When it wasn’t broken, there was no incentive to fix it. But now that the cracks have turned to fissures, supply chain executives realize that supply chain disruptions are just another cost of doing business. Manufacturers, shippers, and retailers know that the future supply chain must be more sustainable and highly collaborative. Maximizing labor, containers, warehouse space, and last mile within a collective will be more efficient and sustainable in the long run. Digitizing the product creation and buying process will ensure that the products that brands and retailers produce and ship will actually be the ones that their consumers want to buy when they are on the shelves.

In the end, it is clear that we are headed to a more dynamic (meaning … CHANGING) and yes less predictable time ahead. As many noted, one thing is for certain, understanding where people are “moving to” versus where they “have been” will be a new and needed skill set while remaining agile enough to listen, understand and respond.

This article was written by Greg Petro from Forbes and was legally licensed through the Industry Dive Content Marketplace. Please direct all licensing questions to legal@industrydive.com.

 

2022 Summer Fancy Foods Show: What We Expect

On Sunday, June 12th, the Specialty Food Association’s Fancy Food Show kicks off, and Shopkick is excited to join the industry’s top emerging and leading brands from the first session to the last on Tuesday, June 14th.  

Dedicated exclusively to specialty foods and beverages, the Fancy Foods Show is the industry’s largest show in the United States, with over 10,000 participants at its Winter 2022 conference in Las Vegas and expecting over double for the Summer session. While we are undoubtedly looking forward to hearing about (and hopefully tasting) the latest innovations in the space, Shopkick is especially interested in the trends and insights that the “thousands of dollars worth of category data and analysis” can offer (SFA, n.d.).   

After generating over 26.6 million in-aisle engagements and 1.86 million purchases in the Food and Beverage category in 2021, Shopkick is enthusiastic about increasing these numbers in 2022 and beyond by keeping current with the direction of the industry. Coupling the forward-thinking knowledge we will gain from the Fancy Foods Show along with our first-party research, we’re confident in the innovation Shopkick can drive both for our current partners, future partners, and our users. 

While at the show, we’ll have our eye on innovations in the health and wellness spaces, as our research shows that consumers are increasingly concerned with what they put in their bodies and how it affects them and the world around them. Shopkick’s users are making an effort to include plant-based products in their shopping carts, with 49% doing so at least once every few grocery trips citing general health benefits, the fact that they feel better, and weight loss, as the three main reasons behind doing so. Shoppers are not just basing their cart decisions on what’s in the product, but also on what’s around it. Over 59% of surveyed users are more likely to purchase a brand with sustainable packaging than one without, 38% going as far as to say they would pay more for a product if it was sustainably packaged. Brands need to be ready to align their values with those of the consumer, and we’re excited to learn how the leading brands are doing so. 

There is no telling what innovations will come from this event, but we know whatever they will be, they’ll have a distinct and veritable impact on the food and beverage industry. Shopkick will be there for every moment, and if you’d like to discuss the industry, trends, or how Shopkick can help your brand awareness, you can schedule a meeting with us here or contact us. If you can’t join us there, be sure to keep an eye out for a follow-up article on what we learned as a result of hearing from and speaking to those that are at the forefront of the industry! 

By: Nick Schramm 

Specialty Food Association. (n.d.). Reasons to attend the summer fancy food show. Specialty Food Association. Retrieved June 10, 2022, from https://www.specialtyfood.com/shows-events/summer-fancy-food-show/attend/reasons-attend/

The Blurring Sweets & Snacks Category: Creating Experiences with Indulgence and Function

It isn’t news that the world shifted dramatically because of the pandemic. Most of the conversations have been around tangible scenarios – i.e., where we live, where we work, and where we shop. These changes have brought tectonic shifts that grab the headlines in real estate market shifts, The Great Resignation, and the management battles of hybrid vs. office.  

The next phase of the impact of these shifts on the consumer product goods / fast-moving consumer goods (CPG and FMCG) industry will determine the leaders and laggards in the hearts and minds of consumers and shoppers. The start of these shifts was on full display at the 25th Annual Sweets and Snacks Expo in Chicago before Memorial Day. 

One overarching trend that was evident was how the industry has moved towards crucial areas such as sustainability, food sensitivities, and organic production – due to the shift towards brand purpose and consumer trends towards healthier options.  

One other critical area that manufacturers demonstrated was based on consumer insights intersected with meeting the shopper needs of portion/calorie control, portability, and the collision of flavors – in sweet & salty, sweet & spicy, and tons of licensed products to expand flavor profiles across products.

Some other observations across the show floor included: 

Shark Tank Effect:

It seems as if there are more and more food products featured each week on the Shark Tank, and that’s evident through seeing previous founders and their products on display.  It wouldn’t be surprising to see a “Shark Tank” section at future events! 

Selective Indulgence Meets Choiceful Health:

Manufacturers were not shy about providing more and more indulgent options – but only when married with single-serve, individually wrapped and other easy to snack yet made to not overindulge packaging.

Founder and Product Stories:

In addition to the trend toward purpose-driven brands, the industry was eager to put their story on display. In many cases, the story of the founder and their inspiration and life stories while larger manufacturers shared key insights around the shopping experience and the need for added value, the shopping experience, and the value/deal impacting the perceived quality. 

One consistent driver of these product and category trends that was evident was that the breakthrough products and differentiators for success at the shelf were going to be made through value and experiences.  Shoppers want their products and retailers to provide value and be mindful about what truly denotes value – aligning with core values, additional value beyond couponing, and having fun along their customer journey. Consumers and shoppers want social and fun – and want to feel like they are part of a community.  Sometimes that community is exhibited via social and sustainable values, and sometimes it is in the form of how they attain added value within their purchases. The industry also shows that consumers will find value in an explosion of flavors and gravitate towards products that lead the charge across the themes that were on display. Brands need to differentiate now more than ever – and get the shopper to try their new products, invest in them and understand their defined value. 

By: Paul Robinson 

As one of the leading engagement opportunities for brands, products, and retailers, Shopkick users echo this need.  If you would like to understand how your brand can create value without eroding your margin, read our success stories and contact Shopkick

3 things brands need to know about Gen Z’s CX expectations

Don’t look now, but Gen Zers are graduating college. They’re starting salaried jobs. And they’ve got money to spend. 

But there’s mounting evidence that companies across industries aren’t ready for these digital natives (those born late 90s and after). 

According to the latest Broadridge CX and Communications Insights survey, which polled 3,025 consumers in North America, two-thirds (66%) of Gen Zers say that most of the companies they do business with need to improve their CX. 

While CX expectations are high, there’s significant upside for companies that deliver. Recent estimates indicate there are around 68 million Gen Zers in the United States, the oldest of whom are 24, and 74% of them say they would spend more money with a company that provides a good customer experience. Capture this audience now and you’ve got a long runway ahead. 

The key to a creating a better CX for Gen Zers? Personalization and customization: 77% of Gen Z believe it’s important for businesses to customize interactions, while 76% are looking for companies to send them digital communications they can customize based on their preferences.

Personalization involves delivering information and content that matches customer expectations based on their specific point in the customer lifecycle. That means accounting for prior interactions with your company, then anticipating what they want to do next. Customization, meanwhile, is about offering a configurable experience that lets customers take a greater role in deciding how to access information, where and when. 

To execute both effectively, you need the infrastructure to create and deploy digital interactions across relevant touchpoints. As you strategize ways to deliver for Gen Zers, here are three capabilities you should consider investing in. 

1. QR codes are back

If this year’s Super Bowl commercial from Coinbase is any indication, QR codes are back – and for good reason. The ad simply contained music and a QR code bouncing around on a black screen, yet more than 20 million people scanned it, causing the Coinbase website to crash. 

The value that QR codes bring to customer communications has not gone unnoticed: 78% of Gen Zers say they expect to see QR codes on printed communications. 

QR codes give customers the option to easily move from printed communications to a mobile environment where they can take action or engage with a more customizable digital experience. 

Why do QR codes work? Well, it turns out that, despite the general trend toward digital, 90% of Gen Z still values getting some physical mail communications from the companies they do business with. So there’s opportunity to deliver engaging digital experiences, even while paper communications persist. 

2. Predictive analytics and preference management

Nearly half of all Gen Z respondents said they’d be willing to share personal information to enhance the customer experience. That’s promising because true personalization in marketing requires both data and the capability to easily access and employ that data to inform your next customer interaction. 

To that end, it’s advantageous to invest in predictive analytics and preference management. Available platforms enable marketing teams to automate omni channel communications based on customer behavior, delivery preferences and expressed interests (measured by various metrics including clicks, dwell time, account data, past purchases, etc.). 

By aggregating and analyzing all existing customer data, predictive analytics will help make informed decisions about what this generation – across a diverse range of backgrounds and experiences – needs or wants next. Along

with a deeper understanding of their individual preferences, you can establish next-best-action logic to automatically trigger the appropriate communication. 

Whether you aim to cross sell, increase engagement, boost loyalty or make an account stickier, the key – as always – is to nail timing and relevance. An analytics engine tied to your communications platform can help make it happen. 

3. Customizable digital documents

With Gen Z moving to mobile to pay bills and interact with companies more than any other generation, ensuring digital documents are customizable and tailored is imperative. When it comes to bills, statements, and other transactional communications, it’s important to think beyond static PDFs. Static PDFs are limited for several reasons. First, they don’t render well on mobile screens. Second, you can’t interact with them. Customers are forced to stay passive consumers of generic information. 

This generation wants to see interactive bills and statements, providing them with the ability to choose which information to hide, view and further explore. This also means providing easy access to customer support should they need it. 

Importantly, it’s not just Gen Zers who want this. In fact, 67% of all survey respondents said they’d like to see companies implement digital interactive documents with customizable sections. 

Although some companies have been able to wow Gen Zers with innovative experiences, the majority continue to offer experiences designed more than a decade ago. The need to innovate is imminent. Many organizations still rely on complex legacy systems for creating and managing communications, which limits their ability to customize and personalize the experience. 

The good news is that there are communications platforms designed to make it easier than ever to catch up. Gen Zers are moving quicker than many companies. Organizations that don’t invest in the latest technologies risk missing out on understanding and capturing this critical group of digital natives in years to come. 

Matt Swain is managing director for Broadridge Communications and CX Consulting. 

This article was written by Matt Swain from The Drum and was legally licensed through the Industry Dive Content Marketplace. Please direct all licensing questions to legal@industrydive.com.

Retailers Turn to Hybrid Cloud and AI to Meet Shifting Consumer Behaviors

As the pandemic has transformed the nature of work with more employees working from home than ever before it has also changed how consumers shop according to new study from IBM and the National Retail Federation. 

The new global study of over 19,000 titled “Consumers want it all” revealed that hybrid shopping which mixes physical and digital channels in shopping journeys is on the rise as a result of shopping habits consumers adopted out of necessity that are now becoming routine. 

Of those surveyed, almost three quarters (72%) said that they use retail stores as all or part of their primary purchase method. The reasons they gave for visiting a store include touching and feeling products before buying them (50%), picking and choosing their own products (47%) and getting products right away (43%). 

However, 27 percent of respondents said that hybrid shopping, where part of their shopping journey is conducted online and the other half takes place in a retail store, is their method of choice. When it came to the generation most likely to be a ‘hybrid shopper’, Gen Z consumers lead the way when compared to other age groups. 

VP of research and development and industry analysis at the National Retail Federation, Mark Matthews explained in a press release how hybrid shopping represents a fundamental shift in consumer behavior, saying: 

“While many surveyed consumers still place high value on the traditional in-store shopping experience, they also now expect the flexibility to build their own shopping journey – according to the behaviors prevalent to their age range, available tools and the product category they are looking to purchase. This ‘hybrid’ approach is a fundamental shift in consumer behavior.”

Growing importance of sustainability

While adoption of hybrid cloud, AI and other technologies can allow retailers to create bespoke hybrid shopping experiences, IBM’s new study has also revealed that they’ll need to keep sustainability in mind to retain and grow their customer base. 

Purpose-driven consumers that choose products and brands based on their own values like sustainability are now the largest segment of consumers surveyed (44%) according to the study. At the same time, 62 percent of respondents are willing to change their purchasing habits to reduce environmental impact which is up from 57 percent two years ago. 

Half of respondents said they are now willing to pay an average premium of 70 percent for sustainability which is roughly double the premium from 2020. Still though, there is a gap between intention and action with only 31 percent of respondents saying that sustainable products made up most or all of their last purchase. 

Dglobal managing director of IBM Consumer Industries, Luq Niazi provided further insight on the study’s findings and the growing importance of sustainability to consumers, saying: 

“The survey shows over the last year, sustainability became increasingly important to consumers, though there’s still a gap between their intentions and actions due to lack of information in the buying process. Increasingly, it’s becoming essential that retail brands demonstrate sustainable choices and options in each step of the customer experience.  At the same time, hybrid shopping has taken hold in most categories, particularly in home goods and apparel; and while stores continue to play the predominant role in grocery, hybrid shopping is growing in these categories too.”  

We’ve also rounded up the best ecommerce platforms and best shopping cart software

This article was written by Anthony Spadafora from TechRadar and was legally licensed through the Industry Dive Content Marketplace. Please direct all licensing questions to legal@industrydive.com

Retailers Turn to Hybrid Cloud and AI to Meet Shifting Consumer Behaviors

As the pandemic has transformed the nature of work with more employees working from home than ever before it has also changed how consumers shop according to new study from IBM and the National Retail Federation. 

The new global study of over 19,000 titled “Consumers want it all” revealed that hybrid shopping which mixes physical and digital channels in shopping journeys is on the rise as a result of shopping habits consumers adopted out of necessity that are now becoming routine. 

Of those surveyed, almost three quarters (72%) said that they use retail stores as all or part of their primary purchase method. The reasons they gave for visiting a store include touching and feeling products before buying them (50%), picking and choosing their own products (47%) and getting products right away (43%). 

However, 27 percent of respondents said that hybrid shopping, where part of their shopping journey is conducted online and the other half takes place in a retail store, is their method of choice. When it came to the generation most likely to be a ‘hybrid shopper’, Gen Z consumers lead the way when compared to other age groups. 

VP of research and development and industry analysis at the National Retail Federation, Mark Matthews explained in a press release how hybrid shopping represents a fundamental shift in consumer behavior, saying: 

“While many surveyed consumers still place high value on the traditional in-store shopping experience, they also now expect the flexibility to build their own shopping journey – according to the behaviors prevalent to their age range, available tools and the product category they are looking to purchase. This ‘hybrid’ approach is a fundamental shift in consumer behavior.”

Growing importance of sustainability

While adoption of hybrid cloud, AI and other technologies can allow retailers to create bespoke hybrid shopping experiences, IBM’s new study has also revealed that they’ll need to keep sustainability in mind to retain and grow their customer base. 

Purpose-driven consumers that choose products and brands based on their own values like sustainability are now the largest segment of consumers surveyed (44%) according to the study. At the same time, 62 percent of respondents are willing to change their purchasing habits to reduce environmental impact which is up from 57 percent two years ago. 

Half of respondents said they are now willing to pay an average premium of 70 percent for sustainability which is roughly double the premium from 2020. Still though, there is a gap between intention and action with only 31 percent of respondents saying that sustainable products made up most or all of their last purchase. 

Dglobal managing director of IBM Consumer Industries, Luq Niazi provided further insight on the study’s findings and the growing importance of sustainability to consumers, saying: 

“The survey shows over the last year, sustainability became increasingly important to consumers, though there’s still a gap between their intentions and actions due to lack of information in the buying process. Increasingly, it’s becoming essential that retail brands demonstrate sustainable choices and options in each step of the customer experience.  At the same time, hybrid shopping has taken hold in most categories, particularly in home goods and apparel; and while stores continue to play the predominant role in grocery, hybrid shopping is growing in these categories too.”  

We’ve also rounded up the best ecommerce platforms and best shopping cart software

This article was written by Anthony Spadafora from TechRadar and was legally licensed through the Industry Dive Content Marketplace. Please direct all licensing questions to legal@industrydive.com

Predictions 2022: Entering a New Era of Hybridization for Retail

The retail sector is in “a momentous period of change” with the pandemic sparking mass market disruption for both big heritage brands and small, local businesses. The evolution of the traditional retail experience has presented marketers with a ripe opportunity to re-examine their strategies and rework their offerings, to create a more connected experience in-store and online. 

As part of The Drum’s Predictions 2022 Festival, Carina Moran, head of strategy at Yahoo UK, considers how marketers can create a more seamless shopping experience in keeping with the changing demands of consumers. As we move from pandemic into longer term endemic, some consumer mindsets may have reset but many new and lasting behaviors have emerged. Marketers need to accept the challenges brought on by the pandemic and understand where to go from here. 

“The biggest challenge induced by the pandemic is that consumers are now mandating convenience from retailers,” says Moran. But marketers shouldn’t fear delivering convenience; they can meet consumer needs with exceptional service by focusing on quick delivery and turnaround times; providing free and easy returns; and simplifying the shopping experience across touchpoints. 

“Consumers are also expecting engaging, entertaining and tangible interactions with brands,” says Moran. “And since the surge in online shopping during the pandemic, if these demands are not met, consumers are not hesitant to shop elsewhere.” 

The type of customer who shops online has changed and now encompasses a much wider range – with baby boomer consumers continuing to purchase three times more online than they were pre-pandemic. The closure of the high street during lockdowns prompted new users to explore online options and this rise in online shoppers will only continue to increase demand and create a new standardized norm for convenient high-quality experiences. 

With so many options, consumers may appear more fickle-minded now than before, meaning marketers need to work harder to earn their attention. 

New challenges to overcome

With this surge in online purchasing, brands and retailers must now consider how consumer behavior around trying on and returning items has been impacted. “We’re buying more online and our bedrooms now also act as our changing rooms,” says Moran. “But we’ve adopted the attitude that if something doesn’t fit or work out, we’ll just send it back.” 

According to Retail’s CBE, the number of returns for online purchases ranges between 15-30%, meaning that a fifth of all purchased online goods are returned. Logistically, this is a nightmare for retailers as it is time-consuming and costly dealing with returned items and having to restock digital shelves. “It also poses a big question around sustainability with this way of shopping and how to sustain this approach,” adds Moran. 

“One of the biggest limitations to online shopping is that you can’t see the product in real life,” says Moran. “74% of people said that was one of the benefits of purchasing items in-store. People do miss the tangible in-store experience particularly after a year of being locked up inside.” 

Embracing hybridity and new technology

“The typical shopping journey now involves both brick-and-mortar stores and digital interactions,” says Moran. “We’re entering a new era of hybridization. Consumers want to be able to browse anywhere, buy anywhere, and have their orders fulfilled anywhere, and retailers need to be able to deliver on all three of these at scale in order to survive in the current climate.” 

Marketers should consider modernizing their physical locations through embedded digital touchpoints to create a space that advertises the brand and allows for easy omni-channel engagement. The aim is to combine how consumers interact online and in-store to help them discover new products, conduct product research and make product purchases – whether it’s in the physical or virtual space. 

“Really good in-store experiences need to become high touch, sensory experiences,” says Moran. 

Shoppers already use their phones when physically shopping, so installing purchase-enabling technology in-store and utilizing existing smart solutions like QR codes will help connect the two experiences. 

With the rise in new tech innovations such as virtual reality (VR), augmented reality (AR), artificial intelligence (AI) and extended reality (XR), retailers can offer more immersive digital experiences for shoppers and get them to try products digitally. 

“Marketers need to make experiences in-store and online feel as personalized or personal as possible, so that the tech feels like a convenient add-on for customers,” says Moran. 

Times might be changing for retailers but there are plenty of opportunities and possibilities for marketers to seize. With the change in cookies and access to more first party data, marketers can be more autonomous with the data that they are extracting online and can use this to both understand consumer online behavior and weave this into in-store activations. 

“We need to make all aspects of the user’s journey shoppable and seamless,” concludes Moran. “Customers are not limited to one screen or one experience. We need to think in the same way they do if we want to scale up and reach them – and use smart data to create a combined and aligned approach.” 

  

This article was written by Olivia Atkins from The Drum and was legally licensed through the Industry Dive Content Marketplace. Please direct all licensing questions to legal@industrydive.com.

Loyalty Programs: The New Pillar For Next-Gen Customer Engagement

Following the global shakeups caused by the Covid-19 pandemic, 2021 found the business world hyper-focused on innovation. According to a report by Celerity, “63% of leaders stated that Covid-19 made their organizations embrace digital transformation sooner than they had expected and were making greater investments in technology as a result.” 

Loyalty programs are among the technologies that have seen an increase in adoption due to this newfound focus on digital transformation. MarketsandMarkets forecasts that the global loyalty management market size will grow from $8.6 billion in 2021 to $18.2 billion in 2026. Considering the emerging value of the loyalty management industry, it’s pivotal to understand the underlying trends so that companies can build a relevant and successful concept for their program. Because just like the business world in general, loyalty programs have also been affected by the pandemic. 

My company, Antavo, recently surveyed over 320 corporate respondents from all regions of the world and analyzed the data from over 25 million member actions tracked via our platform. We published the Global Customer Loyalty Report 2022, which allows us to see through the eyes of loyalty program owners and to identify important trends not just for loyalty programs but also for post-Covid-19 customer retention in general. 

Redefined Engagement, Tiers And Technology

After examining companies’ motivation behind running (or planning) a loyalty program, we found out that “increasing customer engagement’’ ranked first, indicating that companies wish to use loyalty programs as more than an incentive to generate more sales, and they are actively seeking ways to have more touchpoints with customers. Customer sentiment backs up the assumption that it’s worth focusing on engagement: According to Gallup, “Customers who are fully engaged represent a 23% premium in terms of share of wallet, profitability, revenue and relationship growth over the average customer.” 

As for the engagement itself, loyalty programs offer a wide range of options: gamification, badges, tiers, birthday surprises, early access privileges — and the list goes on. Tiers, in particular, were proven to be popular. Still, consider doing more than just the default three groups (bronze, silver, gold tiers). For instance, consider adding a VIP tier that requires annual buy-in by spending loyalty points. Also, offering early access to sales events and new product drops is an excellent high-tier reward. 

The Importance Of Performance Tracking

Loyalty programs helped keep customers engaged during Covid-19, but does this actually result in a positive ROI for companies? High-profile examples, such as Amazon Prime or Starbucks Rewards, demonstrate that loyalty programs can be — and are — profitable. However, it’s hard to draw a conclusion for the majority of loyalty programs. In our report, only 32.8% of respondents offering a loyalty program reported that their organization measures the ROI of loyalty. Interestingly enough, 93.1% of those who do measure ROI indicated they had a positive ROI. If anything, this data should provide strong motivation for loyalty program owners to start tracking their program’s performance. 

Of course, this presents its own conundrum: What metrics need to be tracked to consider a loyalty program successful? Recurring revenue and customer lifetime value are seemingly obvious answers, but ROI isn’t the only indicator of good performance. Being able to increase the number of participants and refine the segmentation using loyalty data collected from members is also a sign of success, just like the number of active referrals or the activity rate on social media. In the end, it all comes down to what KPIs each brand wishes to pursue. 

Shifting Toward A More Emotional Loyalty Model

With digital transformation in full swing across the globe, businesses have more channels to reach their customers than ever before. However, the question of how to build loyalty is just as important as where to build loyalty. 

To put it simply, in an age where customers have access to a huge selection of web shops and retailers, a brand has to catch customers by the heart, and not the wallet, because discounts are now less effective than rewards that have an emotional component to them. According to Capgemini, “86% of consumers with high emotional engagement say they always think of the brands they are loyal to when they need something, and 82% always buy the brand when they need something.” 

But what are business leaders thinking about emotional loyalty? In our survey, only 20.7% of existing program owners classified their program as more emotional than rational, while 53.6% of companies in the process of launching or relaunching their program specified that their program would be more emotional than rational, signaling that in the future, much more loyalty programs will focus on generating emotional loyalty. 

It’s worth highlighting that emotional loyalty isn’t a zero-sum game. You can still have transactional elements, like coupons and collection in your loyalty program — just remember to add a couple of features and rewards that emphasize emotional attachment. For example, provide invitations to member-only events celebrating the anniversary of your brand, privileges that make the shopping journey smoother, such as private concierge and dedicated customer support, or input opportunities for product and service development.

In Conclusion

To sum it all up, the world of loyalty programs is changing behind the scenes at worldwide organizations that prioritize customer loyalty. So businesses that wish to capture the attention of customers should adapt their strategies to focus on engagement, tiered program structures and emotional loyalty. 

This article was written by Zsuzsa Kecsmar from Forbes and was legally licensed through the Industry Dive Content Marketplace. Please direct all licensing questions to legal@industrydive.com.